The Center for Public Integrity

The Treasury Department’s inspector general has opened a new front in the investigation of the government loan to Solyndra, the now bankrupt company that had been touted as a model of President Obama’s ambitious green energy program, the Center for Public Integrity and ABC News have learned.
 
The new probe involves the $535 million loan, arranged by the Energy Department, but actually processed by the Federal Financing Bank, a government lending institution that falls under Treasury’s control. Already, the FBI and the Energy Department’s inspector general have executed search warrants at Solyndra’s headquarters and questioned company executives.
 
“We’re going to look at everything the FFB had to do with its role in this thing,” Rich Delmar, a spokesman for the Treasury Department’s inspector general, told ABC News and iWatch News.
 
Word of the broadening probe came as the head of the Energy Department’s loan program came before congress at a contentious hearing on Capitol Hill Wednesday.

Earlier this month,  iWatch News  and ABC News disclosed that Solyndra received an interest rate of 1 to 2 percent -- lower than those affixed to other Energy Department green energy projects. The low rate was set even as an outside agency, Fitch Rating, scored Solyndra as a B+ -- "speculative" -- investment. Energy Department officials said the bank set the rate, based on formulas including the payout length, and that Solyndra did not receive special treatment.

Newly uncovered emails show the White House closely monitored and tried to rush Energy Department deliberations over whether to make a $535 million taxpayer-backed loan to Solyndra, a politically-connected solar energy firm that went bankrupt and now is the focus of a criminal investigation.

The company’s solar panel factory was heralded as a centerpiece of the president’s stimulus-backed green energy plan – billed as a way to jumpstart a promising new industry while creating jobs. The internal emails, excerpts of which were obtained by iWatch News and ABC News, show the Obama administration keenly monitored progress of the loan, even as analysts voiced serious concerns about the risk involved.

With Obama about to take a trip where he might be able to announce the loan in March 2009, top White House officials were pressing for a quick answer.

“If you guys think this is a bad idea, I need to unwind the WW [West Wing] QUICKLY,” wrote Ronald A. Klain, then chief of staff to Vice President Joe Biden, in an email sent March 7, 2009.

Three days later, an analyst at the Office of Management and Budget cautioned against moving too quickly. “This deal is NOT ready for prime time,” the analyst wrote in a March 10, 2009 email.

Only 10 days later, the Energy Department formally announced its commitment to guarantee the loan, which the administration had fast-tracked as the first green energy project backed by stimulus dollars.

Time and again, the government handed breaks to Solyndra Inc., an upstart California solar panel firm backed by a major supporter of the president.

And, time and again, benefits flowed from Washington despite warning signs that the government’s $535 million investment was a risky bet, at best.

The bill for that risk is yet to fully come due, as a criminal investigation expands into whether the company misled the government about its financial health in securing its half billion dollar reward, and in landing a favorable loan refinancing earlier this year.

At the least, taxpayers will lose a chunk of their investment in bankruptcy proceedings. More than 1,100 Solyndra workers already have faced consequences; when the company collapsed Aug. 31, they were fired on the spot.

A deeper political storm has now formed and shows signs of intensifying. The president is facing broadsides about Solyndra from the GOP, criticism sure to escalate as the 2012 election nears. Obama touted the company in a visit to its plant last year, two months after Solyndra’s own auditors raised striking questions about the company’s viability. Wednesday, a House panel investigating the loan is summoning witnesses, and Democrats have joined Republicans in asking questions.