Wow, I bet the White House and DOE are kicking themselves for ignoring this guy. Check out this e-mail between OMB staff from Jan. 31, 2011, subject line: “Solyndra optics.” It was written as DOE officials were engaged in negotiations to restructure the Solyndra loan guarantee in light of the company’s obvious financial troubles. The second paragraph is eerily prescient, and shows just how skeptical the budget wonks were about Solyndra’s prospects:
Although the decision has already been made for OMB not to play an active role in determining what to do with Solyndra, the Director/S-1 meeting tomorrow might present an opportunity to flag to DOE at the highest level the stakes involved, for the Secretary to do as he sees fit (and be fully informed and accountable for the decision). Although optics are generally out of our lane, it may be worthwhile for the Director to privately make this point to the Secretary:
Given the PR and policy attention Solyndra received since 2009, the optics of a Solyndra default will be bad whenever it occurs. While the company may avoid default with a restructuring, there is also a good chance it will not. If Solyndra defaults down the road, the optics will arguably be worse later than they would be today. At that point, additional funds have been put at risk, recoveries may be lower, and question will be asked as to why the Administration made a bad investment, not just once (which could hopefully be explained as part of the challenge of support innovate technologies), but twice (which could easily be portrayed as bad judgement, or worse). In addition, the timing will likely coincide with the 2012 campaign season heating up, whereas a default today could be put in the context of (and perhaps even get some credit for fiscal discipline / good government because the Administration would be limiting further taxpayer exposure) letting bad projects go, and could make public steps it is taking to learn lessons and improve / limit future lending.
In the end, obviously, DOE agreed that optics were generally out of OMB’s lane, and pushed ahead with the restructuring anyway. Furthermore, in what appears to be a blatant contravention of federal law, DOE awarded priority status to Solyndra’s private investors in the event of a future default. But they learned their lesson right? Er, maybe not.