The Solyndra loan scandal is a case study in crony capitalism run amok. As e-mails and other documents continue to be released, two cronies in particular stand out: the two Steves.
The sheer audacity of Spinner’s involvement with the Solyndra loan is something to behold. After raising more than $500,000 for Barack Obama’s campaign in 2008, Spinner was named to the Presidential Transition Team as a member of the technology-innovation-and-government-reform working group. As the new administration was forming up, he joined the Department of Energy in April 2009 as the “chief strategic operations officer” of the loan program that would eventually place a half-billion-dollar bet on Solyndra.
At the time, Spinner’s wife, Allison, was a partner at Wilson Sonsini, the law firm representing Solyndra in its DOE loan application. Spinner signed an ethics agreement stipulating that he would “not participate in any discussion” concerning clients of his wife’s firm, which Solyndra compensated to the tune of $2.44 million, all of it made possible by the DOE loan guarantee. However, e-mails released by the White House suggest that Spinner was a key player in the discussions of Solyndra.
The e-mails reveal that in late August 2009, just days before the $535 million loan guarantee was formally announced, Spinner was an active participant in major aspects of the administration’s carefully orchestrated rollout of the Solyndra loan approval, which was to be the first of its kind, and which the White House viewed as a perfect opportunity to tout its “green jobs” agenda. The rollout, Spinner suggested, should be a “big event,” with “golden shovels, bulldozers, hardhats, etc.”; either President Obama or Vice President Biden should attend. The good political optics of such an event, Spinner suggested in one e-mail to another DOE official, “might spur [the Office of Management and Budget] a little faster to help the closing.”
In fact, Spinner appears to have been a primary point of contact for senior White House officials as well as top Solyndra executives, both of whom were anxiously awaiting a final decision from the Office of Management and Budget on the company’s application. “Any word from OMB?” Spinner wrote to DOE career official Kelly Colyar on August 28. “I have the [office of the vice president] and [the White House] breathing down my neck on this.” Later that day, Spinner contacted another department official, framing the same question in a decidedly more urgent tone. “How [f***]ing hard is this?” he wrote. “What is he waiting for? Will we have it by the end of the day?”
Throughout the Solyndra loan process, Spinner defended the company against the many doubts and concerns raised within the administration, including questions from climate czar Carol Browner’s office. On August 19, Spinner e-mailed an aide to then–Chief of Staff Rahm Emanuel stating that Solyndra was a solid bet deserving of federal support. “I haven’t heard anything negative on my side,” he wrote in one e-mail exchange. He even offered to set up a meeting with the individuals who had expressed concern, writing “I . . . have no idea what they’re referring [to].”
Spinner left his position at the DOE in September 2010, shortly after the Solyndra loan was finalized. He then became a senior fellow at the Center for American Progress, a liberal think tank. His contract there recently expired, and he is currently an “active fundraiser” for the Obama 2012 campaign, having already raised more than $500,000. That is par for the course for the prolific fundraiser, who has also personally given more than $31,000 to Democratic candidates and organizations since 2005.
Like Spinner, Mitchell has operated at the intersection of politics and venture capitalism. As managing director of Argonaut Ventures, an investment arm of the George Kaiser Family Foundation, Mitchell oversaw the foundation’s multi-million-dollar investment in Solyndra. As recently uncovered e-mails suggest, he used political connections to help give the solar-power company a leg up on the competition. George Kaiser is an Oklahoma billionaire and major Obama fundraiser, who made multiple visits to the White House in the months before the Solyndra loan was formally approved.
Despite assertions to the contrary — from the White House and from Kaiser himself — e-mail evidence indicates that Kaiser, operating in close conjunction with Mitchell, did discuss Solyndra in meetings with senior White House officials. In early 2010, when Solyndra began to encounter financial difficulties, e-mail exchanges among Kaiser, Mitchell, and Ken Levit, executive director of the Kaiser Family Foundation, detail their efforts to secure a second DOE loan for the struggling company. “They about had an orgasm in Biden’s office when we mentioned Solyndra,” Levit wrote to Mitchell on Feb. 27, 2010. An excited Mitchell responded: “That’s awesome! Get us a [DOE] loan.”
Several days later, Mitchell informed Kaiser and Levit about a phone conversation between Solyndra CEO Chris Gronet and Jonathan Silver, who was then the head of the Department of Energy loans program (he has recently stepped down). “Apparently our application has been caught up with several other groups who were also wanting a second bite at the DOE loan guaranty apple,” Mitchell wrote. “[Silver] would not say that we are the first one that will be considered but he all but did. . . . So it appears things are headed in the right direction and [Energy Secretary Steven] Chu is apparently staying involved in Solyndra’s application and continues to talk up the company as a success story.”
Once it became clear that a second loan was not in the offing, Mitchell continued to seek federal aid for Solyndra. In an e-mail dated Oct. 8, 2010, Kaiser urged Mitchell to “pursue your contacts with the WH.”
“Understood,” Mitchell wrote back, indicating that he planned to meet with White House officials to discuss “assistance in selling [solar] panels to the government.” He noted that the White House “has offered help in the past and we do have contact with the [White House] that we are working with.”
Kaiser and Mitchell also discussed the possibility of restructuring Solyndra’s original $535 million loan guarantee; this ultimately did occur in February 2011. The resulting arrangement, which gave private investors like Argonaut Ventures priority over the taxpayers with respect to the first $75 million recovered in the event of the company’s bankruptcy was negotiated by the DOE in conjunction with Argonaut, other investors, and Solyndra’s board of directors. House Republicans investigating the Solyndra loan contend this was a blatant violation of federal statute.
As a result of that restructuring agreement, Argonaut Ventures stands to recoup a significant portion of its Solyndra investment, which at one point constituted a 39 percent stake in the company. Additional e-mails indicate that in the days before it filed for bankruptcy, Solyndra was seeking a second restructuring agreement on similar terms. Though this agreement was ultimately not to be, one Treasury Department official expressed severe misgivings about the perceived special treatment given to private investors: “I think DOE should be thinking through whether the proposed deal is just giving the investors more time to extract more value from the firm before bankruptcy . . . in which case it’s clearly in the investors’ interest regardless of the firm’s prospects.”
Argonaut’s substantial investment in Solyndra had earned Mitchell a spot on the company’s board by 2008. In fact, he is still listed as a board member.
And that’s not all. Mitchell is also listed as a “board participant” at Solar Reserve, a Silicon Valley–based enterprise affiliated with the Crescent Dunes Solar Energy Project, a Nevada company that received a $737 million loan guarantee in September. Solar Reserve, as it turns out, is an “investment partner” with the Pacific Corporate Group, which happens to be run by Ron Pelosi, brother-in-law of House Minority Leader Nancy Pelosi (D., Calif.).
In his new book, Throw Them All Out, Hoover Institution fellow Peter Schweizer chronicles the breathtaking cronyism that has characterized President Obama’s entire “green jobs” agenda, noting that four out of every five “green” energy companies to receive taxpayer support were “run by or primarily owned by Obama financial backers.” Schweizer continues: “In the 1705 [a section of the Energy Policy Act of 2005] government-backed-loan program, for example, $16.4 billion of the $20.5 billion in loans granted as of Sept. 15 went to companies either run by or primarily owned by Obama financial backers — individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party.”
For the companies on the receiving end of this taxpayer funding, Schweizer writes, “political largesse is probably the best investment they ever made in alternative energy.”
American taxpayers, on the other hand, have far less to speak of for the “investments” made on their behalf. And they have people like Steve Spinner and Steve Mitchell to thank for it.
— Andrew Stiles is the Franklin Center’s 2011 Thomas L. Rhodes Journalism Fellow.
EDITOR’S NOTE: This article has been amended since its initial posting.