Obama Loan Official Resigns as Solyndra Scandal Widens

Thursday, 06 Oct 2011 04:59 PM

By Newsmax Wires

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The embattled director of the controversial loan program that approved a $535 million taxpayer guarantee to bankrupt solar firm Solyndra is stepping down, the Energy Department confirmed Thursday.

Jonathan Silver, head of the Loan Programs Office, plans to join the organization Third Way as a "distinguished visiting fellow."

The move comes as GOP Congressional investigators are looking into the department's handling of the Solyndra agreement. Obama officials were warned about potential problems with the company as it sought government help, according to documents that have emerged over the last few weeks.

Energy and Commerce Committee Chairman Fred Upton, R-Mich., and Oversight and Investigations Subcommittee Chairman Cliff Stearns, R-Fla., said the resignation resolves nothing in the widening scandal.

“Mr. Silver’s resignation does not solve the problem," Upton and Stearns said in a joint statement. "We are in the midst of the Solyndra investigation and just days removed from Mr. Silver’s mad rush to finalize the last $4.7 billion in loans before the statutory deadline."

"Just this past Monday, the president declared the loan guarantee program sound and said that it was to be expected that one company like Solyndra could fail. But today the president changed his tune, stating, ‘The nature of these programs are going to be ones in which, you know, for every success there may be one that does not work out as well.’"

"Does the Obama administration now expect that half of these companies will fail? American taxpayers are already on the hook for the half billion dollar Solyndra bust — what other shoes does this administration expect to drop?”

Solyndra declared bankruptcy last month and laid off its 1,100 workers in a move that embarrassed the White House after Obama had touted the company as a model for success. The FBI and the GOP-led House Energy and Commerce Committee launched investigations into the company.

Silver presided over what is the largest ever U.S. investment to commercialize clean-energy technologies, allocating more than $35 billion in government-backed loans for energy projects in less than two years.

The agency in early 2011 decided to help keep the company afloat with a restructuring. It did this by allowing some of Solyndra's investors to be paid back ahead of the government in the event of a liquidation of its assets, the Wall Street Journal reported.

Republicans have questioned whether that decision complies with federal law. The Obama administration has defended it, with Silver saying it was the best bet for taxpayers at the time because the company had not yet finished building its factory.

Despite the firm's failure, President Obama defended the vetting and said Thursday the loan guarantee program overall has been successful and has created jobs. Energy Secretary Steven Chu said in a statement that Silver's departure was expected.

Chu said Silver told him in July that he planned to return to the private sector soon after Sept. 30, when the loan program expired, Fox News reported.

"Since he joined the Department in November 2009, Jonathan assembled and managed a truly outstanding team that has transformed the program into the world leader in financing innovative clean energy projects. Under his leadership, the loan program has demonstrated considerable success, with a broad portfolio of investments that will help American companies compete in the global clean energy market," Chu said. "Because of my absolute confidence in Jonathan and the outstanding work he has done, I would welcome his continued service at the Department, but I completely understand the decision he has made."

Silver joined the department in November 2009, two months after the Solyndra loan guarantee was finalized. Solyndra, which later went bankrupt and is now under multiple investigations, ended up being lent $528 million in taxpayer money.

Obama said Thursday that lending by nature is inherently risky. At a wide ranging news conference, Obama said his administration knew that some companies participating in the loan guarantee program started under the Bush administration would fail.

"There were going to be some companies that did not work out; Solyndra was one of them," he said. "But the process by which the decision was made was on the merits, it was straightforward."

Obama argued that the U.S. must continue to guarantee loans for clean energy companies to compete with Chinese subsidies that compel companies to move offshore.

"We're going to have to keep pushing hard to make sure that manufacturing is located here, new businesses are located here and new technologies are developed here," he said. "And there are going to be times where it doesn't work out, but I'm not going to cave to the competition when they are heavily subsidizing all these industries."

Obama's comments came as the House panel expanded its investigation to include a request for all emails between the White House and the company since January 2009, when Obama took office.

Several documents already released show administration officials had been concerned about the company’s finances. The committee this week also released more emails that showed the Energy Department was considering giving Solyndra a second $469 million loan in the summer of 2010 despite the company's deteriorating financial situation.

Asked about the warnings his administration received, Obama said projects in the loan guarantee program that have succeeded also faced doubts in the marketplace.

"So I mean there's always going to be a debate about whether this particular approach to this particular technology is going to be successful or not," he said. "And all I can say is that the Department of Energy made these decisions based on their best judgment about what would make sense."

Asked to respond to reports that the $38 billion loan guarantee program that promised to save or create 65,000 jobs only produced 3,500, Obama said that historically businesses that rely on new technologies are "going to take awhile before they get takeoff."

"Keep in mind that clean energy companies are competing against traditional energy companies," he said, adding that traditional energy is still cheaper, but running out and polluting the environment.

"And we know that demand is going to keep on increasing, so that if we don't prepare now, if we don't invest now, if we don't get on top of technologies now, we're going to be facing 20 years from now, China and India having a billion new drivers on the road, the trend lines in terms of oil prices, coal, et. cetera, going up, the impact on the planet increasing. And we're not just going to be able to start when all heck is breaking loose and say, 'Boy, we better find some new energy sources.'"

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