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September 29, 2011

Solyndra: An Update
Latest Revelations About Solyndra Make It Clear It’s Time For Obama To Take Responsibility For His $535 Million Failure
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OBAMA WAS PERSONALLY WARNED THAT THE DEPARTMENT OF ENERGY’S LOAN PROGRAM WAS NOT VETTING ITS LOANS, AND DID NOTHING
Obama Was Personally Warned About The Financial And Political Risks Of The Department Of Energy’s Loan Guarantee Program That Aided Solyndra. “Long before the politically connected California solar firm Solyndra went bankrupt, President Obama was warned by his top economic advisors about the financial and political risks of the Energy Department loan guarantee program that boosted the company's rapid ascent.” (Tom Hamburger, Kim Geiger and Matea Gold, “Obama Advisors Raised Warning Flags Before Solyndra Bankruptcy,” Los
Angeles Times, 9/26/11)

NEC Director Larry Summers And Treasury Secretary Tim Geithner Told Obama The Energy Department’s Loan Guarantee Program Wasn’t Rigorous Enough In Its Selection Process. “At a White House meeting in late October, Lawrence H. Summers, then director of the National Economic Council, and Timothy F. Geithner, the Treasury secretary, expressed concerns that the selection process for federal loan guarantees wasn't rigorous enough and raised the risk that funds could be going to the wrong companies, including ones that didn't need the help.” (Tom Hamburger, Kim Geiger and Matea Gold, “Obama Advisors Raised Warning Flags Before
Solyndra Bankruptcy,” Los Angeles Times, 9/26/11) 

Summers Thought The Government Would Wind Up Funding Flops. “Not everyone in the administration agreed. Summers doubted that the government could do this kind of lending well, according to industry and administration officials. He believed the government would end up funding projects that would have been built anyway or funding projects that flopped. He resisted efforts to move money fast.” (Steven Mufson And Carol D. Leonning, “Some Clean-Energy Firms Found US Loan-Guarantee Program A Bad Bet,” The
Washington Post, 9/26/11)

In Late 2010, Obama Advisors Drafted A Memo Urging Obama To Fix The “Broken Process” For Loan Approval. “In late October 2010, administration officials took their opposing views directly to Obama. In preparation, a memo was drafted by Summers, who remained wary of the program, and two others who were more supportive: then-energy advisor Carol Browner and Ron Klain, then chief of staff to Vice President Joseph Biden. The memo laid out their different concerns and options to fix a ‘broken process’ for getting loans approved.” (Tom Hamburger, Kim Geiger and Matea Gold, “Obama Advisors Raised Warning Flags Before Solyndra Bankruptcy,” Los
Angeles Times, 9/26/11) 

“After The Meeting, Officials Worked To Streamline The Process But Didn't Make Significant Changes.” (Tom Hamburger, Kim Geiger and Matea Gold, “Obama Advisors Raised Warning Flags Before Solyndra Bankruptcy,” Los Angeles Times,
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9/26/11)

SOLYNDRA GOT NUMEROUS CARVE OUTS FROM THE OBAMA ADMINISTRATION
Solyndra Received The Lowest Interest Rate Of Any DOE Loan From The Treasury Department. “The $535 million loan to Solyndra Inc., issued by the U.S. Department of Treasury's Federal Financing Bank, included a quarterly interest rate of 1.025 percent, the government bank reported in July. Of 18 Energy Department loans cited in the bank's report, Solyndra's rate was lowest.” (Ronnie Greene And Matthew Mosk, “'Connected'
Energy Firm Got Lowest Interest Rate on Government Loan,” iWatch And ABC News, 9/7/11)

The IRS Gave Solyndra Customers A 30 Percent Tax Deduction. “Solyndra, not only received a $500 million loan guarantee, it also got a favorable ruling from the IRS. According to ‘California Watch’ -- a unit of the Center For Investigative Reporting -- the IRS decision gave Solyndra's customers a 10-percent tax deduction and it was later increased to 30 percent.” (“Solyndra Got A Favorable Ruling From IRS,” KGO-TV, 9/27/11)

“And The Timing Of The Ruling, Just Weeks Before Getting The Stimulus Loan, Raises Questions About Whether The White House Pulled Strings For Solyndra, At Other Agencies.”
(“Solyndra Got A Favorable Ruling From IRS,” KGO-TV, 9/27/11)

AND SOLYNDRA WAS SPENDING LIKE THEY HAD AN ENDLESS WELL OF CASH
Former Solyndra Employees Saw “Questionable Spending.” “Former employees of Solyndra, the shuttered solar company that exhausted half a billion dollars of taxpayer money, said they saw questionable spending by management almost as soon as a federal agency approved a $535 million government-backed loan for the start-up.” (Carol D. Leonning And Joe Stephens, “Solyndra Employees: Company Suffered From Mismanagement, Heavy Spending,” The
Washington Post, 9/21/11)

Solyndra’s $733 Million Factory Had “Robots That Whistled Disney Tunes, Spa-Like Showers … And Glass-Walled Conference Rooms.” “When it was completed at an estimated cost of $733 million, including proceeds from a $535 million U.S. loan guarantee, it covered 300,000 square feet, the equivalent of five football fields. It had robots that whistled Disney tunes, spa-like showers with liquid-crystal displays of the water temperature, and glass-walled conference rooms.” (Alison Vekshin And Mark Chediak, “Solyndra’s $733M Plant Had Robots,
Spa Showers,” Bloomberg, 9/28/11)

“The Plant Features 19 Loading Docks, Four Electric Car Charging Stations In The Parking Lot And Landscaping Of Wild Grass And A Rock Garden.” (Alison Vekshin And Mark Chediak, “Solyndra’s $733M Plant Had
Robots, Spa Showers,” Bloomberg, 9/28/11)

“The Factory Stands As Emblematic Of Money Misspent.” “Amid the still-unfolding postmortems, the factory stands as emblematic of money misspent and the Field of Dreams ethos that seemed to drive the venture, said Ramesh Misra, a solar-industry analyst in Los Angeles for Brigantine Advisors.” (Alison Vekshin And
Mark Chediak, “Solyndra’s $733M Plant Had Robots, Spa Showers,” Bloomberg, 9/28/11)

“‘After We Got The Loan Guarantee, They Were Just Spending Money Left And Right,’ Said Former Solyndra Engineer Lindsey Eastburn.” (Carol D. Leonning And Joe Stephens, “Solyndra Employees: Company Suffered From
Mismanagement, Heavy Spending,” The Washington Post, 9/21/11) 

Eastburn: “Because Of That Infusion Of Money, It Made People Sloppy.” (Carol D. Leonning And Joe Stephens,
“Solyndra Employees: Company Suffered From Mismanagement, Heavy Spending,” The Washington Post, 9/21/11)

With The Loan Money Solyndra Built A “Seven-Acre Factory” And Bought Custom-Made Tools From A Dutch Company. “With the loan guarantee in hand, Solyndra built a second, seven-acre factory with 19 loading docks. As part of the expansion, Gronet and fellow managers hoped to cut costs by speeding up the automated assembly. To do so, they bought a custom-made assembly tool from VDL, a Dutch company. The company had never built that kind of equipment, but it promised the assembly tool would arrive in the
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summer of 2010.” (Carol D. Leonning And Joe Stephens, “Solyndra Employees: Company Suffered From Mismanagement, Heavy Spending,” The
Washington Post, 9/21/11)

Solyndra Decided It Did Not Want To Use Available Space, But Needed A New Factory. “‘There was available space that we talked about with them,’ Bob Wasserman, Fremont’s mayor, said in an interview. ‘It was their decision that they needed a new building. Was that a good decision? It didn’t turn out to be.’” (Alison Vekshin And Mark Chediak, “Solyndra’s $733M Plant Had Robots, Spa Showers,” Bloomberg, 9/28/11) The New Plant Was Built In “The Epicenter Of Some Of The Priciest Real Estate In The Country.” “Commercial real-estate agents in the region wondered why a new factory was being built in the Silicon Valley region, the epicenter of some of the priciest real estate in the country, where most new construction consists of office space.” (Alison Vekshin And Mark Chediak, “Solyndra’s $733M Plant Had Robots, Spa
Showers,” Bloomberg, 9/28/11)

IN 2010, SOLYNDRA DEFAULTED ON THEIR LOAN, AND BROKE THEIR AGREEMENT WITH THE GOVERNMENT
Solyndra Technically Defaulted On Its Government Loan In Late 2010, Violating Their Loan Agreement. “Solyndra LLC had such steep financial problems in late 2010 that the company violated terms of its loan-guarantee agreement with the Department of Energy and technically defaulted on its $535 million loan, according to people familiar with the matter.” (Deborah Solomon, “Solyndra Said To Have Violated Terms Of Its US Loan,” The Wall
Street Journal, 9/28/11)

Solyndra Failed To Pay A $5 Million Payment In December 2010. “The failed solar-panel maker, which is under numerous criminal and congressional investigations, ran so short of cash in December 2010 that it was unable to satisfy certain terms of its U.S. loan agreement, these people said. The agreement required Solyndra to provide $5 million in equity to a subsidiary building its factory but cash-flow problems prevented those payments.” (Deborah Solomon, “Solyndra Said To Have Violated Terms
Of Its US Loan,” The Wall Street Journal, 9/28/11)

Solyndra’s Default Only Raising More Questions About Obama’s Backing Of Solyndra. “It will likely add to questions surrounding the Obama administration's backing for the company even as its financial problems mounted.” (Deborah Solomon, “Solyndra Said To Have Violated Terms Of Its US Loan,” The Wall Street Journal, 9/28/11)

But The Obama Administration Ignored The Glaring Red Flags And Allowed Taxpayers To Take A Back Seat During The Loan Restructuring In 2011
Obama’s Department Of Energy Made The Decision To “Waive Its Privilege As First Creditor” In Solyndra Loan. “That decision in February gave Solyndra a temporary reprieve and a chance to survive, but it also forced the government to waive its privilege as first creditor in the event of a bankruptcy — which then occurred at the end of August.” (Matthew L. Wald, “Questions Raised Over Letting Another Lender Help A Failing Solar Company,”
The New York Times, 9/16/11)

And Allowed Taxpayers To Take A Backseat To An Investment Company Backed By An Obama Donor. “Complicating the politics of the situation for the Obama administration, part of the new loan came from Argonaut, the investment company backed by George Kaiser, an Oklahoma oil billionaire who is an Obama campaign contributor. Argonaut was already heavily invested in Solyndra, and provided another $69 million in cash in exchange for taking over $75 million that Solyndra was owed by its customers.” (Matthew L.
Wald, “Questions Raised Over Letting Another Lender Help A Failing Solar Company,” The New York Times, 9/16/11)

Even Though They Knew That It Would Cost Taxpayers More In The End If They Restructured Than If They Let Solyndra Go Under In January
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January 2011: Federal Reviewers Said It Would Be “Far Cheaper” To Not Restructure The Loan. “New records obtained by The Washington Post show that some federal reviewers warned internally earlier this year that it would be far cheaper for the government to allow Solyndra to shut down and sell off its assets, rather than to restructure the deal and bet on the company recovering.” (Carol D. Leonning And Joe Stephens, “Lawmakers
Question Solyndra Loan Decision,” The Washington Post, 9/14/11)

“A Preliminary Estimate By The Office Of Management And Budget In January Showed That Restructuring Solyndra Could Cost Taxpayers Up To $168 Million More Than Liquidation.” (Carol
D. Leonning And Joe Stephens, “Lawmakers Question Solyndra Loan Decision,” The Washington Post, 9/14/11)

OMB Staffers Warned That Restructuring Solyndra’s Loan Would Be “Throwing Good Money After Bad.” “OMB staff members had warned that the Energy Department’s restructuring of Solyndra’s loan might be throwing good money after bad, other e-mails show, and could cost taxpayers $168 million more than if Solyndra had liquidated in January.” (Carol D. Leonnig & Joe Stephens, “Obama Administration Emails: Giving More Taxpayer Money To
Solyndra Was Risky,” The Washington Post, 9/15/11)

OBAMA BUNDLER GEORGE KAISER MAY HAVE BEEN MORE INVOLVED IN SOLYNDRA THAN HE HAS LET ON
July 2009: Solyndra Agreed To Giving Tulsa – Kaiser’s Hometown – Preference For Its New Factory After Kaiser’s Foundation Invested In The Company. “A Solyndra regulatory filing suggests the $340 million invested in the company was viewed by the charity partly as a way to bring jobs to a city where Kaiser’s wealth has underwritten projects from parks to preschools. The company said that following a July 2009 financing involving Kaiser foundation funds, it agreed to give preference to Tulsa for a new factory.”
(David Mildenberg and Peter Robison, “Kaiser Charity Sought Solyndra Plant After Billionaire Founder Aided Obama,” Bloomberg, 9/26/11)

Kaiser In July 2009: “There’s never been more money shoved out of the government’s door in world history, and probably never will be again, than in the last few months and the next 18 months, and our selfish parochial goal is to get as much of it for Tulsa and Oklahoma as we possibly can.” (David Mildenberg and Peter
Robison, “Kaiser Charity Sought Solyndra Plant After Billionaire Founder Aided Obama,” Bloomberg, 9/26/11)

Kaiser: “We made multiple trips to Washington to tell the story in education, in health care and energy to the respective cabinet secretaries in each of those areas and almost all the key players in the west wing of the White House.” (David Mildenberg and Peter Robison, “Kaiser Charity Sought Solyndra Plant After Billionaire
Founder Aided Obama,” Bloomberg, 9/26/11)

George Kaiser’s Family Foundation Was Investigated By The Senate Finance Committee In 2005 For Its Use Of Tax Loopholes. “Six years ago, Senate Finance Committee investigators mounted an inquiry into an exotic variety of nonprofit organization that they feared affluent families were using to warehouse wealth while simultaneously earning themselves lucrative tax breaks. One nonprofit group singled out for scrutiny was a low-profile organization based in Tulsa. That group, the George Kaiser Family Foundation, later became the biggest investor in Solyndra, the solar company that collapsed last month after burning through a half-billion dollars in taxpayer money.” (Joe Stephens, “Investment In Failed Solar Firm Solyndra Raises Questions About
Nonprofit’s Purpose,” The Washington Post, 9/27/11)

“The Loophole Used By GKFF, The Memo Concluded, ‘Is Now Being Used By Wealthy Individuals To Avoid The Private Foundation Rules.’” (Joe Stephens, “Investment In Failed Solar Firm Solyndra Raises
Questions About Nonprofit’s Purpose,” The Washington Post, 9/27/11)

With Many Foundations, “Donors Retain A Great Deal Of Influence Over The Organizations And How They Invest.” “Opposition to the groups stem from the argument that in many cases donors retain a great deal of influence over the organizations and how they invest. Regulators and watchdog groups suspect that the wealthy often use the organizations more for tax planning than for any charitable purpose.” (Joe Stephens,
“Investment In Failed Solar Firm Solyndra Raises Questions About Nonprofit’s Purpose,” The Washington Post, 9/27/11)

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