Wednesday, September 14, 2011

Obama's crony capitalism

The Washington Post has an above-the-fold story about how the White House pressured the OMB to rush its review of the Solyndra loan so that Joe Biden could make an announcement in time for the company's groundbreaking ceremony. They were pressing the OMB to speed through their due diligence in order for a nice photo-op.
The August 2009 e-mails, released to The Washington Post, show White House officials repeatedly asking OMB reviewers when they would be able to decide on the federal loan and noting a looming press event at which they planned to announce the deal. In response, OMB officials expressed concern that they were being rushed to approve the company’s project without adequate time to assess the risk to taxpayers, according to information provided by Republican congressional investigators.

Solyndra collapsed two weeks ago, leaving taxpayers liable for the $535 million loan.

One e-mail from an OMB official referred to “the time pressure we are under to sign-off on Solyndra.” Another complained, “There isn’t time to negotiate.”

“We have ended up with a situation of having to do rushed approvals on a couple of occasions (and we are worried about Solyndra at the end of the week),” one official wrote. That Aug. 31, 2009, message, written by a senior OMB staffer and sent to Terrell P. McSweeny, Biden’s domestic policy adviser, concluded, “We would prefer to have sufficient time to do our due diligence reviews.”

White House officials said Tuesday that no one in the administration tried to influence the OMB decision on the loan. They stressed that the e-mails show only that the administration had a “quite active interest” in the timing of OMB’s decision.
Yeah, sure. That's not how the OMB perceived the pressure.
In one e-mail, an OMB staff member questioned whether the review team was using the best model for determining the financial risk to taxpayers in evaluating the Solyndra deal.

“Given the time pressure we are under to sign-off on Solyndra, we don’t have time to change the model,” the staffer wrote....In one e-mail, an assistant to Rahm Emanuel, then White House chief of staff, wrote on Aug. 31, 2009, to OMB about the upcoming Biden announcement on Solyndra and asked whether “there is anything we can help speed along on OMB side.”

An OMB staff member responded: “I would prefer that this announcement be postponed. . . . This is the first loan guarantee and we should have full review with all hands on deck to make sure we get it right.”

In another message, a White House staff member wrote that officials were “walking a fine line with Solyndra needing to begin notifying investors to fly in” for the groundbreaking. It stressed that “this OMB piece” of the review was not final and pointed out that if word of the groundbreaking leaked to the public prematurely, that would “leave us in an awkward place.”
Of course, Solyndra has now declared bankruptcy and the administration has left the taxpayers on the hook waiting behind the Obama bundler to get money out of the failed company. Obama will have trouble explaining this whole story away given this paper trail plus all the nice videos of those photo ops of Obama officials praising themselves for sending taxpayer money to Solyndra.
The e-mails also raise questions about whether the administration should have foreseen financial trouble. In August 2009, e-mail exchanges between Energy Department staff members pointed out that a credit-rating agency predicted that the project would run out of cash in September 2011. Solyndra shut its doors on the final day of August.
Yeah, but we know that the Obama administration doesn't respect those pesky appraisals from cred-rating agencies.

UPDATE: ABC is also reporting on the evidence of Obama administration's involvement of pushing the loans to Solyndra.
Newly uncovered emails show the White House closely monitored the Energy Department's deliberations over a $535 million government loan to Solyndra, the politically-connected solar energy firm that recently went bankrupt and is now the subject of a criminal investigation.

The company's solar panel factory was heralded as a centerpiece of the president's green energy plan -- billed as a way to jump start a promising new industry. And internal emails uncovered by investigators for the House Energy and Commerce Committee that were shared exclusively with ABC News show the Obama administration was keenly monitoring the progress of the loan, even as analysts were voicing serious concerns about the risk involved. "This deal is NOT ready for prime time," one White House budget analyst wrote in a March 10, 2009 email, nine days before the administration formally announced the loan.

"If you guys think this is a bad idea, I need to unwind the W[est] W[ing] QUICKLY," wrote Ronald A. Klain, who was chief of staff to Vice President Joe Biden, in another email sent March 7, 2009.
This is what happens when you have divided government. The Republicans are pushing forward with this investigation and then feeding their findings to major media outlets like ABC and the Washington Post. Do you think any of this would be done if Pelosi still controlled the House?

Jennifer Rubin explains why this is such a dangerous story for the Obama team.
The story is a dangerous one for the Obama administration for multiple reasons. First, it is in fact the quintessential crony capitalism story that personifies the unseemly conflict of interests that arise between pols and donors. Second, it highlights the absence of business acumen in the administration. This is its idea of how government “creates” jobs? Third, the initial White House response, that it was totally hands-off, was a lie. That’s never a comfortable place for the White House. And finally, it provides fodder to the Tea Party Republicans who have been railing about this sort of behavior for some time and now have further grounds for criticizing the permanent political class.

This may not be Obama’s biggest problem, but it’s getting up there. At a time when he’s cajoling Congress to spend more money for the benefit of political allies (e.g. teachers unions) it’s legitimate to ask: Can we trust the administration to spend our money?
Expect the Republicans to hang Solyndra around Obama's neck just as the media hung Enron around Bush's neck. Remember that there was no evidence that Bush or his administration had interfered with Enron's collapse. Here we have plenty of evidence of Obama's administration's involvement shoveling money to a company headed by a big Obama fund-raiser. Obama is going to have a hard time answering why his administration pushed for loan guarantees for a company just as they were being warned by experts that this wasn't a good deal. And there will be video accompaniment of Obama or Biden praising the company to pound home that media message. It's a story that is easy to understand, not like the corruption surrounding Fannie and Freddie which are actually much bigger scandals. This one is easy to understand and we have Obama on video personifying his crony capitalism.

5 comments:

2421Rich said...

Ironic,isn't it?


In their rush to make Obama look good they run roughshod over the Energy Departments caution in doing their job properly. So in their desire for a quick photo op, (and rewarding a supporter,)they end up with a situation where they have wasted tons of taxpayer money and look, at best, like a bunch of inept fools! They just have no appreciation for murphy's law, imagining that the "one" is above such mundane effects. Or maybe they just really are just inept fools!

pumping-irony said...

Fools, crooks, tomato, tomahto...

John A said...

Solyndra fit this Administration almost perfectly, except it actually had a shippable product.

Otherwise, it set its price-per-unit well above (by about 400%) what the market would actually pay, and sold prospects (such as the Administration) on the price they set. This over-statement is at the very least reminiscent of so much of the approach of this Administration it is quite natural objections went unheard.

Then it actually went on sale, and, surprise! It had to be sold for about (slightly under) cost. This might have been OK if the business plan included, as anyone opening a new restaurant or other business could explain, losses for a year or so while a customer base and word of the product spread - but as with the Administration (and far too much of Congress) benefits were assumed to be immediate and problems non-applicable or non-existent.

tfhr said...

I wonder if Al Gore bought any Solyndra stock?

Pat Patterson said...

It's only crony capitalism when it's the the other guys cronies that are getting all the capital.