Sep 27, 2011 1:09 PM GMT
The Obama Administration seems to have a very novel definition of the word "success" in this case.
Treasury chief Timothy F. Geithner and others were worried that the selection process for federal loan guarantees fell short and raised the risk that funds could be going to the wrong firms.
Reporting from Washington— 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.
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.
Energy Secretary Steven Chu, also at the meeting, had a different view. Under pressure from Congress to speed up the loans, he wanted less scrutiny from the Treasury Department and the Office of Management and Budget, or OMB.
The divisions foreshadowed a question that has emerged since Solyndra's bankruptcy: Was the program's vetting process thorough enough? The disagreements also spotlighted an issue that has confronted Obama since he took office: What is the appropriate role of the government in stimulating the private marketplace?
Skeptics, noting that taxpayers could now be on the hook for $527 million the federal government loaned Solyndra, said the administration would have been better off making greater use of market incentives, not individual company loan guarantees.
"It was completely predictable that there would be a colossal failure among the bets," said one person familiar with the internal debate.
Defending the program as an overall success, administration officials say that the $17 billion in loan guarantees now on track to go to 30 companies will help double renewable energy generation in Obama's first term.