The Washington Post reports:
Energy Department officials were warned that their plan to help a failing solar company by restructuring its $535 million federal loan could violate the law and should be cleared with the Justice Department, according to newly obtained e-mails from within the Obama administration.
The e-mails show that Energy Department officials moved ahead anyway with a new deal that would repay company investors before taxpayers if the company defaulted. The e-mails, which were reviewed by The Washington Post, show for the first time concerns within the administration about the legality of the Energy Department’s extraordinary efforts to help Solyndra, the California solar company that went bankrupt Aug. 31.
But the Energy Department didn’t go to the Office of Legal Counsel for advice (which saved them the trouble of ignoring their conclusions). Instead they went with an in-house attorney that produced the demanded result:
An Energy spokesman, Damien LaVera, said agency officials had listened to Treasury’s advice to consult the Justice Department on the loan restructuring but felt it was appropriate to move forward. “Ultimately, DOE’s determination that the restructuring was legal was made by career lawyers in the loan program based on a careful analysis of the statute,” he said.
By the way, the statute seems quite clear:
(3) SUBORDINATION.—The obligation shall be subject to the condition that the obligation is not subordinate to other financing.
I don’t see the wiggle room by which the DOE lawyer turned “is not” into “can be”.
POSTSCRIPT: The Washington Post story has another revelation too. A key administration official pushed for the Solyndra loan despite being recused for a conflict of interest:
[Steve] Spinner came from Silicon Valley to serve as a senior adviser on the loan program, and his wife was a lawyer with Wilson Sonsini, the law firm representing Solyndra in its application. Despite an ethics agreement under which he said he would recuse himself from Solyndra’s loan application, correspondence shows that Spinner defended the company, worked to get the president or vice president to visit its factory, and pushed for a final decision on approving the company’s loan.
“How [expletive] hard is this?” Spinner wrote to a career staffer on Aug. 28, 2009, asking for answers about final approval from an OMB official. “What is he waiting for? Will we have it by the end of the day?”
In an Aug. 19, 2009, e-mail, an aide to then-White House Chief of Staff Rahm Emanuel asked Spinner if he could discuss any concerns among the investment community about Solyndra.
Spinner dismissed the idea that Solyndra had financial problems. “I haven’t heard anything negative on my side,” he said. . .
Spinner is now a fellow at the Center for American Progress, a Democratic think tank.