Bush-era loan chief ‘probably would have made the same decision’ on Solyndra

The director of the Energy Department’s loan programs under former President George W. Bush said he likely would have backed the controversial restructuring of the now-bankrupt solar company Solyndra’s federal loan package, which has become a focal point for Republicans attacking the Obama administration’s handling of the financing.

“I’m glad I wasn’t in that chair to get that call. From what I know of the facts right now I probably would have made the same decision,” said Walter Howes, who directed the loan guarantee office during the Bush administration, in an interview with Platts Energy Week TV that aired Sunday.

Republicans investigating the Obama administration's handling of Solyndra's $535 million loan guarantee granted in 2009 have alleged the deal was rushed for political reasons.

They have also zeroed in on the loan’s restructuring in early 2011, when the company was struggling to stay in business.

The revision put private investors — who agreed to pitch in an additional $75 million — ahead of taxpayers for repayment if the company collapsed.

But Howes, echoing current Energy Department officials, said the decision to keep Solyndra afloat when it was nearing collapse was the best option, even though the company ultimately went belly-up anyway.

“It was probably a good gamble and it didn’t really put the government at a diminished position,” said Howes, who is currently a managing partner with Verdigris Capital, a private equity firm that according to Platts works with companies seeking loan guarantees.

Asked overall if the Energy Department had “botched” the Solyndra loan guarantee, he replied: “I think that would be an unfair assessment."

“If you look at DOE, best I can determine they have done nothing illegal, wrong, incorrect,” he said, arguing the department put in a “huge amount” of time and due diligence. Howes said a perfect storm of factors contributed to Solyndra’s collapse, such as competition from heavily subsidized Chinese companies.

The Energy Department loan guarantee program for advanced energy projects was established under a sweeping 2005 energy law. Solyndra applied for financing under the Bush administration but ultimately won Obama administration support under provisions in the stimulus law that expanded the loan program and funded it.

Howes, who also worked for the Energy Department during the Clinton administration, criticized the Bush administration’s handling of the loan office in the Platts interview. He said the administration was more interested in subsidies for the oil-and-gas industry than renewable energy, and put the loan guarantees “on ice.”

“It really went sideways for two years,” he said. “The wheels were turning but not much was happening ... they basically answered the mail but they didn’t do too much.”

The office did not issue any loan guarantees until Obama took office. Solyndra was the first approval announced and many others followed — including a conditional approval of a $8.3 billion guarantee for utility giant Southern Company to build two new nuclear reactors.