A sign at the entrance to the headquarters of bankrupt Solyndra LLC is shown in Fremont
A sign at the entrance to the headquarters of bankrupt Solyndra LLC is shown in Fremont, Calif. Reuters

In December, the U.S. Department of Energy learned that Solyndra was violating its federal loan deal, technically defaulting on its $535 million loan; the department, however, changed the loan terms in order for the solar company to continue receiving taxpayer funds, federal officials confirmed Wednesday.

Solyndra executives, who had been awarded the $535 million government-backed loan to increase solar-panel production, confessed to the Energy Department late last fall that the company, based in Fremont, Calif., was running out of money and at risk of liquidating.

Under the terms of the loan, the company was supposed to pay $5 million into a special reserve fund, something it was not able to do, The Washington Post reported.

Hill Republicans Ask: Why Was Solyndra Helped?

Congressional investigators - and Republicans --- alike have questioned why President Barack Obama's administration agreed to help the company in late 2010 when the risk of collapse was given as a warning. Federal reviewers estimated, initially, that by allowing Solyndra to go under in December 2010, taxpayers would save $168 million, internal e-mails show. But the administration chose to resuscitate the flailing company.

On Wednesday, Energy Department Spokesman Damien LaVera said the agency knew Solyndra had violated the loan terms, but agreed to change the requirement to keep them afloat. Initially, the agency required Solyndra to make six installments of $5 million each, to start in December, to create a $40 million cash cushion for problems.

Instead, on Aug. 31, Solyndra laid off 1,100 workers without warning, shut down the business and filed for bankruptcy. Days later, the FBI executed search warrants of the Solyndra headquarters, as part of a criminal probe. On Sept. 20, U.S. Rep. Darrell Issa, R-Calif., said his committee plans to investigate government loans programs to private companies, investigating whether inappropriate dealings between the White House and failed energy company Solyndra took place.

I want to see when the president and his cronies are picking winners and losers ... it wasn't because there were large contributions given to them, the chairman of the Oversight and Government Reform Committee said Tuesday morning on C-SPAN.

The committee will be looking to see if members of Congress or White House staff improperly chose companies eligible for subsidized government loans based on their ability to give campaign donations, Issa said.

Criticism by Republicans, who allege that the Obama administration exerted improper influence to the aid of both companies, has left Obama defending himself. Solyndra's sudden collapse has left Republicans and conservatives alike placing the blame squarely on the Obama administration's shoulders, saying it is the one to blame for Solyndra's loan approval.

An Accusation of Crony Capitalism in White House

Solyndra's downfall puts a spot light on the kind of taxpayer-funded cronyism this White House said it would eliminate, said Republican National Committee Chairman Reince Priebus in a statement. After bundling tens of thousands of dollars for President Obama and his campaign, company officials were granted at least 20 visits to the White House and had Energy Department officials sitting in on company board meetings. Before taxpayers are forced to spend another dime of stimulus money, the White House must explain why they were so reckless the first time around.

House Republicans also say they have e-mails showing the White House pressuring Department of Energy professionals to expedite the loan approvals, although the White House has argued that nothing improper happened.

According to The Hill, Republicans have also said the White House pressured an Air Force general to revise testimony before a closed congressional hearing to aid LightSquared. Apparently, e-mails between the company and the White House mention that the company's CEO would be attending Democratic fundraisers in Washington; administration officials reportedly met with executives from the company the same day CEO Sanjiv Ahuga wrote a $30,400 check to the Democratic National Committee.

Company, White House Deny Influence-Peddling

Both the company and White House have denied any influence-peddling. And while Issa did not accuse the White House of wrongdoing, he suggested that government loan programs tempt corruption.

This is another reason that crony capitalism ... is dangerous, because they're going to pick winners that they ideologically, or in some cases because they support their candidacy, want to see win, Issa said.

The congressman also said that he does not want to limit the investigation to the Obama administration and the companies, but rather expand it to see whether congressmen were also exerting influence on the bureaucracy.

We see that as a backdoor, easy way to end up with corruption in the government, Issa said.