Oversight and Investigations Subcommittee Hears from Energy Secretary Chu in Ongoing Solyndra Investigation
WASHINGTON, DC - The House Energy and Commerce Oversight and Investigations Subcommittee, chaired by Rep. Cliff Stearns (R-FL), today held a hearing with Energy Secretary Steven Chu to discuss the failed Solyndra loan guarantee. Members questioned the review and approval of the $535 million loan guarantee, specifically pressing the Secretary to explain why the administration ignored the clear warning signs that accurately predicted the deal was a bad bet for taxpayers.
"We have been methodically investigating the circumstances surrounding Solyndra's failure for nine months now and have followed the facts every step of the way," said Stearns. "Our goal is to determine why DOE and the administration tied themselves so closely to Solyndra, and why they were so desperate to repeatedly prop this company up. Why did DOE make these bad decisions, and what can we do to prevent such a waste of taxpayer dollars in the future? But as our investigation has unfolded, many more questions have emerged about the loan guarantee to Solyndra, the subsequent restructuring and subordination of the taxpayer's money, and the extent of the White House's involvement."
Chairman Fred Upton said, "At every opportunity, Solyndra and DOE officials, including Secretary Chu, publicly assured the American people that Solyndra was on track and would eventually thrive, right up until the time that Solyndra declared bankruptcy. They continued telling this story even when they clearly should have known it was not the case. DOE was receiving financial reports showing that Solyndra was bleeding cash and going bankrupt. DOE also failed to mention that, behind the scenes, they were continually taking extraordinary steps to keep Solyndra on financial life support."
During the hearing, members questioned the legal justification for the restructuring of the loan and the decision to subordinate the first $75 million recovered in the event of a liquidation to two Solyndra investors -a move that put the interest of private investors ahead of taxpayers. According to a preliminary legal analysis prepared for the Department of Energy by outside counsel, subordination of the loan guarantee was prohibited under the 2005 Energy Policy Act. DOE chose not to have the legal analysis finalized, instead developing an internal justification that was finalized only after the restructuring had been agreed to. Moreover, members noted, DOE points only to an email from outside counsel commenting on DOE's internal analysis; DOE did not receive any formal written legal analysis supporting the loan restructuring from outside counsel or any other federal agency. Members called on the Justice Department to investigate the secretary's actions, which appear to be in violation of the law.
Although members gave him numerous opportunities, the secretary never did offer an apology to the taxpayers, or say who should apologize, for the loss of half a billion dollars. He compared the company's bankruptcy to a natural disaster, stating, "Fundamentally, this company and several others got caught in a bad tsunami."
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