Solyndra Bankruptcy Confirms $535 Million Loan Guarantee Was a Bad Bet for Taxpayers from the Beginning
WASHINGTON, DC - House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-FL) today responded to the news that Solyndra LLC, is immediately suspending its operations and filing for bankruptcy. The Energy and Commerce Committee has been investigating the Department of Energy's $535 million loan guarantee that was awarded to Solyndra in the spring of 2009. Over the last six months, Solyndra executives, lobbyists, and investors, as well as officials at the DOE and OMB repeatedly told Committee investigators that Solyndra was financially sound.
Committee Democrats have continually refused to cooperate, instead protesting investigative efforts at every opportunity. The Committee was forced to issue a subpoena on July 14, 2011, to the Obama Office of Management and Budget for documents related to approving the Credit Subsidy Costs of all DOE loan guarantees - every Democrat on the Oversight Subcommittee opposed issuing the subpoena.
Despite missing the subpoena's July 22, 2011, deadline, OMB has since produced, and continues to produce, hundreds of pages of documents relating to the Solyndra loan guarantee and the restructuring of that agreement just this year. The Committee expects OMB's continued and timely compliance with this subpoena.
Upton and Stearns released the following statement:
"We smelled a rat from the onset. As the highly celebrated first stimulus loan guarantee awarded by the DOE, the $535 million loan for Solyndra was suspect from day one. Our investigation to protect American taxpayers has revealed that in the rush to get stimulus cash out the door, despite repeated claims by the Administration to the contrary, some bets were bad from the beginning. And yet, despite the red flags and vocal concerns this Administration continued to tout Solyndra as a stimulus success story, going so far as to have the President visit the plant last summer.
"It is clear that Solyndra was a dubious investment, but DOE doubled down in March of this year and restructured the loan, possibly further increasing taxpayers' liability. That is a question we want answered. In this time of record debt such disregard for taxpayer dollars cannot be tolerated.
"For an Administration that parades around the banner of transparency, they fought us tooth and nail all summer long in turning over relevant documents related to the credit approval, and today we found out why. Committee Democrats have played politics, protesting our investigation every step of the way, and our issuance of a subpoena for OMB documents was a 14 to 8, straight party line vote.
But our investigation continues, and with Solyndra's bankruptcy we expect full and continued cooperation from the OMB, as we must ensure American taxpayers are not left holding the bag. Unfortunately, Solyndra is just the latest casualty of the Obama Administration's failed stimulus, emblematic of an economic policy that has not worked and will not work. We hope this informs the President ahead of his address to Congress next week."
Background on Stimulus Loan Guarantee Investigation
On February 17, 2011, committee leaders launched an investigation into DOE's use of stimulus funds, particularly the department's highly publicized $535 million stimulus loan guarantee awarded to Solyndra of Fremont, California. OMB is responsible for reviewing and approving the Credit Subsidy Costs of all DOE loan guarantees.
Since the loan guarantee was closed in September 2009, Solyndra had suffered a number of financial setbacks, including the cancellation of a planned public offering in June 2010 and repeated problems with cash flow. The firm had closed one of its factories, laid off workers, and postponed the expansion of the plant that had received the loan guarantee, resulting in the cancellation of a planned hiring spree that had been touted to include as many as 1,000 additional workers. The week of March 7, DOE modified Solyndra's loan guarantee and Solyndra announced a new $75 million loan from its existing investors in an effort to save the company by restructuring its outstanding debts and reducing costs.
Timeline of Energy and Commerce Committee Investigation
February 17, 2011 - Committee Leaders submit a letter to Energy Secretary Chu seeking documents and information about the $535 million loan guarantee that the DOE Loan Guarantee Program awarded Solyndra, Inc. DOE complies with the request.
March 14, 2011 - Committee Leaders submit a letter to OMB requesting key documents and information concerning the review of the Solyndra loan guarantee. A two week deadline is set.
March 17, 2011 - Subcommittee on Oversight and Investigations holds a hearing on DOE Recovery Act Spending.
March 28, 2011 - OMB fails to meet the Committee deadline.
June 7, 2011 - After weeks of back and forth, an in camera review takes place with Committee staff and OMB staff. OMB selected eight emails between OMB and DOE to make available to Committee staff, and refused to produce the rest of the emails or the agreed-upon internal OMB emails and documents.
June 23, 2011 - Oversight and Investigations Subcommittee Chairman Cliff Stearns responded in a letter to OMB after it refused to share requested documents by the Committee regarding the Solyndra loan guarantee investigation.
June 24, 2011 - The Subcommittee on Oversight and Investigations held a hearing regarding OMB's Role in the DOE Loan Guarantee Process. Sole witness Jeffrey Zients, Deputy Director of the Office of Management and Budget was a no show.
July 11, 2011 - Committee staff conduct a second in camera review. Committee staff asked OMB about the production of the other categories of documents sought by this Committee, specifically, OMB's internal communications and documents relating to Solyndra, and its communications with the White House. As the OMB had done for months, OMB staff refused to provide and answer about whether they would produce these materials, and instead maintained that the OMB-DOE communications sufficiently show whether or not OMB had has done its job with regard to Solyndra.
July 12, 2011 - Energy and Commerce Committee leaders announced the Subcommittee on Oversight and Investigations were to hold a business meeting on Thursday, July 14, 2011 to consider a motion authorizing the issuance of a subpoena for certain records of the Office and Management and Budget relating to the Department of Energy's issuance of a loan guarantee to Solyndra, Inc. on September 2, 2009.
July 13, 2011 - Oversight and Investigations Subcommittee Chairman Cliff Stearns wrote a letter to the Director of the Office of Management and Budget (OMB) to provide a final opportunity to avoid the issuance of a subpoena. OMB refused.
July 14, 2011 - The Subcommittee on Oversight and Investigations held a business meeting to consider the issuance of the subpoena. The Subcommittee voted to issue the subpoena 14 to 8.
July 15, 2011 - The subpoena is issued to OMB, setting a July 22, 2011, deadline.
July 22, 2011 - OMB fails to meet the subpoena's dealing. Oversight and Investigations Subcommittee Chairman Cliff Stearns informs OMB that they have failed to comply with the subpoena issued on July 15, 2011 regarding the Solyndra loan guarantee. Chairman Stearns requested that OMB produce the documents no later than 9:00 a.m. Monday, July 25, 2011.
July 25, 2011 - OMB fails to produce the documents by 9:00am deadline.
August 2011 - OMB agrees to produce all documents necessary to the Committee's investigation, with appropriate safeguards relating to proprietary information. Production continues.