Hearing, Concern DOE Violated Law in Restructuring Solyndra Loan

Press Release

Hearing To Examine Treasury Department’s Concern DOE Violated Law in Restructuring Solyndra Loan

Documents Obtained During the Eight-Month Investigation Reveal DOE had Rebuffed Treasury’s Repeated Concerns in Solyndra Mess

October 13, 2011

WASHINGTON, DC – The Subcommittee on Oversight and Investigations will hold a hearing on “Continuing Developments Regarding the Solyndra Loan Guarantee” this Friday, October 14, 2011, at 9:30 a.m. in room 2123 of the Rayburn House Office Building. The committee recently learned that the Treasury Department was concerned that the Department of Energy’s restructuring of the Solyndra Loan in early 2011 was in violation of the law. Despite the plain letter of the law, DOE allowed Solyndra’s investors to be moved to the front of the line for the first $75 million in the event of Solyndra’s bankruptcy. Last Friday, committee leaders sent a letter to the Treasury Department seeking information and documents about the agency's involvement with the loan and its concerns. Treasury officials will offer testimony at tomorrow’s hearing.

Oversight and Investigations Subcommittee Chairman Cliff Stearns made the following statement:

“Our thoughtful and deliberate investigation continues Friday as we’ll hear Treasury officials elaborate on their concern that DOE violated the law in restructuring the Solyndra loan. For one cabinet level agency to suggest another is engaged in illegal activity is a startling development, and American taxpayers who are on the hook for the half billion dollar Solyndra bust deserve answers.

“The documents that the White House dumped last Friday reveal a disturbing prevalence of wealthy donors and bundlers littered throughout the loan guarantee process, with direct access to the President's West Wing inner circle. And now, allegations of political influence and impropriety involving other loan recipients are rampant. It is a topic we do not take lightly and are working to find out if Solyndra is just the tip of the iceberg. After failing to respond to our September 20th request, we also have asked Secretary Chu for a second time to provide financial details and DOE communications on every loan guarantee. We are still waiting for answers.

“Regarding last minute requests to have DOE testify tomorrow, I would note that when Jonathan Silver – the recently departed DOE official behind the restructuring – testified on September 14th, Democrats were conspicuously mum on DOE’s violation of the law. We will have many questions for DOE officials at an appropriate time very soon as there is great cause for alarm on a wide range of issues.”

TREASURY BACKGROUND
On August 17, 2011, Department of the Treasury Assistant Secretary for Financial Markets Mary J. Miller sent an email to Jeffrey D. Zients, Deputy Director of OMB, in which she stated that “[s]ince July of 2010, Treasury has asked DOE for briefings on Solyndra’s financial condition and any restructuring of terms. The only information we have received about this has been through OMB, as DOE has not responded to any requests for information about Solyndra.”

Further, Assistant Secretary Miller also questioned whether DOE’s decision to subordinate its interest in Solyndra to Solyndra’s investors was proper, stating “[o]ur legal counsel believes that the statute and the DOE regulations both require that the guaranteed loan should not be subordinate to any loan or other debt obligation. The DOE regulations also state that DOE shall consult with OMB and Treasury before any ‘deviation’ is granted from the financial terms of the Loan Guarantee Agreement. In February, we requested in writing that DOE seek the Department of Justice’s approval of any proposed restructuring. To our knowledge, that has never happened.”

The hearing is open to the public and press. Opening statements, witness testimonies, and a live webcast will be available online HERE.

A background memo on the hearing can be found HERE.