Energy Secretary and ranking Democrats defend Solyndra loan
WASHINGTON (Legal Newsline) - Energy Secretary Steven Chu refused to apologize to taxpayers, or say who should apologize, for the loss of a half-billion dollars over his department's loan guarantee to the failed California solar cell company Solyndra.
Chu, who appeared before a hearing of the House Energy and Commerce Oversight and Investigations Subcommittee on Thursday, compared the company's bankruptcy to a natural disaster.
"Fundamentally, this company and several others got caught in a bad tsunami," he said.
Republican committee members questioned the $535 million loan, specifically asking Secretary Chu to explain why the administration ignored warning signs that accurately predicted the deal was not in the taxpayers' interest.
"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 committee chairman Rep. Cliff Stearns, R-Fla.
"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."
Chu was also asked about the legal justification for the loan's restructuring and the decision to subordinate the first $75 million recovered in the event of 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.
Most Democrats on the committee defended the loan and criticized their Republican counterparts.
Ranking member Rep. Henry Waxman, D-Calif., told the committee, "There's no scandal, there's nothing there."
But Waxman's Democrat colleague, Rep. Gene Green, D-Texas, echoed the complaints of Republicans about Chu restructuring the loan so that newer investors were repaid before taxpayers.
Rep. Marsha Blackburn, R-Tenn., expressed dismay that Chu claimed he knew so little about this loan.
"I find it troubling that there was so much you weren't aware of," she said to Chu.