Today embattled Energy Secretary Steven Chu finally ended his silence and took personal responsibility for the controversial Soyndra loan amid congressional charges that he may have violated federal laws. At the contentious hearing he repeatedly said he was unaware of many governmental emails and reports that warned Solyndra was a bad bet.
Chu testified under oath before a key House Energy and Commerce oversight subcommittee. He asserted “the final decisions on Solyndra were mine” and that “I did not make any decision based on political considerations.”
Chu said that knowing what he knows today about Solyndra, he “would not have approved” the Solyndra loan. He said he did not know how much money taxpayers would recover from the Solyndra bankruptcy but added “not very much.”
Chu claimed that the $535 million loan guarantee was not awarded because of the company’s ties to George Kaiser, a major donor for the president’s 2008 political campaign.
He said some additional DOE green loans may be in “financial trouble,” but under repeated questioning by the panel’s chairman he refused to give a specific number.
A Republican congressman charged that the secretary’s decision to change the Solynra loan terms at the last minute violated federal law. The change by Chu, called subordination, waived U.S. government rights as a first tier creditor to recover money during the Solyndra bankruptcy.
Prior to today’s hearing some lawmakers have called for Chu’s resignation.
Chu emphasized that upon entering office he was ordered to “get the loans out” and he authorized “the most promising” companies. Solyndra was the first recipient of Obama’s ambitious $37 billion green technology funding. The California company was touted by the White House as a solar energy winner. President Obama and Vice President Joe Biden personally hailed the company.
Chu said he did not know Kaiser, a prominent 2008 Obama campaign donor, was tied to Solyndra. Rep Barton (R-TX) retorted he was surprised Secretary Chu did not know since “everyone else in DOE” knew about Kaiser’s relationship. Kaiser has personally visited the White House 16 times since President Obama assumed office. He defended himself that no one at the White House “pressured” him to approve the loan.
However, the secretary equivocated about White House communications to him under questioning by Rep Marsha Blackburn (R-TN).
The secretary said that the department had set aside nearly $10 billion “to cover potential losses in our total loan portfolio” for DOE’s green energy loan program and that there were “inherent risks of funding new and innovative technologies.”
Chu came into office as Energy Secretary in January 2009. Solyndra was the first recipient approved by the secretary, by March of that year.
He said the first time he was aware Solyndra “was in deep trouble” was in 2011. The White House Office of Management and Budget, Treasury Department and the outside firm of Price Waterhouse wrote earlier warning reports about Solyndra. Chu said he was unaware of the warnings.
An internal DOE staff analysis also forecast that the company would run out of money in September 2011. Chu said he was not aware of this staff report. He testified that he was focused on “getting it (loans) out of the door.”
Solyndra did shutter its doors in September of this year. He said he accepted the statements of Solyndra investors that the company predicted it “would be in the black in 2011.”
Chu said that it was normal to have had a high $10 million run rate per week. The company has been described as spending money lavishly.
He also said that putting taxpayers on the hook for at least $75 million with a DOE restructuring of the Solyndra loan “was appropriate.” He said the restructuring, called “subordination,” was fair. He acknowledged that he did know of a blistering Treasury Department analysis that condemned the procedure.
Chu said that he approved the restructuring of the loan to allow the company to complete its factory even though his own staff objected to the restructuring. He overruled them and instead sought outside consulting advice which supported the restructuring.
Democratic Rep. Gene Green (D-TX) said he was disturbed by the DOE restructuring of the loan and that the language of the law seems clear prohibiting DOE from refinancing the loan. Rep. Barton called Chu’s approval of the loan restructuring “tortured interpretation of the law.”
He said no one at DOE should be held accountable for the Solyndra bankruptcy, as many could not anticipate global markets that underpriced the cost of solar cells. The solar industry has complained that foreign companies, especially China, were undercutting American solar energy companies.
In an opening statement Rep. Cliff Stearns, chairman of the House subcommittee on Oversight and Investigations, said two of Chu’s first three loans have resulted in bankruptcies “and the president and our Democratic colleagues just hug and say ‘Hey, sometimes things don’t work out.'”
Rep. Fred Upton (R-MI), chairman of the full Energy and Commerce committee, charged that “the number of red flags about Solyndra that were raised along the way — many from within DOE — and either ignored or minimized by senior officials is astonishing.” He said the committee will “get to the bottom of why taxpayers are now on the hook for a half billion dollars.”
Democratic Rep Henry Waxman (D-CA) said he did not think Secretary Chu had done anything wrong and that the issue was a “distraction.”
The hearing lasted for more than four hours. Most Republicans stayed throughout the hearing. Most Democrats left the hearing after the first round of questions.