Kevin Lamarque/ReutersU.S. Energy Secretary Steven Chu testifies today during a House Energy and Commerce subcommittee hearing on the failure of solar panel maker Solyndra.
WASHINGTON – Energy Secretary Steven Chu told a House panel today that he was unaware of Fremont-based Solyndra's financial difficulties before he approved a $535 million taxpayer-funded loan to the now-bankrupt solar panel company.
Chu, speaking before the Republican-led House Energy and Commerce Committee's Oversight and Investigations Subcommittee, told lawmakers that he was first made aware of Solyndra's financial problems in late 2010, when Solyndra officials pleaded with the Department of Energy to restructure the firm's loan, saying they faced imminent closure.
Chu said he was unaware of a Department of Energy staff projection that Solyndra would run out of cash in September 2011 and a March 2010 warning from the company's auditor, PricewaterhouseCoopers, that Solyndra faced bankruptcy.
“Was I aware of it? I'm aware of it now,” Chu said in an exchange with Republican House members. Chu said that in hindsight, he would not have made the loan to Solyndra. “Certainly, knowing what we know now, we'd say no,” Chu said. “But you don't make decisions fast-forwarding two years in the future and then go back. I wish I could do that.”
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House Republicans on the committee quickly went on the attack.
“It's very disturbing to hear that this is the first you've been aware of many of these issues,” said Rep. Marsha Blackburn, a Tennessee Republican.
Rep. Cliff Stearns, a Florida Republican who leads the subcommittee, said, “It’s apparent that this administration put politics ahead of good stewardship of taxpayer dollars.”
He later told reporters that Chu should be fired.
Chu said the Energy Department “made a very difficult choice” by restructuring the loan in January 2011, saying that allowing Solyndra to continue completing its new factory, Fab 2, would give taxpayers a completed asset it could own should the company fail. On Aug. 31, Solyndra declared bankruptcy. The company shut its doors a week later, laying off more than 1,100 workers.
“We either had to stop the loan, which would put Solyndra into immediate bankruptcy, or focus on the path that could get the taxpayer the most money,” Chu said. “It was a difficult decision."
However, Chu admitted that it is likely “not very much” of taxpayers’ $528 million investment would be recouped once Solyndra's assets are auctioned off.
Republican members of the committee grilled Chu, the former head of the Lawrence Berkeley National Laboratory, during a four-hour hearing, punctuated by accusations of political favoritism. Democrats counterattacked, accusing Republicans of pursuing a made-up political issue to damage the Obama administration.
“I do not see you have done anything wrong here,” Rep. Henry Waxman, a California Democrat, told Chu while criticizing Republicans. “They are dancing on Solyndra's grave and manufacturing a scandal.”
Republicans focused on two issues: the subordination of taxpayers to private investors in the restructured loan and e-mails that allegedly showed Solyndra executives were pressured by Energy Department officials to keep quiet about impending layoffs until after the November 2010 Congressional elections.
GOP committee members accused the Energy Department of breaking a 2005 law that set up the loan program by restructuring Solyndra's guarantee so that private investors could recoup their funds before taxpayers. Chu said Energy Department legal counsel Scott Harris, who left the department earlier this year, said the subordination was legal.
“We believe there was no violation of the law,” Chu said.
Chu's answer left even some Democrats unimpressed.
"I don't know how you can get around (the language)," said Rep. Gene Green, a Texas Democrat.
Chu told House members on the panel: "I did not make any decisions based on political considerations. I don't think it’s a proper way to do business.”
Chu also denied meeting or having conversations with Oklahoma billionaire George Kaiser, a bundler for Barack Obama's presidential campaign who led Solyndra's biggest investor, Argonaut Private Equity.
Rep. Joe Barton, a Texas Republican, asked, “If there were no political considerations involved, who at DOE ordered Solyndra to delay the announcement of the layoffs?”
Chu said his general counsel's office is investigating.