Last week, the House Energy and Commerce Subcommittee on Oversight and Investigations heard testimony from top Treasury officials regarding the department’s role in the Solyndra loan scandal. More hearings are planned as investigators continue to shift through documents provided (reluctantly) by the Obama administration.
The most notable piece of evidence unveiled last week was a memo authored by the DOE legal counsel defending the controversial decision to prioritize private inventors ahead of taxpayers with respect to the first $75 million recovered in Solyndra’s liquidation. But while it sheds some light on DOE’s dubious rationale in this case, the revelation appears to raise more questions than it answers. Here is a look at a few of the questions Republican investigators will hope to answer in the coming weeks and months:Who was involved in the decision to restructure Solyndra’s loan agreement?
At a previous committee hearing, Jonathan Silver, the former head of the DOE loans programs, told members under oath that he would provide them with a list of all the individuals involved in the decision to subordinate taxpayers in the restructuring agreement. Silver has since resigned
. The committee is still interested in speaking to the people involved in the decision, particularly Susan Richardson, the chief counsel of the loans program who wrote the authorizing memo.
Energy secretary Steven Chu has already assumed responsibility for approving the restructuring agreement, and the committee certainly hopes to hear from him at some point as well. The most pressing question, though, remains the extent to which the White House was involved in the decision. E-mail evidence already suggests the White House was rather aggressive in pressuring the Office of Management and Budget to rush its approval of Solyndra’s initial $535 million loan guarantee. Given President Obama’s connections to George Kaiser, the Oklahoma billionaire whose family foundation (through investment arm Argonaut Ventures) was one of the private investors receiving preferential treatment in the loan restructuring — not to mention the political capital Obama himself had invested by making Solyndra a “green jobs” posterchild — it is certainly reasonable to ask whether the White House exerted any undue pressure on DOE officials. An e-mail among Treasury staff on Aug. 28, 2011, just days before Solyndra filed for bankruptcy, paints a disturbing picture:
I think DOE should be thinking through whether the proposed deal is just giving the investors more time to extract more value from the firm before bankruptcy . . . in which case it’s clearly in the investors’ interest regardless of the firm’s prospects.
Which brings us to the next question.
Why did DOE repeatedly ignore concerns from Treasury and OMB regarding the legality of the loan restructuring? As early as December 2010, just as DOE was entering negotiations to restructure Solyndra’s loan agreement, senior OMB officials were questioning the legality of the decision to subordinate taxpayers to private investors. The Energy Policy Act of 2005 stipulates that loan guarantees approved by DOE “shall be subject to the condition that the obligation is not subordinate to other financing.” In other words, the taxpayer comes first. In an e-mail dated Dec. 15, 2010, a senior OMB official raised doubts about DOE’s creative interpretation of the statute. “I think they have stretched this definition beyond its limits,” the official wrote.