Officials at the Treasury Department, meanwhile, were arguing that at the very least DOE ought to consult Treasury, OMB, and the Department of Justice “before any ‘deviation’ is granted from the financial terms of the Loan Guarantee Agreement.” In an e-mail dated Feb. 14, 2011, just days before the restructuring was finalized, Gary Burner, chief financial officer of the Federal Financing Bank (an arm of Treasury) raised the issue with Frances Nwachuku, the director of portfolio management for the DOE loans program:
Unless DOE has other authorities, these adjustments may require approval of the Department of Justice pursuant to 31 USC 3711 and 31 CFR Part 902. Unless other authorities exist, this statute rests with DOJ the authority to accept the compromise of a claim of the U.S. Government in those instances where the principle balance of a debt exceeds $100,000.
Nwachuku wrote back that Burner’s concern was based on a “gross misunderstanding” of the restructuring agreement. In his testimony before the committee last week, Burner told members that he had never, in 28 years of experience at the Treasury Department, witnessed a federal loan agreement that subordinated taxpayers to private investors. “It would have been wise for [DOE] to go to the DOJ,” he said.
In fact, Treasury officials were raising these concerns as recently as August 2011. Mary Miller, assistant secretary for financial markets at Treasury, explained in an Aug. 17, 2011, e-mail to OMB deputy director Jeffrey Zients that DOE had failed to acknowledge Treasury’s repeated requests. “While I expect that DOE has a view about why loan subordination can occur without DOJ approval or Treasury consultation, I wanted to correct any impression that we have acquiesced in the steps to date,” Miller wrote. That same day, another senior Treasury official wrote Zients, “reiterating our current understanding that the authority to approve a potential restructuring resides with the Department of Justice.”
What is the administration trying to hide? Granted, this is exactly what Solyndra investigators have been trying to figure out since Day One, but the suspicions keeps piling up. First of all, the White House is refusing to turn over all the documents that Republicans have requested, including any Solyndra-related messages President Obama might have received on his BlackBerry. Not exactly living up to his pledge that “transparency will be the hallmark of my administration,” but it’s hardly the first example.
A DOE memo justifying the subordination of taxpayers to private investors was not provided as part of the House subcommittee’s initial request for documents from DOE and the White House relating to the Solyndra loan. Instead, it was turned over by OMB following a subpoena from the committee, after which DOE checked again and “found” the document, as well as an earlier draft dated a month prior to the release of the official copy.
The draft copy, submitted on Jan. 19, 2011, is addressed to Secretary Chu as a “Memorandum for the Secretary.” However, the subsequent final version is not addressed to Chu, but is labeled instead a “Memorandum for the General Council.” Rep. Lee Terry (R., Neb.) said he was perplexed as to why this was the case. It seemed likely, Terry argued, that it was done deliberately, in an effort to absolve Chu of his involvement in a dubiously reasoned legal opinion.
House Republicans plan to hold another hearing in the coming weeks and hope to hear from DOE officials. They’ll be looking for answers.
— Andrew Stiles is the Franklin Center’s 2011 Thomas L. Rhodes Journalism Fellow.