The House Energy and Commerce Subcommittees on Energy and Power and Oversight and Investigations today held a joint hearing to discuss a draft of the "No More Solyndras Act." Energy and Commerce Committee Chairman Fred Upton (R-MI) and Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-FL) co-authored the legislation to ensure taxpayers will never again be left on the hook for the administration's risky bets.
The committee leaders offered the legislation after conducting an extensive oversight investigation of the failed Solyndra loan that uncovered a series of wrongdoings by the Obama administration in its management of the loan guarantee program. The "No More Solyndras Act" will effectively terminate the administration's loan guarantee program by prohibiting the Department of Energy from issuing any loan guarantees for applications submitted after December 31, 2011. The legislation will also provide taxpayers with strong new protections for already pending participants, including increased due diligence, new transparency requirements, and the prohibition of taxpayer subordination.
In support of the draft legislation, Upton stated, "The Obama administration's gross mismanagement of the loan guarantee program necessitates the phase out of the Title XVII loan guarantee program. With the bankruptcies starting to pile up, our message to American taxpayers is clear: There will be No More Solyndras."
Fellow coauthor Stearns stated, "Today marks a turning point in our investigation. We gather to consider a bill that will fix the problems we uncovered during our investigation. The Solyndra investigation, and the introduction of the "No More Solyndras Act,' is a great example of how Congressional oversight should work: ask tough questions, collect all the facts, identify problems, and offer legislative solutions."
David Frantz, Acting Executive Director of the DOE Loan Programs Office, was presented with the facts of the string of bankruptcies that have plagued the loan guarantee program and yet somehow he declared it an "enormous success." During questioning, Energy and Power Subcommittee Chairman Ed Whitfield (R-KY) more aptly described the program as a "total failure," pointing out that under Section 1705, DOE's Loan Guarantee Office has awarded over $16 billion in loan guarantees, amounting to $13,738,075 per permanent job. Whitfield also asserted that the federal government should not be handing out millions of dollars to well-financed companies when the federal debt is totaling over $16 trillion and millions of Americans remain out of work.
Members also expressed great frustration over DOE's decision to restructure the loan after Solyndra's bankruptcy and put wealthy investors at the front of the line ahead of taxpayers. While the plain letter of the law prohibits subordination, or putting any interests before those of the U.S. taxpayer, DOE formulated a convoluted legal justification in order to move forward with the restructuring anyway. In response to questions about this subordination of taxpayer dollars, Frantz stated repeatedly, "hindsight is much more valuable than foresight."
Rep. Steve Scalise (R-LA) grilled Frantz over the legal authority of the department to put investors ahead of taxpayers, pointing to documents and emails uncovered by the committee's investigation showing DOE was repeatedly warned against taking such action.
Rep. Mike Pompeo (R-KS) elaborated on the importance of the "No More Solyndras Act." Pompeo expressed that the only way to fix the problems of the loan guarantee program is to eliminate it completely, stating, "The government shouldn't be in this business in the first instance."
David Kruetzer from the Heritage Foundation summed up the multiple failures of the loan guarantee program, stating, "The Section 1705 loan guarantee program is based on a flawed understanding of capital markets. The loan guarantees misallocate capital, reduce productivity, and burden federal finances."