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Public Statements

No More Solyndras

Statement

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Date:
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Earlier this year, J.P. Morgan Chase lost more than $4.4 billion in bad trades. CEO James Dimon was widely criticized and hauled in front of the Senate Banking Committee in a public hearing. Four of the top bank officials involved in the trades were forced out and Dimon himself may still fall.

Last year, the Department of Energy-backed Solyndra declared bankruptcy. Taxpayers lost $535 million. Just last week, Abound Solar in Colorado suspended operations. They had borrowed $43 million from the Department of Energy. When the Executive Director of the loan program was called in front of a Congressional committee, he called the program an "enormous success."

When the private sector loses money on investments, heads typically roll. While occasional losses may be tolerated, epic failure is punished. Secretary of Energy Steven Chu continues to serve and there is little indication that the White House will ask for his resignation. The bureaucrats who approved the loan and the administration staff who pushed for it continue in their jobs.

J.P. Morgan Chase certainly lost a lot of money. However, it was shareholders of the bank that lost out. The stock price went down and the dividends won't be as great as they may have been in the past. In fact, the bank will weather this storm quite nicely.

In the second quarter, the same period as the huge losses, J.P. Morgan Chase reported $5 billion in earnings, $1.21 per share. The bank's stock is still up for the year. In other words, they took a hit, but still came out ahead.

Contrast this with the federal government. Every single tax-paying American lost money when these loans failed. We are not all required to invest in J.P. Morgan Chase, but try to tell the IRS that you don't want to invest in any more shaky solar companies. You're likely to get an audit and some jail time if you don't pay your taxes on time.

Unlike J.P. Morgan Chase, the federal government is not turning a profit. In fact, the government is borrowing unprecedented amounts of money. We're now into the fourth year of a deficit greater than $1 trillion.

Banks and investment firms that make bad loans eventually declare bankruptcy. When that happens, investors lose out. For a big bank, the pain may be widespread, but still limited.

However, when governments go bankrupt, the suffering is spread out among all citizens.

It is never a good time for the government to be losing money on poor investments. When deficits are sky-high, it's even worse. Our debt is climbing swiftly toward 100 percent of annual gross domestic product and is already above the level where economic growth is restrained.

When J.P. Morgan Chase loses their investors billions of dollars, they have to admit that they made a mistake. When government bureaucrats lose taxpayer money, they call it a success. This is just simply wrong.

It's time to end the DOE loan program and protect the American taxpayer from further losses. I'm a cosponsor of the new No More Solyndras Act, a bill introduced by my Energy and Commerce Committee colleagues Chairman Fred Upton (R-MI) and Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-FL).

This legislation winds down the mismanaged loan program and makes sure that the taxpayer is paid back before private investors. As Solyndra was beginning to lose money, the DOE rewrote the terms of their loan so that private investors would be paid back first in event of a bankruptcy. This may have helped the company talk a few more investors into giving them money, but it didn't save them. Ultimately, it means that the taxpayer is unlikely to see a dime after Solyndra's assets are sold and creditors are paid off.

DOE issued a convoluted legal justification in order to ignore the plain letter of the law barring them from placing anyone in front of taxpayers. The No More Solyndras Act strengthens these provisions to ensure that the DOE has no more loopholes.

Government bureaucrats will never be good investors. In the private sector, losses mean that heads roll. In the government, money-losing officials keep their job and call a failure a success. Let's leave venture capitalism to private individuals risking their own money.


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