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No More Solyndras Act

Floor Speech

By:
Date:
Location: Washington, DC

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Mr. STEARNS. I thank the distinguished chairman. And let me say that we are here this morning because the Oversight Committee, under the leadership of Mr. Upton, and myself as chair were able to define the problems.

Now, on that side of the aisle, they obviously are going to defend the administration. But you can't defend an administration that lost $535 million, and they did so in a way that violated the Energy Policy Act of 2005.

Now, the ranking member, Ms. DeGette, indicated that nothing was done wrong. I think if she looks carefully at the evidence, obviously, a lot was done wrong because the Energy Policy Act said you cannot subordinate taxpayers' money to the two hedge funds which they did in the case of the Solyndra loan.

And also, I think when you look at the evidence, you'll see that there's wholly mismanagement by the administration and the Department of Energy. And actually, there were so many warning signs that, in the end, this loan should have never gone forward. And these warnings came from the administration.

So, my colleagues, I rise in strong support of H.R. 6213, the No More Solyndras Act, which I am proud to join with Chairman Upton in sponsoring. And as mentioned, this is a culmination of 18 months of thorough investigation by our Subcommittee on Oversight and on Investigations.

Solyndra, as many of you know, was a California-based solar panel manufacturer that not only went bankrupt, but was also raided by the FBI a week later, and ultimately lost almost a half a billion dollars.

Now, my colleagues, this bill was systematically put together carefully. It will phase out the Department of Energy's grossly mismanaged loan guarantee program by simply stopping DOE from issuing any loan guarantees for applications submitted after December 31, 2011. But, for those applications submitted prior to the December 2011 cut-off date, the legislation allows them to remain eligible to receive a guarantee but subjects them to tougher, tougher scrutiny, and provides taxpayers strong new protections, including--let me outline these four basic protections.

(1) forbidding the subordination of U.S. taxpayers' dollars at any time to private investors;

(2) requiring the Department of Energy to submit to Congress a transparency report that details the specifics of any new loan program that is going to be guaranteed by our taxpayers;

(3) requiring the Department of Energy to first consult with Treasury prior to any restructuring of a guarantee; and

(4) holding DOE officials accountable for their actions by imposing penalties on them for failing to follow the law.

Certainly, the folks on this side of the aisle would agree, that if we have continued subordination and if these people do it in violation of this act, there should be some accountability.

As many of you know, Solyndra was the first recipient, as Mr. Upton mentioned, of a DOE loan guarantee under title XVII of the Energy Policy Act of 2005. It also holds the dubious title as the first stimulus-backed recipient of a DOE loan guarantee to actually go bankrupt just 2 years after the loan closed and 6 months after DOE restructured the loan. So it didn't take long for these folks to end up in bankruptcy. And when they were out of cash, the Obama administration doubled down on their bad debt.

Now, why would the administration double down on their bad debt? I think we'll go into that further as we get into this debate.

They attempted to restructure Solyndra's loan and subordinate the interest of the taxpayer to two very, very wealthy and well-connected investors, all but ensuring taxpayers will never, ever see a dime.

Other DOE loan recipients have also struggled. Three of the first five companies which received loan guarantees issued by DOE's Loan Guarantee Program--Solyndra, Beacon, Abound Solar--have all filed for bankruptcy, losing hundreds of millions of taxpayer dollars that will never, ever be recovered. Two other companies are struggling, my colleagues. Nevada Geothermal has substantial debt and no positive cash flow, and First Wind had to withdraw their planned IPO and also has substantial debt.

So, on behalf of the American taxpayers, we had a duty to figure out what went wrong with the Solyndra loan guarantee and whether the Loan Guarantee Program was properly managed. I think, as we go into this debate, we will show that it was not well managed.

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Mr. STEARNS. As pointed out by Chairman Upton, the investigation was methodical; it was systematic; it was thorough; and it was over an 18-month period. It took us almost 8 months after we issued a subpoena in November to try to even get the administration to respond.

The Energy and Commerce Committee requested, received and reviewed documents from every executive branch agency that was connected to Solyndra, and it interviewed more than a dozen administration officials who played key roles in the loan guarantee. The committee has also reviewed documents produced by Solyndra's investors, as well as by DOE's independent consultant and legal adviser.

As the committee's investigation revealed, the Obama administration put Solyndra's loan on a fast track for political reasons despite repeated red flags and warnings in 2009 from the Office of Management and Budget and DOE officials about the company's financial condition and, actually, about the market for the product they were trying to sell, which was that they couldn't do it. It's clear that DOE failed to adequately monitor the loan guarantee, blindly writing check after check to Solyndra as the company hemorrhaged cash throughout 2010.

When the warnings came to fruition and Solyndra was out of cash in the autumn of 2010, the Obama administration doubled down on its bad bet, restructuring Solyndra's loan in early 2011 and putting wealthy investors at the front of the line, ahead of taxpayers, which was a clear violation of the Energy Policy Act. Right up to the bankruptcy filing, my colleagues, the administration was willing to take extraordinary measures to keep Solyndra afloat for political reasons and ensure that the first loan, which was their poster child, would not be a failure.

The investigation also showed that DOE failed to consult with the Treasury Department, which was part of the law and which they should have done as required by the Energy Policy Act, prior to issuing a conditional commitment to Solyndra, and that Treasury didn't even play a role in reviewing the restructuring, which was also a violation of the Energy Policy Act of 2005.

The No More Solyndras Act will stop that, and it will correct this by ensuring that Treasury is actively involved in the loan process to protect taxpayers. This investigation and this No More Solyndras Act are great examples of how congressional oversight should work. Our investigation uncovered a problem, and this legislation will fix it.

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In closing, I would like to thank the staff of the Subcommittee on Oversight and Investigations, in particular, Todd Harrison, Karen Christian, Alan Slobodin, John Stone and Carl Anderson and my Legislative Director, James Thomas, for their dedication and hard work during this investigation.

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Mr. STEARNS. I would say to the dean of the House of Representatives, I appreciate sincerely his compliments and his kind words about me. The words he used by calling us Luddites, of course, refers to the 19th century textile workers who objected to the machinery being used.

I would really say to Mr. Dingell that he is Luddite because you folks are objecting to letting the free market work. Just because other countries subsidize their energy sector to diversify their portfolios doesn't mean that we should, too. In fact, you saw the editorial recently in The Wall Street Journal how the Chinese subsidize, and now all their solar panel companies are going bankrupt, too.

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