OBAMA ADMINISTRATION SUBORDINATED TAXPAYERS TO TWO HEDGE FIRMS IN SOLYNDRA LOAN GUARANTEE

WASHINGTON, JUNE 6, 2012 – The House today approved by a vote of 348 to 60 the amendment offered by Rep. Cliff Stearns (R-FL) that prohibits the Department of Energy (DOE) from using any funds included in this bill to subordinate any loan obligation to other financing in violation of the Energy Policy Act of 2005.  Said Stearns, “As the Chairman of the Energy and Commerce Committee’s Subcommittee on Oversight and Investigations, I have led the investigation into the Obama Administration’s rushed decision to loan Solyndra $535 million in taxpayer money that was ultimately lost.  During this investigation, we learned that DOE went out of its way to subordinate this $535 million of taxpayer money. Subordination gave private investors priority over the taxpayers so that in the event of bankruptcy private investors would be paid back before taxpayers.”

The Stearns’ amendment was adopted during consideration of H.R. 5325, the Energy and Water Appropriations Act of 2013, which funds DOE.  “The Energy Policy Act of 2005 states that DOE loan guarantees are not to be subordinate to other financing and it was the clear intent of Congress that taxpayers should be reimbursed first,” added Stearns, “In a 17-page draft memo, DOE's private attorneys seem to acknowledge that the law prohibits the subordination of department-guaranteed loans. It is clear that at every step of the way, DOE ignored the law and did whatever they could to push through the subordination.  Although this amendment will prevent future subordination by DOE, I believe that Energy Secretary Chu should step down for his failures with Solyndra and other projects.  This vote on my amendment was a referendum on Chu’s decision to violate the law and the intent of Congress to protect the taxpayers above outside interests.”  In addition, Stearns is working on comprehensive legislation to further protect taxpayers and to prevent future abuses in the loan guarantee program.”