TREASURY OFFICIAL WITH 28 YEARS OF EXPERIENCE TESTIFIES NO SUCH INSTANCE

WASHINGTON, OCT. 14, 2011 – During today’s Solyndra hearing, Rep. Cliff Stearns (R-FL), Chairman of the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations, said about the Department of Energy’s (DOE’s) decision to restructure the Solyndra loan, “Under the new arrangement, two primary investors in Solyndra, Argonaut and Madrone Capital, were given priority over the government (subordinating taxpayers) with respect to the first $75 million recovered in the event of liquidation.  I and other members of this Subcommittee have continuously questioned the legal basis for this unprecedented decision.  Section 1702(3) of the Energy Policy Act of 2005 clearly states in plain language that when DOE makes a loan, ‘the obligation shall be subject to the condition that the obligation is not subordinate to other financing.’”

Stearns sought testimony from Treasury officials due to emails released by the White House that included this from Assistant Secretary of Treasury, Mary Miller, in August of 2011, “[Treasury’s] legal counsel believes that the statute and the DOE regulations both require that the guaranteed loan should not be subordinate to any loan or other debt obligation…”

Chairman Stearns asked one witness, Gary Burner, Chief Financial Officer, U.S. Department of the Treasury Federal Financing Bank, “So, in your experience of 28 years plus being the Chief Financial Officer, have you ever heard of taxpayers’ money being subordinate to outside commercial firms?”  Burner responded, “No sir, I have not.”

In addition, during his questions Stearns clarified that this case did not involve a loan guarantee to a commercial bank; instead DOE issued a loan guarantee to the U.S. Treasury, which provided the funds to DOE for Solyndra.  Treasury simply printed $535 million and gave it to Solyndra via DOE.

Regarding the emails from Treasury, Stearns said, “I have never seen anything like this in all my years in Congress.  Here we have one cabinet level agency concerned that another has broken the law and taxpayers are on the hook for half a billion dollars as a result.”

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