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Energy Sec. Chu Takes The Fall for Solyndra Loan
Steven Chu (Photo Credit: AP)

Energy Sec. Chu Takes The Fall for Solyndra Loan

"I did not make any decision based on political considerations"

WASHINGTON (AP) -- Energy Secretary Steven Chu said Thursday that no one from the White House ever contacted him to make a political decision on a half-billion-dollar loan to a California solar company that later went bankrupt.

Testifying under oath on a widening controversy, Chu said he was unaware of his staff predictions in 2009 that Solyndra was likely to face severe cash-flow problems. He said that market changes which led to a steep decline in the price of solar panels were "totally unexpected."

Solyndra went belly-up after getting the $528 million loan from the government, and Chu told the House Energy and Commerce Committee that he made all decisions involving the loan to the solar-panel manufacturer. He said he made all judgments regarding Solyndra with the best interests of the taxpayer in mind.

Chu also said he doesn't expect taxpayers will recover much of the money lost in the transaction.

The secretary's position before the committee was that politics played no role in the decisions on the loan, despite emails and other documents released by panel that revealed some pressure from the administration on Solyndra to delay an early round of layoffs until after the 2010 elections. Other documents showed that campaign donor George Kaiser was involved in discussions about the loan program.

"I want to be clear: Over the course of Solyndra's loan guarantee, I did not make any decision based on political considerations," Chu said. He was facing sharp questions in the biggest showdown so far in the energy panel's nine-month investigation of Solyndra.

Still, according to Politico, in response to a question during his actual testimony about whether he would approve the loan if he knew then what he knows now, he would do things differently:

“Certainly knowing what I know now, we’d say no,” Chu said during a hearing in the House Energy and Commerce Oversight and Investigations Subcommittee. “But you don’t make decisions [by] fast-forwarding two years in the future and then go back. I wish I could do that.”

That said, he wouldn't apologize:

Earlier, Chu declined to apologize for the failure of the California solar company.

“Based on what you know and what’s happened, who has to apologize” for Solyndra? Energy and Commerce Chairman Fred Upton (R-Mich.) asked Chu.

“It is extremely unfortunate what has happened to Solyndra,” Chu replied, adding, “Was there incompetence? Was there any undue influence? I’d have to say no.”

Chu denied he was influenced by a major Obama campaign donor, George Kaiser, an Oklahoma billionaire who invested $400 million in the solar company through an investment vehicle connected to a family foundation. Kaiser has said he played no part in helping Solyndra win the 2009 loan, but emails released last week show he discussed Solyndra with the White House on at least one occasion. Kaiser also directed business associates on how to approach the White House and Energy Department to help Solyndra deal with its financial problems.

Chu told lawmakers he did not know who Kaiser was when the loan was approved. He says he is aware of Kaiser now, in the wake of media reports about Kaiser's investment in Solyndra.

Rep. Joe Barton, R-Texas, said he found it hard to believe that Chu did not know who Kaiser was, since Kaiser was an Obama financial "bundler" who visited the White House frequently in 2009, while the Solyndra loan was being considered.

"Everybody and their dog at DOE knew who he was. He was there at the White House 16 times," Barton said of Kaiser.

In a joint statement, Reps. Fred Upton of Michigan and Cliff Stearns of Florida said at the outset Thursday that they intended to find out how decisions were made to guarantee and lend more than $500 million to Solyndra. Upton chairs the energy panel while Stearns heads a subcommittee on investigations.

"We want to find out why the administration restructured the loan after Solyndra had reached a technical default, and how they explain putting private investors in line ahead of taxpayers," the pair said. "And we need to understand how all the warnings, from inside and outside the Department of Energy, were ignored and this risky bet was allowed to happen."

Chu said his decision to approve the loan was based on the analysis of experienced professionals and on the strength of the information they had available to them at the time.

"The Solyndra transaction went through more than two years of rigorous technical, financial and legal due diligence, spanning two administrations, before a loan guarantee was issued," he said. "Based on thorough internal and external analysis of both the market and the technology, and extensive review of information provided by Solyndra and others, the (Energy) Department concluded that Solyndra was poised to compete in the marketplace and had a good prospect of repaying the government's loan."

Chu also took responsibility for a later decision to approve a restructuring of Solyndra's debt that allowed two private investors to move ahead of taxpayers for repayment in case of default

The Energy Department faced a difficult decision in late 2010 and early this year, he said: Force Solyndra into immediate bankruptcy or restructure the loan guarantee to allow the company to accept emergency financing that would be paid back first if the company was still unable to recover.

"Immediate bankruptcy meant a 100 percent certainty of default, with an unfinished plant as collateral. Restructuring improved the chance of recovering taxpayer money by giving the company a fighting chance at success," Chu said.

Although both options involved significant uncertainty, Chu said he made the judgment that restructuring was the better option to recover the maximum amount of the government's loan. The decision also meant continued employment for the company's approximately 1,100 workers, he said.

Chu said it was worth noting that U.S. taxpayers remain first in line for repayment of the initial loan and noted that private groups invested nearly $1 billion in the company.

Solyndra faced another crisis in August, Chu said. This time, after consulting with outside analysts, he decided that the U.S. should not provide additional support to Solyndra. Days later, the company filed for bankruptcy.

While disappointed, Chu said the U.S. should continue to support clean energy.

"When it comes to the clean energy race, America faces a simple choice: compete or accept defeat. I believe we can and must compete," he said.

Solyndra was the first renewable-energy company to receive a loan guarantee under the 2009 stimulus law, and the Obama administration frequently touted the company as a model for its clean energy program. Chu attended a 2009 groundbreaking when the loan was announced, and President Barack Obama visited the company's Fremont, Calif., headquarters last year.

Since then, the company's implosion and revelations that the administration hurried a review of the loan in time for the September 2009 groundbreaking has become an embarrassment for Chu and Obama and a rallying cry for GOP critics of the administration's green energy program.

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