In my opinion, in subordinating the loan guarantee, DoE acted illegally. Subordination is the process by which private financiers were put in line in front of the taxpayers should Solyndra go bankrupt, as it did.
Congressman Morgan Griffith (R-VA) issued the following statement today after Secretary of Energy Steven Chu’s testimony before the House Energy and Commerce Subcommittee on Oversight and Investigations. The Department of Energy (DoE) was responsible for approving the $535 million Solyndra loan guarantee as well as the later $75 million subordination, which put the American taxpayers in second place behind private investors in line to recover assets.
“In my opinion, in subordinating the loan guarantee, DoE acted illegally. Subordination is the process by which private financiers were put in line in front of the taxpayers should Solyndra go bankrupt, as it did.
“One would think the value of a company’s assets would be a primary concern during this subordination decision. Nonetheless, Secretary Chu could not give me an idea of the value of Solyndra’s manufacturing facility or the value of the patents/intellectual property the company owned. If DoE doesn’t know the value of assets that could be recovered today in this situation, how could it have been in the taxpayers’ best interest to subordinate last February? DoE received concerns about the legality of subordination from the Department of Treasury and the Office of Management and Budget. Treasury even went so far as to recommend that DoE consult with the Department of Justice before taking action related to the subordination.
“When DoE considered subordination in December 2010, $95 million of the loan guarantee had yet to be dispersed. If DoE had allowed Solyndra to go bankrupt then, the taxpayers would not be on the hook for that $95 million or put in second place for the $75 million that was subordinated. In essence, a $170 million mistake with taxpayer money was made in a failed attempt to save Solyndra. It doesn’t look like the taxpayers will see much, if any, of that money again.”
