House to probe government loan programs after Solyndra collapse

Sep 20 2011 - 5:51pm

WASHINGTON -- Rep. Darrell Issa, R-Calif., chairman of the House Oversight Committee, said that he plans to launch an investigation into government loan programs, in response to the implosion of solar equipment maker Solyndra, which got a $535 million federal loan guarantee in 2009.

Solyndra was the first recipient of a loan guarantee under a program authorized by the Bush administration in 2005 and beefed up under President Barack Obama's stimulus act. But in the past few weeks, the company has shuttered its operations, laid off nearly all of its 1,100 workers and filed for Chapter 11 bankruptcy protection.

The Federal Bureau of Investigation and the Energy Department's Inspector General have launched investigations of the company, raiding its offices in Fremont, Calif., and the homes of their executives. The Treasury Department is looking into the role one of its units -- the Federal Financing Bank -- played in the debacle. In the end, the bank lent Solyndra $527 million.

Congressional Republicans pounced on the scandal, asserting that the program did not perform the necessary due diligence for the Solyndra guarantee. They have alleged that the lax oversight may have been due to the fact that the largest investor in Solyndra has ties to an Obama donor, George Kaiser.

The House Energy and Commerce Committee has held a hearing on Solyndra in which administration officials testified, and plans to hold another on Friday, which Solyndra's top executives are expected to attend. Kaiser denies that he ever spoke to the administration about the Solyndra loan guarantee.

Speaking on C-SPAN on Tuesday morning, Issa said government loan programs might be "unfixable," although Solyndra is the only one of the nearly four dozen companies to get guarantees under the Energy Department program to go bankrupt. (Another company delayed its initial public offering.)

"There's been this attitude that the government can step in and give money and pick winners and losers," Issa said. "And we see that as a backdoor easy way to end up with government corruption."

A year ago, however, Issa seemed to support government loan guarantees, at least to the nuclear industry, which includes the San Onofre plant in his district. In an April 18, 2010, op-ed in the San Diego Union-Tribune, Issa called for government help, including loan guarantees, to a nuclear industry he contended had been hamstrung by the environmental movement.

"That this kind of political obstruction could again end up destroying investments in nuclear power makes it necessary for federal loan guarantees to backstop potential private sector investments to restart nuclear energy development," he wrote.

Republican leaders of the House Energy and Commerce Committee also sent a letter to Energy Secretary Steven Chu expressing concern about additional loan guarantees the program is scheduled to decide upon before the end of the month, when the program expires. The letter questions whether the program would have time to perform the necessary due diligence on the applications and asked for a response by Friday.

Meanwhile, Solyndra executives will invoke their Fifth Amendment right not to answer questions during a Friday hearing before a House investigative committee, their attorneys said Tuesday.

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