Solyndra faces House subcommittee hearings
Solar energy equipment maker Solyndra Inc., reeling from a recent bankruptcy filing and FBI raids last week on its Bay Area office and executives’ homes, faces a public and probably embarrassing reckoning before a House subcommittee.
The hearings Wednesday are the latest step by the House Energy and Commerce Committee and its oversight arm to push an investigation it launched in February into the Energy Department’s decision to give Solyndra a $535-million loan guarantee under the American Recovery and Reinvestment Act.
The committee wants to explore, in particular, questions about whether the loan from the $787-billion stimulus fund was granted because of Solyndra’s financial ties to a major Democratic fundraiser, George Kaiser.
“We smelled a rat from the onset,” said Rep. Fred Upton (R-Mich.), the committee’s chairman. “As the highly celebrated first stimulus loan guarantee awarded by the DOE, the $535-million loan for Solyndra was suspect from Day One.
“Our investigation to protect American taxpayers has revealed that in the rush to get stimulus cash out the door, despite repeated claims by the administration to the contrary, some bets were bad from the beginning.”
The committee has insisted that the White House has been reluctant to turn over information about any role it might have played in the decision to lend to the Fremont, Calif., company.
Top Obama administration staff and Solyndra executives are expected at Wednesday’s hearings. They include Jeffrey Zients, deputy director of the White House Office of Management and Budget; Jonathan Silver, head of the Energy Department’s loan programs; Brian Harrison, Solyndra’s chief executive; and W.G. “Bill” Stover, its chief financial officer.
The administration’s critics couldn’t have asked for better ammunition in their attacks on the White House than the Solyndra scandal.
Many Republicans have argued that federal backing of clean energy technology is a waste of money and a clear example of government picking business winners and losers. The committee, however, does not oppose tax breaks to fossil fuel companies that critics say subsidize that sector.
In January, the committee drew up a list of priorities that included close scrutiny of the Obama administration’s clean energy programs.
Kaiser, an Oklahoma billionaire who was a major fundraiser for Obama in 2008, has denied that he invested in Solyndra or that he participated in talks for the federal loan. The Energy Department has said that Solyndra applied for the loan under the Bush administration.
The FBI declined to comment on the raid and investigation.
President Obama visited a Solyndra plant in May 2010 to herald it as “leading the way toward a brighter and more prosperous future,” just after a market analyst issued a report raising questions about the company’s financial condition and whether it could continue as a “going concern.”
Subsequently, Solyndra seemed to experience one stumble after another.
It shelved an initial public offering of stock in June 2010. It replaced its chief executive and founder, Chris Gronet, a month later. It canceled a plant expansion and closed an older facility last fall.
By January, more market analysts had questioned the company’s viability. By late August Solyndra had suspended its operations and laid off 1,100 employees. The company filed for Chapter 11 bankruptcy a week ago, and two days later the FBI raided its offices as part of a joint investigation it was conducting with the Energy Department’s inspector general’s office.
Among the problems Solyndra faced was that it was rolling out pricier new technology at a time when Chinese manufacturers, usually subsidized by their government, had sharply driven down the prices of solar equipment.
Solyndra’s downfall has helped to turn up the Republican rallying cry to cut state subsidies to clean technology. That the loan to Solyndra was part of the administration’s stimulus package has also fed the Republican argument that the federal effort to goose the economy was a failure.
Republican National Committee Chairman Reince Priebus on Monday used the Solyndra implosion to dismiss Obama’s latest effort to prod the economy.
“With the president traveling the country touting his Stimulus II plan, it is important to understand the lessons from his first stimulus,” Priebus said. “A year ago, he made Solyndra the supposed poster child for stimulus success.
“After laying off 1,100 workers, wasting over $500 million in loan guarantees and becoming the subject of an FBI investigation,” he said, “Solyndra is now the prime example of stimulus failure.”
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