Chu: No political considerations in Solyndra loan
Updated: 1:09 p.m. ET
Energy Secretary Steven Chu denied Thursday that political considerations were a factor in the Department of Energy's decision to move forward with a $535 million loan to Solyndra Inc., a now-bankrupt solar energy company, and argued that both he and Congress had been aware of the risks the company faced when the loan was approved.
Chu, testifying in a House Energy and Commerce subcommittee hearing, took responsibility for the approval of the loan to Solyndra, and the subsequent refinancing of that loan, but reiterated that the decision was made in the name of innovation -- not politics.
"As the Secretary of Energy, the final decisions on Solyndra were mine, and I made them with the best interest of the taxpayer in mind," Chu said in his opening remarks to the subcommittee. "I want to be clear: over the course of Solyndra's loan guarantee, I did not make any decision based on political considerations."
Chu, answering a series of at times combative questions from committee members, reiterated his belief in the importance of competing with countries like China, Canada and Germany "in a fierce global race" in the clean energy market. He stressed the "inherent risks of funding new and innovative technologies," but suggested that America's economic future hinged on establishing itself as a leader in the industry.
Republicans blasted the DOE for its management of the loan program and for failing to heed "red flags" specifically regarding the loan to Solyndra.
"The number of red flags about Solyndra that were raised along the way -- many from within DOE -- and either ignored or minimized by senior officials is astonishing," said Fred Upton, chairman of the House Energy and Commerce Committee.
"I've been on this committee for 25 years, rarely if ever, to put it positively, have I seen a more mismanaged program than the Solyndra loan guarantee," added Rep. Joe Barton (R-Texas).
An investigation into the company's bankruptcy has led to questions about whether or not the White House adequately vetted the half-billion-dollar loan. In addition to reports suggesting that the Obama administration may have rushed a decision on the matter in order to be able to announce it officially at a press event, a donor to President Obama - who a guest at the White House multiple times during a period in which Solyndra was under review for a second loan - was a major investor in the company.
The White House has denied that the donor, George Kaiser, had lobbied for a second loan -- which was ultimately denied -- during his visits, as has Kaiser. But recently-released emails suggest that Kaiser did discuss the Solyndra loan with the White House.
Moreover, additional newly-released e-mails suggest that in the days before the 2010 midterms, the White House pushed Solyndra to delay layoffs until after the election.
Chu, pressed on why Solyndra received the loan in the first place, said the company had been "first in line" to benefit from a loan program aimed at providing support to cutting-edge clean energy industries. He said that the loan guarantee to the company was "subject to proper, rigorous scrutiny and healthy debate during every phase of the process," and argued that Congress, in establishing the loan guarantee program, would inevitably have been aware of the associated risks.
"Congress appropriated nearly $10 billion to cover potential losses in our total loan portfolio, thereby acknowledging and ensuring that the inherent risks of funding new and innovative technologies were recognized and accounted for in the budget," he said.
Chu, a Nobel Prize-winning physicist, denied the accusation that the White House had contacted him on behalf of the company. He also rejected the suggestion that Kaiser had contacted him directly to press for the loan. Chu said that, per discussions with he had with his staff about the matter, none of them had any knowledge of anyone having been contacted by the White House or a White House donor.
He also said he had only recently been informed of the allegations that the White House had asked Solyndra to delay layoffs until after the midterms.
Chu called Solyndra's bankruptcy "extremely unfortunate" but argued that risk is the nature of the game in innovation.
"It is extremely unfortunate of what has happened to Solyndra," he said, when asked who should "apologize" for its failure. But, he said, looking back, "Was there incompetence? Was there any influence of a political nature? And I would have to say no."
"When the bottom of a market falls out...That was totally unexpected," he said. "If you look at the range of predictions that were being made by financial analysts... the average of those were not expecting these prices to plummet."
"This company and several others got caught in a very, very bad tsunami, if you will," he said.
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