The Obama administration’s Solyndra scandal goes beyond pressuring career federal employees to approve a $535 million loan guarantee to a company largely held by an Obama crony. When the government restructured the loan in February, officials appear to have broken the law by allowing the company’s private investors to recoup their funds before U.S. taxpayers get their money back.
Much of the media and political backlash has focused on the Obama administration’s lobbying for the loan’s swift approval in 2009. George Kaiser bundled between $50,000-$100,000 in campaign contributions for Obama in 2008, and the George Kaiser Family Foundation controls 35.7 percent of Solyndra Inc. Despite analysts’ significant misgivings about the company’s viability, the well-connected company received approval on the administration’s expedited schedule.
When Solyndra appeared ready to falter early this year, in need of $75 million in new investments, the Obama administration seems to have gone beyond the constraints of the law.
On February 23, the government restructured Solyndra’s loan. To lure private entrepreneurs to the troubled company, the Department of Energy (DOE) included a proviso that, in the event Solyndra declared bankruptcy, those who invested the $75 million would be paid back before U.S. taxpayers. Under the scheme only $150 million of government funds would be considered senior debt, a category of IOUs that must be paid back before other stakeholders are reimbursed.
That means those who provided the $75 million will recover their funds before taxpayers recoup $385 million.
The Energy Policy Act of 2005 clearly states that all government loan guarantees “shall be subject to the condition that the obligation is not subordinate to other financing.”
The House Committee on Energy and Commerce questioned the agreement’s legality in a memorandum released on Wednesday. “While DOE counsel, in a legal opinion rendered this year, somehow found that the government’s subordination to the investors’ was permissible under the Energy Policy Act of 2005, documents reviewed by the Committee question the basis for this decision, and a plain reading of the statute suggests otherwise,” it stated. The committee reported the subordination agreement “appears to be in direct violation of the Energy Policy Act of 2005.”
At hearings held on Thursday, Republicans battered Jonathan Silver, the executive director of DOE’s Loans Program Office. In his opening statement, Chairman Fred Upton, R-MI, asked, “Why did DOE and OMB allow the government to be subordinated to the private investors, in apparent violation of the law?” Rep. Joe Barton, R-TX, went further, calling the action “a direct violation of federal law.”
An irate Steve Scalise, the Republican representative from the first district in Louisiana, asked Silver, “Who made the decision to put the taxpayers in the back of the line and subordinate [them], in violation of federal law?” Silver replied weakly, “I don’t know that it was in violation of federal law.”
Reportedly, Silver agreed to furnish the committee with the names of those responsible for the decision.
The DOE also appears to have misled or lied to Congress about the terms of the restructuring agreement itself. Again, the Energy and Commerce Committee noted, “DOE Loan Programs Office staff represented to Committee staff at a briefing that the restructuring deal would allow ‘maximum recovery’ for the taxpayer, even though the Solyndra restructuring agreement allowed Solyndra’s investors to have priority over the government with respect to the first $75 million recovered in the event of a bankruptcy.”
The burgeoning scandal already has the Left justifiably concerned that impeachment is around the corner.
The far-Left DailyKos website assessed the magnitude of damage caused by Solyndra-gate:
House Republicans are already licking their chops over the opportunity to A) hold this up as an example of wasteful government spending, B) a failure of the stimulus package, C) crony capitalism by the Obama White House (remember, these people have no shame), D) express sorrow and regret that they have to look out for the taxpayer while corrupt tax and spend Democrats line their pockets, and E) demonstrate the need to take back the White House in 2012 to save the country from further follies like this.
And who knows? If they can push hard enough, turn up more questionable details, they just might start the impeachment machine up again.
The horrified left-wing diarist provides a series of suggested talking points for Democrats, encouraging them, “Never give up, never surrender.”
But the American public is in no mood for spin. In the midst of a massive economic downturn, widespread unemployment, and catastrophic deficits, Americans are outraged the Obama administration put their money in the hands of a prominent Democratic contributor with the full knowledge Solyndra was structurally unsound. Knowing the president or one of his subordinates also broke the law to benefit well-heeled investors who financed the government’s preferred companies will only add fuel to the flame.
Congress must act swiftly to ascertain all the circumstances of the restructuring negotiations and the 2009 loan approval, and bring any guilty party — including the president himself — to certain justice.
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