[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
              SOLYNDRA AND THE DOE LOAN GUARANTEE PROGRAM
=======================================================================


                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 14, 2011

                               __________

                           Serial No. 112-84



      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov






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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    HENRY A. WAXMAN, California
  Chairman Emeritus                    Ranking Member
CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
  Vice Chairman                      DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California         JAY INSLEE, Washington
CHARLES F. BASS, New Hampshire       TAMMY BALDWIN, Wisconsin
PHIL GINGREY, Georgia                MIKE ROSS, Arkansas
STEVE SCALISE, Louisiana             JIM MATHESON, Utah
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana              Islands
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

                                 _____

              Subcommittee on Oversight and Investigations

                         CLIFF STEARNS, Florida
                                 Chairman
LEE TERRY, Nebraska                  DIANA DeGETTE, Colorado
SUE WILKINS MYRICK, North Carolina     Ranking Member
JOHN SULLIVAN, Oklahoma              JANICE D. SCHAKOWSKY, Illinois
TIM MURPHY, Pennsylvania             MIKE ROSS, Arkansas
MICHAEL C. BURGESS, Texas            KATHY CASTOR, Florida
MARSHA BLACKBURN, Tennessee          EDWARD J. MARKEY, Massachusetts
BRIAN P. BILBRAY, California         GENE GREEN, Texas
PHIL GINGREY, Georgia                DONNA M. CHRISTENSEN, Virgin 
STEVE SCALISE, Louisiana                 Islands
CORY GARDNER, Colorado               JOHN D. DINGELL, Michigan
H. MORGAN GRIFFITH, Virginia         HENRY A. WAXMAN, California (ex 
JOE BARTON, Texas                        officio)
FRED UPTON, Michigan (ex officio)

                                  (ii)


                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Cliff Stearns, a Representative in Congress from the State 
  of Florida, opening statement..................................     1
    Prepared statement...........................................     4
Hon. Diana DeGette, a Representative in Congress from the State 
  of Colorado, opening statement.................................     6
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................    25
    Prepared statement...........................................    27
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................    29
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................    29
    Prepared statement...........................................    30
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................    31
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, prepared statement.........................   153

                               Witnesses

Jonathan Silver, Executive Director, Loan Programs Office, 
  Department of Energy...........................................    33
    Prepared statement...........................................    36
    Answers to submitted questions...............................   167
Jeffrey D. Zients, Deputy Director for Management, Office of 
  Management and Budget..........................................    42
    Prepared statement...........................................    44
    Answers to submitted questions...............................   182

                           Submitted Material

Department of the Environment and Office of Management and Budget 
  staff emails, dated January to August 2009, and OMB staff 
  email, dated January 31, 2011, submitted by Ms. DeGette........     8
Credit Committee Recommendation re: Solyndra Fab 2 LLC submission 
  as of January 9, 2009, submitted by Ms. DeGette................    50
Article, ``The Solar Hype Cycle: Don't Let The Sun Go Down On 
  Me,'' dated August 4, 2008, by Mark Modzelewski for 
  Xconomy.com, submitted by Mr. Pompeo...........................    94
Credit Committee Paper Request for Loan Guarantee Approval of 
  Solyndra Fab 2, LLC, project, dated March 11, 2009, submitted 
  by Ms. DeGette.................................................   104
Majority supplemental memo, dated June 23, 2011, submitted by Mr. 
  Stearns........................................................   129
Majority slide presentation, submitted by Mr. Stearns............   154



              SOLYNDRA AND THE DOE LOAN GUARANTEE PROGRAM

                              ----------                              


                     WEDNESDAY, SEPTEMBER 14, 2011

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:35 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Cliff 
Stearns (chairman of the subcommittee) presiding.
    Members present: Representatives Stearns, Terry, Sullivan, 
Murphy, Burgess, Blackburn, Myrick, Bilbray, Gingrey, Scalise, 
Gardner, Griffith, Barton, Upton (ex officio), Pompeo, DeGette, 
Schakowsky, Markey, Green, Christensen, Dingell, and Waxman (ex 
officio).
    Staff present: Carl Anderson, Counsel, Oversight; Gary 
Andres, Staff Director; Sean Bonyun, Deputy Communications 
Director; Karen Christian, Deputy Chief Counsel, Oversight/
Investigations; Todd Harrison, Chief Counsel, Oversight/
Investigations; Carly McWilliams, Legislative Clerk; Andrew 
Powaleny, Deputy Press Secretary; Krista Rosenthall, Counsel to 
Chairman Emeritus; Alan Slobodin, Deputy Chief Counsel, 
Oversight; John Stone, Counsel, Oversight/Investigations; 
Kristen Amerling, Minority Chief Counsel and Staff Director, 
Oversight; Phil Barnett, Minority Staff Director; Brian Cohen, 
Minority Senior Policy and Staff Director, Investigations; 
Karen Lightfoot, Minority Communications Director; Elizabeth 
Letter, Minority Press Assistant; Alvin Banks, Minority 
Investigator; Matthew Siegler, Minority Counsel; Stacia 
Cardille, Minority Counsel; and Anne Tindall, Minority Counsel.

 OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Mr. Stearns. Good morning, everybody. We convene this 
important hearing of the Subcommittee on Oversight and 
Investigations to examine the involvement of the Department of 
Energy and the White House Office of Management and Budget in 
the review, approval, and subsequent restructuring of the $535 
million loan guarantee to Solyndra.
    The Obama administration has repeatedly touted its green 
energy plan as the savior for our faltering economy. Solyndra 
was the first loan guarantee issued by the Obama administration 
using stimulus dollars. Administration officials held out the 
company as a shining example of how the stimulus was creating 
jobs and invigorating the economy. However, just after 2 years 
of receiving this half-of-a-billion-dollar loan guarantee, and 
6 months after DOE restructured the terms of the deal, Solyndra 
has closed its door, laid off over a thousand employees, and 
filed for bankruptcy. Last week, the FBI agents raided the 
facility.
    One of our witnesses today, Mr. Silver, attempts to claim 
in his written testimony that the Bush administration is 
equally at fault for approving Solyndra's deal and that 
Solyndra was a train ready to leave the station when President 
Obama took office. But in reality, on January 9, 2009--at the 
end of the Bush administration--the DOE Credit Committee voted 
against offering a conditional commitment to Solyndra, saying 
that the real deal was premature and questioning its underlying 
financial support. Only after the Obama administration took 
control, and the stimulus passed, was the Solyndra deal pushed 
through.
    We have been asking questions for almost 7 months about 
this deal. We have gathered documents from the Department of 
Energy. In a party-line vote, the committee was forced to 
subpoena OMB in July in order to get even basic information 
showing their role in the Solyndra deal. Now, committee 
Democrats have questioned the basis of our investigation and 
actually have accused the committee of engaging in a fishing 
expedition and abusing our subpoena power. But what the 
committee's review of these documents clearly show is that we 
were right all along to ask questions about this loan. It 
should not take a financial restructuring, bankruptcy, and FBI 
raid for my colleagues on the other side of the aisle to put 
politics aside and join us in our efforts.
    The documents demonstrate that when DOE was reviewing the 
Solyndra guarantee in 2009, it was well aware of the financial 
problems the deal posed. What the documents also show is that 
the rush to push out stimulus dollars may have impacted the 
depth and quality of DOE and OMB's review. In fact, the White 
House had scheduled Vice President Biden's and Secretary Chu's 
appearing at Solyndra's groundbreaking event prior to DOE even 
making its final presentation to OMB on the terms of the 
Solyndra deal. An email from a senior OMB staff member to the 
Office of the Vice President sums up this disturbing 
revelation. In it, he states, ``We have ended up with a 
situation of having to do rushed approvals on a couple of 
occasions. We would prefer to have sufficient time to do our 
due diligent reviews and have the approval set the date for the 
announcement rather than the other way around.''
    Only 6 months after the loan closed, Solyndra's financial 
troubles became increasingly severe. In March 2010, an 
independent auditor issued a report stating, ``the Company has 
suffered recurring losses from operations, negative cash flows 
since inception and has a net stockholders' deficit that, among 
other factors, raises substantial doubt about its ability to 
continue as a going concern.'' Nonetheless, President Obama 
visited Solyndra in May and proclaimed, ``the true engine of 
economic growth will always be companies like Solyndra.''
    Just one year after the loan closed, Solyndra was almost 
out of cash. In late fall of 2010, DOE began negotiations with 
Solyndra and two of its main investors about restructuring the 
loan in order to keep the company afloat. Under the 
restructuring agreement, Solyndra's private investors were 
given priority over the government with regard to the first $75 
million recovered in the event of liquidation. Documents 
reviewed by the committee staff raise serious concerns about 
whether this deal was better for the taxpayers. These concerns 
are spelled out in an email between OMB staff in late January 
2011, which notes that, ``while the company may avoid default 
with a restructuring, there is also a good chance it will not. 
At that point, additional funds would have been put at risk, 
recoveries may be lower, and questions will be asked.''
    So my colleagues, we are here today to ask those very 
questions. If Solyndra really is the ``litmus test for the Loan 
Guarantee Program's ability to fund good projects quickly,'' as 
DOE's stimulus advisor called it in an email to DOE officials, 
I am very concerned about where the $10 billion DOE that they 
have left to spend before the September 30 deadline is gone, 
taxpayers would be better served by not risking even more of 
their money, instead using it to reduce our mounting national 
deficit.
    Thank you, and with that I recognize the distinguished 
colleague from Colorado, Ms. DeGette.

    [The prepared statement of Mr. Stearns follows:]

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 OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Ms. DeGette. Thank you very much, Mr. Chairman.
    While China's initiatives continue to threaten our Nation's 
renewable energy industry and while we continue to try to 
revive our economy, it should be clear to everybody in this 
room that solar energy development is not a Democratic or a 
Republican issue; it is an issue of securing American energy 
innovation for decades to come. And so we should have a larger 
discussion about how government can appropriately support the 
development of domestic clean energy technologies. As we all 
know, and as we can tell from the chairman's opening statement, 
there has been a great deal written in the media about today's 
hearing, and unfortunately, the issue has become very 
politicized.
    The narrow purpose of today's hearing is to thoroughly 
examine the process and decisions surrounding the Solyndra loan 
guarantee, but we can't help but look at the issue through the 
larger lens of what our national energy policy should be going 
forward. And as we think about the broader issues, it is 
important to see just what happened with the Solyndra loan.
    Now, the chairman said that the minority opposed this 
investigation, and that couldn't be farther from the truth. We 
believe this investigation into Solyndra is important to 
understand both what happened here and also what our 
appropriate energy policy is. And furthermore, we never oppose 
production of any documents. We oppose the subpoena because we 
believe that the documents were being produced in good time. 
But having said that, I am happy that we now have the 
documents, and I think those documents should be made available 
to everybody.
    The documents and briefings that I have reviewed show that 
the Department of Energy in both the Bush and Obama 
administrations supported Solyndra's loan guarantee 
application. In 2007, the Bush administration DOE invited 
Solyndra to submit a full application, and by the end of the 
Bush administration, DOE had submitted the application to its 
Critical Committee for review. After President Obama took 
office, DOE continued to work on the application and ultimately 
approved the loan guarantee in September 2009.
    In spring of 2010, a pre-IPO audit of Solyndra raised 
concerns about Solyndra's viability, and by late 2010, DOE had 
determined that the company was headed towards default. DOE was 
faced with a choice at this point: restructure the loan to 
increase the chances that Solyndra could repay the taxpayers' 
funds or cut their losses and accept the high possibility of 
default. Ultimately, DOE determined restructuring was the 
course of action most likely to preserve the full recovery of 
the loan value. Under terms approved in February 2011, Solyndra 
was given more time to repay the loan, the government obtained 
additional collateral, and Solyndra was required to raise an 
additional $75 million from private investors that would have 
primacy over the government's interest in the event of 
liquidation before 2013.
    Now, this July, Solyndra's CEO visited my office as well as 
other members' and talked about the strong demand for the 
company's product and how 2011 revenues were projected to 
double from 2010. Now, as we all know, less than 2 months 
later, the company announced it would file for bankruptcy. And 
now, the Federal Government's recovery of over $500 million 
loaned to Solyndra is at grave risk. It is always easier to 
assess decisions in hindsight, but particularly with a loan 
this big, it is critical that we get answers to several key 
questions.
    First, did the Bush and Obama administrations conduct 
appropriate due diligence before September 2009 guarantee 
approval? Second, did the Department of Energy sufficiently 
monitor the financial status of Solyndra after loan 
disbursements began, particularly as the market forces seemed 
to be against them? Third, did Solyndra make accurate 
representations to the government about its financial prospects 
both before and after approval of its loan guarantee? And when 
Solyndra's financial situation deteriorated, did the government 
make the correct decisions about restructuring the loan?
    In examining these issues, I want to underscore that we not 
only lose sight of the policy context for the Loan Guarantee 
Program that supported Solyndra. This program was designed to 
help U.S. companies to grow and compete in a global clean 
energy market in which countries like China and others are 
providing a wide range of incentives and support for domestic 
industry. Even if we conclude that bad judgments were made on 
the Solyndra loan, we have got to continue to work hard to 
develop and implement appropriate policies that give American 
clean energy investors the support they need to make the U.S. a 
market leader in the future and also that protect the U.S. 
taxpayer.
    These are critical decisions. Ranking Member Waxman and I 
have asked that the Solyndra CEO and CFO be called, and I 
believe that is going to be happening in short order. Because I 
am perplexed at how they can be in my office in July telling me 
things were looking better and filing for bankruptcy 2 months 
later.
    With that, Mr. Chairman, I yield back.
    Mr. Stearns. The gentlelady mentioned in her opening 
statement about the documents we have been reviewing. Would she 
consider a unanimous consent request that all those documents 
be made part of the record?
    Ms. DeGette. Yes.
    Mr. Stearns. So ordered.
    [The information follows:]
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    Mr. Stearns. With that, we recognize the distinguished full 
chairman of the Energy and Commerce Committee, the gentleman 
from Michigan, Mr. Upton.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Well, thank you, Mr. Chairman. In 2009, Solyndra 
was the first company to receive a DOE energy loan funded with 
stimulus dollars. Just 2 years after getting $535 million in 
taxpayer money, and being touted by President Obama as a model 
for how the government's venture capital program in green 
technology should work, the company has filed for bankruptcy 
and been raided by the FBI.
    We are starting to look at the DOE Loan Guarantee Program 
and Solyndra's deal in February. Some questioned the basis for 
this investigation. And after 4 months of wrangling with the 
administration to produce relevant documents, the committee was 
forced to issue a subpoena to OMB. I think Solyndra's recent 
bankruptcy filing and last week's FBI raid clearly show that 
the committee was more than justified in its scrutiny of the 
deal. Pursuant to our oversight functions, we have an important 
responsibility to pursue answers regarding the use of 
taxpayers' money.
    Our investigation raises several questions about whether 
the administration did everything that it could to protect 
taxpayer dollars. Why did the administration think Solyndra was 
such a good bet? Why did the administration push ahead with 
restructuring the Solyndra guarantee this year, when some in 
the government voiced serious concerns about the commercial 
viability of the company? Why did DOE and OMB allow the 
government to be subordinated to the private investors in 
apparent violation of the law?
    I look forward to the testimony of Mr. Zients from OMB and 
Mr. Silver, Executive Director of DOE's Loan Program Office. I 
want to know what the Solyndra failure means for the Loan 
Guarantee Program. Was Solyndra just one bad bet by an 
administration rushing to claim credit for the first loan 
guarantee, or is it the tip of the iceberg? DOE has closed over 
$8 billion in loan guarantees to other ``green tech'' 
companies, and it has about $10 billion left to spend in the 
next few weeks before the September 30 deadline. If the 
administration was so wrong about Solyndra after 9 months of 
due diligence, how can it possibly exercise the proper controls 
when doling out another $10 billion in the next couple of 
weeks? In this time of record debt, I question whether the 
government is qualified to act as a venture capitalist, picking 
winners and losers in speculative ventures and shelling out 
billions of taxpayer dollars to keep them afloat.
    We began this investigation to shine a bright light on a 
program shrouded in secrecy and uncertainty. New details are 
coming to the forefront today about who decided to allocate 
billions in taxpayer dollars, and where, and why. This is 
important information, and the public has a right to know how 
their hard-earned dollars are being spent. But it is not the 
end of our inquiry. The answers we have turned up so far spark 
additional questions, and I am committed to pursuing this 
investigation and conducting rigorous oversight of the Loan 
Guarantee Program and its recipients. I hope the administration 
and our friends on both sides of the aisle will share our 
commitment to getting answers.
    I yield to the gentleman from Texas, Mr. Barton.
    [The prepared statement of Mr. Upton follows:]
    [GRAPHIC] [TIFF OMITTED] 74404.020
    
    [GRAPHIC] [TIFF OMITTED] 74404.021
    
   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. Thank you, Chairman Upton.
    I think this is a litmus test of how this subcommittee is 
going to work together to investigate something that obviously 
needs to be investigated. I was very gratified to hear Ranking 
Member DeGette's request that the record include all the 
documents that have been discovered so far because at the 
beginning of this investigation, my friends on the minority 
side did not support the subpoena to get those documents.
    Mr. Chairman, I support Loan Guarantee Programs for 
alternative energy. Having said that, I do not support the 
process by which this particular loan guarantee was announced. 
It is curious to me that in January of 2009, the Credit 
Committee unanimously recommended against this loan guarantee, 
but 2 months later after President Obama had been sworn in, the 
Credit Committee approved, as far as I can tell, the identical 
loan commitment with no intervening improvement in the process. 
A DOE staff member at the time said this project is going to 
run out of cash in September of 2011. And how prescient was 
that, Mr. Chairman? As we all know, they declared bankruptcy 
last week.
    I look forward to the testimony of these officials and I 
look forward next week to the testimony of the members of the 
company. And Mr. Chairman and subcommittee chairman and Ranking 
Member DeGette and Ranking Member Waxman, I strongly support 
you all working together to pursue this investigation on a 
bipartisan basis. And I yield back to the chairman.
    Mr. Upton. I thank the gentleman and I yield the balance of 
the time to Dr. Burgess.
    Mr. Burgess. Thank you, Mr. Chairman.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Ranking Member DeGette referenced the fact that going back 
to the Bush administration this discussion was going on in the 
Department of Energy. I just do want to take a moment to point 
out that the Credit Committee at the Department of Energy 
January 12, 2009, the last dates of the Bush administration, 
the day after their meeting it was a unanimous decision not to 
engage in further discussions with Solyndra at this time.
    Now, we all know the stimulus bill was about shovel-ready 
projects. It appeared that the shovel that this project was 
ready for was to bury it somewhere. And yet it was resurrected. 
Now, I believe in redemption, I believe in the afterlife, but I 
don't believe this was this wisest and best use. I do want to 
convey the message to members of the administration that when 
this committee calls, you respond. When we ask for documents, 
you produce them. When we schedule a hearing, you show up. We 
are a coequal branch of government. We have a responsibility to 
protect the people's money as well, and it does not appear that 
those interests were followed. And unfortunately, now the 
taxpayer is going to suffer.
    I yield back the balance of my time.
    [The prepared statement of Mr. Burgess follows:]
    [GRAPHIC] [TIFF OMITTED] 74404.022
    
    Mr. Stearns. The gentleman yields back. The distinguished 
ranking member, the gentleman from California, Mr. Waxman, is 
recognized.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you, Mr. Chairman.
    Today, we are holding a hearing on the loan guarantee 
provided by the Department of Energy in 2009 to Solyndra, a 
U.S. solar panel manufacturer. And this is an important 
hearing. Taxpayers have over $500 million at risk as a result 
of Solyndra's bankruptcy. We need to understand what happened, 
who should be held accountable, and how we can avoid future 
losses. We also need to ask whether Solyndra misled federal 
officials.
    In July, the company's CEO met with me in my office. He 
assured me that the company was in a strong financial condition 
and in no danger of failing. In fact, he said the company was 
going to double its revenues in 2011. I have a hard time 
reconciling those representations with the company's decision 
to file for bankruptcy 1 month later. Committee staff have now 
reviewed thousands of pages of internal documents from the 
Department of Energy and the Office of Management and Budget. 
And they raise a number of questions. The documents show that 
under both the Bush administration and the Obama administration 
DOE officials strongly backed Solyndra. They believed its 
silicon-free solar panels--Mr. Chairman, may I have an 
opportunity to speak?
    Mr. Stearns. Absolutely. Committee will be in order to 
listen to the gentleman's statement.
    Mr. Waxman. They believe that silicon-free solar panels 
offered cost savings and its tubular shape reduced installation 
costs. And they thought the internal reviews they conducted and 
the external studies they commissions showed Solyndra could 
compete successfully in the global marketplace. Well, these 
rosy scenarios were not realized. Today, we will ask why. Is 
the reason unforeseen developments in the global marketplace as 
Solyndra and DOE argue? Or is the reason sloppy or inadequate 
vetting, or worse yet, corporate malfeasance?
    By late 2010, both DOE and OMB knew Solyndra was facing 
difficulty in meeting its loan obligation. This triggered a 
vigorous internal debate about what the government should do to 
protect the taxpayers. DOE projected that an immediate 
liquidation would return less than 20 cents on the dollar, so 
they favored restructuring because of the potential for 
recovering more of the taxpayers' investment. Some OMB 
officials warned against restructuring on the grounds that it 
might not be enough to avoid bankruptcy and default. Well, that 
was not an easy decision and we need to ask whether the right 
choice was made.
    Given the bankruptcy of Solyndra and the dollars now at 
risk, we have an obligation to the taxpayer to investigate the 
transaction thoroughly. That is why I welcome this hearing and 
why Ranking Member DeGette and I have urged Chairman Stearns to 
hold another hearing where we can question Solyndra's CEO.
    I disagree vehemently, however, with the policy conclusions 
my Republican colleagues have already drawn. They say the 
collapse of Solyndra shows the folly of federal investments in 
solar and other clean energy technologies, and they argue the 
government should not pick winners and losers in the energy 
marketplace. This sounds superficially appealing but there is a 
fundamental flaw in their logic. The majority of Republicans on 
this committee deny that climate change is real. If you are a 
science-denier, there is no reason for government to invest in 
clean energy.
    It is ironic that at this very moment in Washington, CEOs 
of a number of corporations, including Bill Gates from 
Microsoft; Mr. Immelt from GE; Norm Augustine, former Lockheed-
Martin chairman; Chad Holliday, Bank of America; Tim Solso, CEO 
of Cummins, are all here representing American Energy 
Innovation Council, and they are calling for major new 
investments in alternative energy and renewable energy so that 
we don't fall behind the Chinese and others who are competing 
in this area and outcompeting us.
    If you live in reality, you know the world cannot continue 
its dependence on fossil fuels, that we are in danger of losing 
this industry to our competitors, especially China. And last 
month alone, 3 U.S. solar manufacturers have declared 
bankruptcy because they couldn't compete with Chinese 
companies.
    This weekend, the business columnist Steve Pearlstein wrote 
in the Washington Post, ``listening to the Republicans talk 
about the economy and economic policy is like entering into an 
alternative universe.'' He is right. Republicans on this 
committee oppose putting a market price on carbon emissions. 
They oppose EPA regulation of carbon pollution, and now they 
oppose government investment that promote clean energy 
alternatives. That is an economic dissonance for fledgling 
clean energy companies that have to compete against both an 
entrenched fossil fuel industry and heavily subsidized foreign 
firms. And it is a grievous blow to our future prosperity.
    Thank you, Mr. Chairman.
    Mr. Stearns. I thank the gentleman. And with that, the 
opening statements are concluded. And I ask unanimous consent 
that the written opening statements of the members be 
introduced into the record, anyone who wishes to do it. Without 
objection, the documents will be so entered.
    To our witnesses, you are aware that the committee is 
holding an investigative hearing, and when doing so has had the 
practice of taking testimony under oath. Do you have any 
objection to taking testimony under oath?
    The chair then advises you that under the rules of the 
House and the rules of the committee, you are entitled to be 
advised by counsel. Do you desire to be advised by counsel 
during your testimony today? No. In that case, if you would 
please rise and raise your right hand, I will swear you in.
    [Witnesses sworn.]
    Mr. Stearns. You are now under oath and subject to the 
penalties set forth in Title XVIII, Section 1001, of the United 
States Code.
    We welcome you to give a 5-minute summary of your written 
statement. So with that, Mr. Silver, we welcome you with your 
opening statement.

 TESTIMONY OF JONATHAN SILVER, DIRECTOR, LOAN PROGRAMS OFFICE, 
 DEPARTMENT OF ENERGY; AND JEFFREY D. ZIENTS, DEPUTY DIRECTOR 
        FOR MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET

                  TESTIMONY OF JONATHAN SILVER

    Mr. Silver. Thank you, Chairman Stearns, Ranking Member 
DeGette, and members of the subcommittee. My name is Jonathan 
Silver, and I am the executive director of the Loan Programs 
Office. I joined with the Department of Energy and took this 
position in November of 2009.
    In 2005, recognizing that there was a systemic shortage of 
private debt financing for innovative clean energy projects 
from renewable to clean coal to nuclear power, President Bush 
signed bipartisan legislation that established the Title XVII 
Loan Program. The program was specifically designed to support 
next-generation energy projects, which involved technology and 
market risks that private sector lenders often cannot or will 
not underwrite.
    Other governments have recognized the value of such 
programs as well. Germany and Canada already operate 
government-backed clean energy lending programs. The U.K., 
Australia, and India have announced the intent to do the same. 
But none have been as aggressive as the Chinese Government, 
which last year alone provided more than $30 billion in credit 
to its country's largest solar manufacturers. That is roughly 
20 times larger than America's investment in the same period. 
Why is China making this investment? Because the race for solar 
manufacturing jobs is a race worth winning. Over the next few 
decades, this will become a global market worth trillions of 
dollars.
    In 1995, the United States manufactured more than 40 
percent of the solar cells and modules sold worldwide. Today, 
it is 6 percent. Meanwhile, China's share has grown from 6 
percent in 2005 to 54 percent today. China is now home to 5 of 
the 10 largest solar panel manufacturers in the world. Seven of 
the 10 largest are in Asia. Only 2 are in the United States. It 
is in this context that we should discuss the Solyndra 
transaction.
    Solyndra submitted its initial application in 2006. By late 
2008, the Loan Program staff considered Solyndra the most 
advanced of the projects it had reviewed and the likely 
recipient of the program's first loan guarantee. In fact, by 
the time the Obama administration took office, the career staff 
had already established a timeline for issuing the company a 
conditional loan commitment in March of 2009. In March, on the 
exact schedule that had been developed during the Bush 
administration, the program issued Solyndra a conditional 
commitment. In September, after several more months of 
additional due diligence and documentation, DOE finalized the 
loan guarantee. Although I was not at the Department at that 
time, it is my understanding that the transaction went through 
nearly 3 years of rigorous internal and external due diligence, 
including reviews by a leading independent engineering firm, 
the Department's own solar experts, and a blue chip law firm 
all before any taxpayer funds were put at risk.
    The Federal Government was not alone in its assessment of 
Solyndra's potential. Some of America's most sophisticated 
professional investors collectively invested nearly $1 billion 
in the company after conducting extensive due diligence of 
their own, and again, before any taxpayer dollars were 
deployed.
    In 2009, Solyndra appeared to be well positioned to compete 
and succeed in the global marketplace. Solyndra manufactures 
cylindrical thin-film solar cells, which avoided both the high 
cost of polysilicon--a critical component in making 
conventional solar panels--and certain costs associated with 
installing flat panels. But polysilicon prices subsequently 
dropped significantly taking Solyndra and many industry 
analysts by surprise and by providing a significant benefit to 
several of the company's Chinese competitors.
    These developments made Solyndra's business model more 
challenging. The company took steps to respond, cutting costs 
even as revenues increased 40 percent between 2009 and 2010 
from $100 million to $140 million. Despite increasing revenue, 
the company ran short of cash and faced imminent bankruptcy 
without an emergency influx of new capital from its investors. 
The Department of Energy faced a difficult choice: whether a) 
to refuse the proposed terms of that financing ensuring that 
the company would close and the government would recover only a 
small amount of its loan; or b) to allow the company to take 
the financing, giving it and its almost 1,000 workers a 
fighting chance at success and the government the possibility 
of a higher recovery on that loan.
    After extensive analysis both internally and from 
independent market and financial advisors and using the same 
tools and approaches that private lenders use in such 
circumstances, the Department concluded that restructuring the 
loan gave the U.S. taxpayer the best chance of being repaid. 
Unfortunately, the changes in the solar market have only 
accelerated. Chinese companies have flooded the market with 
inexpensive panels, and Europe, historically the largest 
purchaser of solar panels, is in the midst of an economic 
crisis that has significantly reduced demand. The result has 
been a further and unprecedented 42 percent drop in solar cell 
prices in the first 8 months of 2011 alone.
    These changes were particularly damaging to Solyndra, and 
as you know, the company declared bankruptcy earlier this 
month. While we are all disappointed in the outcome, Solyndra's 
situation should not overshadow the professional work that the 
Department's loan programs have done to date or the need to 
continue to find ways to support clean energy in this country.
    Developing a robust clean energy manufacturing sector in 
the United States is critical to our long-term national 
interests and one of the most important tools as our global 
competitors have already learned is low-cost financing 
effectively targeted and deployed. This isn't picking winners 
and losers; it is helping ensure that we have winners here at 
all. We invented this technology and we should produce it here. 
The question is whether we are willing to take on this 
challenge or whether we will simple cede leadership in this 
vital sector to other nations and watch as tens of thousands of 
jobs are created overseas. The administration believes this is 
a battle we must fight and win.
    Mr. Chairman, I thank the members of the committee and I 
look forward to answering your questions.
    [The prepared statement of Mr. Silver follows:]
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    Mr. Stearns. Thank you. Mr. Zients?

                 TESTIMONY OF JEFFREY D. ZIENTS

    Mr. Zients. Chairman Stearns, Ranking Member DeGette, 
members of the subcommittee, thank you for inviting me here 
today to testify on OMB's role in the implementation of the 
Department of Energy's Loan Guarantee Program.
    The DOE Loan Guarantee Program authorized by Congress in 
Title XVII of the Energy Policy Act of 2005 is a key part of 
the administration's efforts to promote economic growth and 
create jobs across the country and to jumpstart the clean 
energy economy. As you know, OMB engages in general oversight 
of the programs being executed by federal agencies. Therefore, 
OMB has been an active participant in interagency discussions 
about major milestones and DOE's implementation of Title XVII 
helping to ensure they are consistent with the statutory 
framework and administration policy.
    These interagency discussions are an important forum for 
asking tough questions and pressure-testing assumptions, 
respectful of DOE's statutory authority to make final 
programmatic decisions on Title XVII loan guarantees.
    OMB also has a particular statutory role in the Title XVII 
program under the Federal Credit Reform Act of 1990, known as 
FCRA. Pursuant to FCRA, OMB reviews and must approve credit 
subsidy cost estimates for all loan and loan guarantee 
programs, including the credit subsidy cost estimates generated 
by DOE for the Title XVII program. OMB ensures that costs are 
accounted for appropriately. In performing its statutory role 
under FCRA, OMB works closely with agencies' credit subsidy 
cost models. Based on these models, OMB reviews and exercises 
final approval authority over credit subsidy costs to ensure 
that the costs of direct loans and loan guarantees are 
presented, and reflect estimated risks, consistently across 
federal agencies so that taxpayer funds are invested in a 
prudent and effective fashion. By contrast, the final decision 
on whether to issue the loan or guarantee rests with the agency 
implementing the applicable program--DOE in the case of Title 
XVII.
    In the Solyndra loan guarantee, OMB's approval of DOE's 
proposed credit subsidy cost was conducted in August and 
September of 2009. While I was not directly involved in this 
aspect of the transaction, what I have learned since indicates 
that the approval process reflected a thorough examination and 
analysis of DOE's calculation of this estimated cost. OMB staff 
addressed with DOE a series of specific questions about its 
analysis. Based on these discussions, OMB and DOE ultimately 
agreed on the credit subsidy cost, and OMB ensured it was 
budgeted and accounted for appropriately. The loan guarantee 
was then issued in September 2009.
    In February 2011, DOE undertook a restructuring of 
Solyndra's debt in light of the acute financial troubles the 
company was experiencing. OMB's statutory role in the 
restructuring transaction was the same as its role in the 
original transaction--to ensure that the credit subsidy cost 
was appropriately accounted for, consistent with OMB's 
responsibilities under FCRA. OMB worked closely with DOE to 
understand the specifics of the proposal before making a cost 
determination. DOE ultimately provided information and analysis 
to OMB to show that the loan was in imminent default and that 
the restructuring proposal was expected to be less costly to 
taxpayers than other options, including liquidation. OMB 
determined that DOE's analysis was reasonable and reflected the 
information as it was understood at that time.
    Since then, a challenging global solar market has continued 
to affect a number of solar manufacturers, including Solyndra. 
The company's recent announcement that it was suspending 
operations and filing for bankruptcy is without a doubt a very 
unfortunate outcome and one that will limit the government's 
recovery of funds loaned to the company.
    Congress designed the Title XVII Loan Guarantee Program to 
fund innovative clean energy projects that might not otherwise 
receive the necessary capital for deployment. The program 
envisions that while some of these projects might not succeed, 
others will contribute to the country's ability to achieve its 
clean energy goals. OMB will continue to work diligently with 
DOE to help make the Title XVII program a success and to ensure 
that the costs associated with the inherent risks in the 
program are budgeted and accounted for to protect taxpayers' 
interests.
    Mr. Chairman and members of the subcommittee, I would be 
pleased to answer any questions you have.
    [The prepared statement of Mr. Zients follows:]
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    Mr. Stearns. I thank the gentleman, and I will start with 
opening questions. And they are directed to you, Mr. Silver, 
and if you could possibly just answer yes or no.
    In your testimony, you claim that some of Solyndra's due 
diligence was done by the end of the Bush administration. Is 
that correct?
    Mr. Silver. Yes, the application was received----
    Mr. Stearns. Yes, that is all I need. Isn't it true, 
though, that at the end of the Bush administration a DOE Credit 
Committee met on January 9, 2009, to consider the Solyndra 
guarantee? Were you aware of that?
    Mr. Silver. The Credit Committee is made up of----
    Mr. Stearns. No, I am not asking you--just answer the 
question.
    Mr. Silver. Which met in early 2009----
    Mr. Stearns. Right. OK, so you agree. That Credit Committee 
recommended that the Solyndra loan guarantee be remanded to the 
Loan Programs Office stating, ``The number of issues unresolved 
make a recommendation for approval premature at this time.'' 
Were you aware of the Credit Committee's meeting when you 
submitted your testimony to the committee this morning?
    Mr. Silver. I was. And, as I said, Congressman, I was not 
there at the time, but it is my understanding that it was not--
it was remanded back for additional data----
    Mr. Stearns. No, I am asking the questions. I just need a 
yes or no.
    Mr. Waxman. Let him give the answer.
    Mr. Stearns. Well, I think he has given an answer. In an 
email sent a few days after the January Credit Committee 
meeting, a member of that Credit Committee sent an email to his 
fellow members. In that January 13, 2009, email he states, 
``After canvassing the committee, it was a unanimous decision 
not to engage in further discussions with Solyndra at this 
time.'' Do you understand that the Credit Committee in the Bush 
administration essentially decided that the due diligence was 
not complete at this point?
    Mr. Silver. No, Mr. Chairman. In fact, the Credit Committee 
that you are referring to, as I said, made up of a group of 
career professionals is also exactly the same Credit Committee 
that then approved----
    Mr. Stearns. I understand that, but the point is what I 
just quoted to you is the truth, isn't that correct? That quote 
is accurate?
    Mr. Silver. I don't--haven't seen that email, sir.
    Mr. Stearns. OK.
    Mr. Silver. I wasn't there at the time.
    Mr. Stearns. Well, you can assure it is. And the DOE should 
quit talking with Solyndra. That was the recommendation. Now, 
Mr. Silver, in your testimony, you stated that regarding 
Solyndra, ``Much of the extensive due diligence on the 
transaction was conducted between 2006 and the end of 2008.'' I 
would like to bring this information to your attention. Isn't 
it true that the Loan Programs Office didn't hire its first 
federal employee until August 1, 2007?
    Mr. Silver. I am not aware of that but it sounds about 
right.
    Mr. Stearns. OK. If you don't know, we can provide this 
information. We provided it to the committee staff through a 
PowerPoint presentation. Now, by the end of 2007, isn't it true 
that the office had only 8 federal employees?
    Mr. Silver. Again, I don't know the exact numbers.
    Mr. Stearns. OK. So who was doing all this extensive due 
diligence that you keep talking about in 2006 and 7 at the loan 
program?
    Mr. Silver. Well, sir, the Department--if you would like an 
answer to that question----
    Mr. Stearns. Sure.
    Mr. Silver [continuing]. The Department is made up of 
115,000 working professionals, including about 70,000 
scientists a number of whom are solar experts----
    Mr. Stearns. But the DOE Credit Committee was the 
responsible authority for approving the credit of Solyndra. 
Isn't it----
    Mr. Silver. No, actually----
    Mr. Stearns. OK.
    Mr. Silver [continuing]. Technically, sir, the Credit 
Committee actually simply reviews a transaction and recommends 
it----
    Mr. Stearns. Right.
    Mr. Silver [continuing]. For approval.
    Mr. Stearns. I think we have established they did not think 
they should go ahead. Isn't it also true that during that time 
period, DOE was reviewing the 140 or so applications that it 
received in response to its first solicitation, how did DOE 
have time to do extensive due diligence on Solyndra from 2006 
to 2007 like you indicated? That baffles us.
    Mr. Silver. If you will give me a moment to explain, I 
think I can. The 2006 solicitation resulted in 143 submissions. 
The loan program staff and others at the Department reviewed 
those for eligibility, which is a thinner review than the full 
due diligence, and recommended 16 applications to file a full 
application.
    Mr. Stearns. But----
    Mr. Silver. Eleven did so. Solyndra was one of those and 
the Department conducted due diligence on all of those 11.
    Mr. Stearns. But Mr. Silver, isn't it true the first draft 
of the independent marking report wasn't even submitted until 
March 2009? You were there. Isn't that correct?
    Mr. Silver. No, I was not there at that time, sir. It is my 
understanding, though, from reviewing the record that there 
were several market research reports that were directly 
relevant that were used as the basis for assessment, and there 
was subsequently a direct marketing report done for the 
project, which was produced in the time frame----
    Mr. Stearns. Our records show an independent engineer 
report that you cited in your testimony was submitted in early 
January 2009. Is that correct?
    Mr. Silver. I think that is the case, yes, sir.
    Mr. Stearns. The due diligent legal memorandum submitted by 
the Morrison and Forester, which you have also cited in your 
written testimony, that also was submitted in early 2009, 
correct?
    Mr. Silver. I believe that is the case.
    Mr. Stearns. Given this, how do you explain the statement 
in your testimony that the extensive due diligence was 
conducted in 2006 and 2008?
    Mr. Silver. Actually, I didn't say it was conducted in 
2006. I said the application was receive in 2006 and due 
diligence began and continued from late 2007 through 2008. It 
would be logical for the reports that you are making reference 
to here to be completed after that work was done during that 
period.
    Mr. Stearns. Well, Mr. Silver, I think my time has expired, 
but I think what we have established is that the Credit 
Committee during the Bush administration found the Solyndra 
deal to be premature and remanded it for further work. And we 
have all the evidence and all the clear evidence, so we are a 
little puzzled with your opening statement. With that, my time 
has expired and I recognize the ranking member, Ms. DeGette.
    Ms. DeGette. Thank you very much, Mr. Chairman.
    I would like to start my questions by asking unanimous 
consent to put the Credit Committee Recommendation that the 
chairman referred to into the record so that we can know what 
we are talking about.
    Mr. Stearns. By unanimous consent, so ordered.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] 74404.032
    
    Ms. DeGette. Thank you very much.
    Mr. Silver, I had staff hand you a copy of this Credit 
Committee Recommendation. Have you seen this document before?
    Mr. Silver. No, ma'am, I have not.
    Ms. DeGette. OK. This is the document that the chairman was 
referring to where the Credit Committee remanded the project to 
LGPO that they denied the application and they remanded it for 
more information. That is the thing the chairman was referring 
to. And it was also the information that he had up on the 
screen. It was from this memo. Now, as I read this document, it 
says, ``While the project appears to have merit, there are 
several areas where the information presented did not 
thoroughly support a finding, but the project is ready to be 
approved at this time.'' And then it lists 4 areas that it says 
need to be supplemented. Do you see that?
    Mr. Silver. Yes, ma'am.
    Ms. DeGette. And then at the bottom is said, ``the Credit 
Committee is appreciative of the hard work done by the 
origination staff but believes the number of issues unresolved 
makes the recommendation for approval premature at this time.'' 
Do you see that?
    Mr. Silver. I do.
    Ms. DeGette. And then it concludes, ``Therefore, the 
committee, without prejudice, remands the project to the LGPO 
for further development of information addressing the issues 
outlined above. Correct?
    Mr. Silver. Yes, ma'am.
    Ms. DeGette. So this document is not a complete denial of 
the application; it is remanding it for more information, 
correct?
    Mr. Silver. Not only is it not a complete denial, it would 
be typical of a credit committee in both the public and the 
private sector to perform its function in exactly this way. If 
they believed additional data was----
    Ms. DeGette. And was that data eventually developed and 
submitted to the DOE? No?
    Mr. Silver. The----
    Ms. DeGette. The data that was requested----
    Mr. Silver. The data was additionally developed and the 
summary of that data was represented to the Credit Committee.
    Ms. DeGette. And subsequently, in March of 2009, the 
application was approved, correct?
    Mr. Silver. Yes, ma'am.
    Ms. DeGette. And was that data submitted as part of that 
application, this data that was requested?
    Mr. Silver. Again, I wasn't there, but it is my 
understanding that that was the case.
    Ms. DeGette. OK, thank you. Now, I wanted to ask you a 
couple of questions about what kind of policies and incentives 
that we need to have in the United States to promote 
competitiveness in the clean energy market? This is what you 
talked about in your testimony. In your written testimony, what 
you said was in between 1995 and 2010, the share photovoltaic 
cells and panels manufactured in the U.S. dropped from over 40 
percent to just 6 percent. We have seen this with some Colorado 
companies that are trying to develop solar but they can't 
actually find cells that are manufactured in this country. 
Since 2005, China's market share has actually increased from 6 
percent to 54 percent, and half of the world's 10 largest solar 
panel manufacturers are now Chinese. So the question I have is 
what does that tell us about the state of play in the solar 
manufacturing industry?
    Mr. Silver. Congresswoman, I think it tells us that the 
rest of the world takes this industry and this industry 
opportunity enormously seriously, has a multi-decade 
perspective on its importance, believes, as we do, that it will 
be a multi-trillion-dollar market that will generate tens of 
thousands of jobs and is deeply committed to it.
    Ms. DeGette. Now, what is the Chinese Government doing that 
you know of to provide support to its solar industry?
    Mr. Silver. The Chinese Government has already committed up 
to $30 billion of credit to its 4 or 5 largest solar panel 
manufacturers. It generally and frequently provides both zero-
cost financing, occasionally free land, and other kinds of 
incentives and subsidies to that sector.
    Ms. DeGette. And does cheap labor play a part in China's 
ability to dominate the world market on this solar development?
    Mr. Silver. It certainly has in the past and cheap labor 
does play a material role in other parts of the world in their 
competitiveness. Increasingly, however, the challenge is 
becoming one related to government support for the industry 
itself, financially.
    Ms. DeGette. So it is not as much cheap labor as capital 
that the Chinese Government is providing in your view?
    Mr. Silver. Correct. Access to inexpensive debt capital, 
yes, ma'am.
    Ms. DeGette. OK. So based on your experiences at DOE and 
the private sector and your understanding of initiatives of 
other governments like China, do you really think it is worth 
us having policies like this Title XVII Loan Program and other 
policies to support solar or should we just walk away from it 
altogether as a government?
    Mr. Silver. I can't imagine a scenario in which we would 
willingly as a country walk away from what will be undoubtedly 
one of the largest if not the largest industries in the world 
over the next several decades.
    Ms. DeGette. Well, do you think though that there is any 
way we can actually compete?
    Mr. Silver. Yes, we have an incredibly strong and 
innovative workforce, but what we have got to be able to 
support not only innovation at the R&D level, we also have to 
be able to support commercial deployment. Without commercial 
deployment, we cannot continue to recognize the benefits that 
come from innovation.
    Ms. DeGette. So irrespective of the details of the Solyndra 
case which are still unfolding to this day, you think that 
these kinds of loan-support programs are important to 
development of the U.S. solar energy and jobs. Is that right?
    Mr. Silver. I think they are critical. They are only part 
of the fabric of what is necessary but they are critical.
    Ms. DeGette. Now, Mr.--pronounce your name for me.
    Mr. Zients. Zients.
    Ms. DeGette. Zients. Mr. Zients, I wanted to ask you 
because you talked about this Title XVII funding and there are 
a number of other projects that are receiving--and I believe 
over 40. Has that worked in other projects? Is it working in 
other loan situations?
    Mr. Zients. Well, the program is, as you know, relatively 
new, so loans have recently closed for the most part. And we 
have every reason to be optimistic that the portfolio as a 
whole will perform.
    Ms. DeGette. And how large is the portfolio as a whole?
    Mr. Zients. I defer to Jonathan on specific numbers. I 
think you have a good estimate in what you said.
    Ms. DeGette. Thank you very much. Thank you, Mr. Chair.
    Mr. Stearns. The gentleman from Texas, Mr. Barton, is 
recognized for 5 minutes.
    Mr. Barton. Thank you, Mr. Chairman.
    Just for the record, are you two gentlemen career civil 
service employees or are you political appointees?
    Mr. Silver. Political appointees, sir.
    Mr. Zients. Political appointee.
    Mr. Barton. Both, OK. Chairman Stearns alluded to this but 
I want to follow up a little bit. While President Bush was 
still in office on January the 9th of 2009, the Credit 
Committee, which is a part of the Department of Energy I 
believe did recommend against going forward with the Solyndra 
loan. Less than 2 months later, on March the 12th of 2009, the 
Credit Committee conditionally approved the loan. First of all, 
is that factually correct?
    Mr. Silver. The timeline is correct, sir. The Credit 
Committee--the first Credit Committee that met did not reject 
the loan. They remanded it back for further analysis. But your 
timeline with respect to the 2 Credit Committees is correct.
    Mr. Barton. The individuals that are on the Credit 
Committee, are those political appointees or civil service?
    Mr. Silver. Civil service.
    Mr. Barton. OK. Were the 2 Credit Committees identical in 
their makeup?
    Mr. Silver. I believe that to be true.
    Mr. Barton. So the same people in the same agency--to use 
your terminology--needed additional information--or anyway, 
they did not approve it in January but in March, the same 
committee made up of the same people did approve or 
conditionally approve. That is correct, right?
    Mr. Silver. No, sir. Technically, the Credit Committee does 
not approve a conditional commitment. The Credit Committee 
recommends a transaction for approval, which is then further 
reviewed by a group called the Credit Review Board, the CRB, 
and they----
    Mr. Barton. Well, instead of putting up a red light, they 
put up a green light or at least a yellow light?
    Mr. Silver. They indicated that the initial questions that 
had been--they had raised in the first meeting had been 
addressed. And they----
    Mr. Barton. All right. Now, what changed in the intervening 
period?
    Mr. Silver. Additional due diligence was conducted----
    Mr. Barton. Specifically, what changed?
    Mr. Silver. Well, as I say, additional due diligence was 
conducted----
    Mr. Barton. Well, specifically, what additional due 
diligence?
    Mr. Silver. Market--additional market research was 
developed and----
    Mr. Barton. Is that available and does the committee staff 
have it?
    Mr. Silver. I believe the committee staff has it. We have 
turned over over 35,000 pages of materials.
    Mr. Barton. But for purposes of this hearing under oath you 
are saying that what changed is additional information that 
wasn't available in January became available in the intervening 
period, is that correct?
    Mr. Silver. Additional due diligence was done----
    Mr. Barton. But additional due diligence doesn't cut it, 
OK? We need, you know, half a billion dollars was not supported 
in January under the Bush administration was supported, 
conditionally recommended in March. We know the one thing 
changed is that the President changed. We know that changed.
    Mr. Silver. I will be happy to get back to you, sir, with 
the additional information----
    Mr. Barton. But due diligence is a generic term.
    Mr. Silver. Well, it is a generic term but it covers very 
specific things, particularly research on market conditions, 
financial conditions, technical----
    Mr. Barton. Is it possible that one of the things that 
changed was political influence?
    Mr. Silver. I don't believe so, sir. I wasn't there but 
there is no indication in the record----
    Mr. Barton. Nobody commented to the White House that this 
project should go forward? There were no supporters of the 
President that stepped forward and had meetings and there were 
no White House officials that encouraged people at the 
Department of Energy to just--this was all done under a bubble 
top and purely on merit?
    Mr. Silver. Well, sir, I can't speak to that because I 
wasn't there, but what I will say to you is that the loan 
program career staff that was doing--did the work in 2008 under 
a Republican-appointed CFO continued to do that work under the 
same individual who was a----
    Mr. Barton. Well, let me ask one final question because my 
time is about to expire. Is it typical of a loan guarantee that 
a project 1) gets a half a billion dollars, and 2) that half a 
billion is 2/3 of the cost of the project, and 3) that the 
federal obligation is subordinated to private sector capital, 
which is a direct violation of federal law?
    Mr. Silver. There is no typical, sir, in answering that 
because every project financing is different and depends on the 
size, structure, and the technology that is being----
    Mr. Barton. So if myself and Mr. Scalise and Mr. Gardner 
and maybe for good measure Mr. Markey and Mr. Dingell put 
together a deal and asked for a half a billion dollars, it is 
acceptable under this program for it to be approved?
    Mr. Silver. Well, sir, if you had a legitimate project that 
went through----
    Mr. Barton. I think we could have a legitimate project that 
wouldn't go bankrupt within 2 years.
    Mr. Silver. If you had a project that met the criteria of 
the solicitation and was deemed to be eligible and went through 
technical, legal, financial regulatory and other kinds of due 
diligence and was deemed to be a potential process, then 
perhaps yes.
    Mr. Barton. OK. Thank you, Mr. Chairman.
    Mr. Stearns. I thank the gentleman. The distinguished 
ranking member, Mr. Waxman, is recognized for 5 minutes.
    Mr. Waxman. Thank you, Mr. Chairman.
    As I understand it, in 2005, the Congress passed the Loan 
Guarantee Program. We did this on a bipartisan basis because we 
wanted to move forward with these enterprises that would give 
us renewable and alternative energy rather than continue our 
reliance on fossil fuels. The idea of a loan guarantee is that 
we want them to borrow the money but we know there is an 
inherent risk in a new startup. Isn't that correct, Mr. Silver?
    Mr. Silver. Yes, sir. When Congress set up the program, it 
set it up specifically to compensate for the lack of debt 
financing for innovative energy and recognized the inherent 
risks in that by providing credit subsidy, which is essentially 
loan loss reserve.
    Mr. Waxman. No one wants to go and invest in the market in 
a solar energy, wind power, anything else, unless they know it 
is really going to return the investment and give them a 
profit. So the government has decided we will help these groups 
get started because it is important for our Nation to move to 
alternative energy.
    Mr. Silver. I agree with that and I would only add one 
caveat. We don't actually start these companies. They--the 
private sector does. In the case of Solyndra, almost a billion 
dollars of private equity had gone into this company before the 
government made its loan. And all the transactions that we work 
on have very, very significant private capital behind them.
    Mr. Waxman. I was taken aback by the figure that between 
1995 and 2010 the share of photovoltaic cells and panels 
manufactured in the United States dropped from 40 percent to 
just 6 percent. At the same time just since 2005, China's 
market has increased from 6 percent to 54 percent. So half of 
the world's largest 10 solar panel manufacturers are now 
Chinese. And we would like to be able to compete as well. And I 
gather your answer to Ms. DeGette is one of the reasons that 
China is outmaneuvering us is that the government is putting a 
lot more money behind their solar industry than we are doing. 
Is that right?
    Mr. Silver. Yes, sir. As I said, China has committed at a 
minimum $30 billion from the China Development Bank and another 
several billion----
    Mr. Waxman. And that is 20 times more than we are providing 
by way of any subsidies or loan guarantees.
    Mr. Silver. At least because there are other subsidies and 
incentives that the Chinese Government provides as well.
    Mr. Waxman. Well, who would be against such a thing? Well, 
I will tell you who would be. Entrenched fossil fuel industry 
wouldn't like this. This is competition for them. And I think 
that is playing a part in some of the reactions that I am 
hearing. But one of the key issues of this investigation, as 
identified by Chairman Stearns, has been whether DOE issued the 
Solyndra loan guarantee as a favor to George Kaiser, a major 
donor to President Obama's campaign. These are serious 
allegations. Mr. Stearns said the administration gives ``some 
of this money out to people who are either contributors or 
strong supporters.'' And he implied that the Solyndra loan 
decision was based on political favoritism.
    Before I ask you about these allegations, I would like to 
get a bit of background on this loan guarantee. My 
understanding is Solyndra applied to this loan in 2006 when 
Bush was president.
    Mr. Silver. That is correct, sir.
    Mr. Waxman. And the DOE invited the company to submit a 
full application to the program in October 2007.
    Mr. Silver. Yes, sir.
    Mr. Waxman. And December 4, 2008, DOE documents outline the 
Solyndra loan as one of the three highest priorities of the 
next 45 days. And all of this took place during the Bush 
administration.
    Mr. Silver. Yes, sir.
    Mr. Waxman. Now, in fact, January 5, 2009, email to a DOE 
official, John Scott of Solyndra, said, ``We think that a 
public announcement would acknowledge the hard work of the 
existing administration and the appointees in DOE and the LGPO 
as well as benefit Solyndra's fundraising efforts for the 
equity contribution.'' And in this email Mr. Scott was talking 
about the Bush administration. But the fact that the loan 
didn't close until President Obama took office seems to have 
given rise to allegations of political favoritism. Well, this 
Kaiser Group wasn't the only private investment. A lot of the 
investment came from another group that is called Madrone, and 
that is a Walton family. They give to Republicans. But they 
were looking to make an investment in a loan that was being 
guaranteed by the Federal Government.
    I would like to you ask you, Mr. Silver and Mr. Zients, 
about your interactions with Mr. Kaiser and his impact on this 
loan. Did you or your staff have any interaction with Mr. 
Kaiser relating to the Solyndra loan guarantee?
    Mr. Silver. Well, sir, as I said before, I was not here at 
that time. But no, I have never met or spoken to the man. And 
as I understand from my staff, neither have they.
    Mr. Waxman. And the staff of civil servants?
    Mr. Silver. Yes, sir.
    Mr. Waxman. Who have been around----
    Mr. Silver. Yes.
    Mr. Waxman [continuing]. Even to the time of the Bush 
administration. Mr. Zients, is that the same answer for you?
    Mr. Zients. Same for me, both personally and my knowledge 
of the OMB staff interaction.
    Mr. Waxman. Did either of you instruct anyone to give the 
loan guarantee to Solyndra or restructure the loan because of 
the donations to the President by Mr. Kaiser?
    Mr. Silver. No, sir.
    Mr. Zients. No.
    Mr. Waxman. Did anyone in the administration instruct you 
or your staff to grant or restructure the loan guarantee 
because of the donations to the President by Mr. Kaiser?
    Mr. Silver. No, sir.
    Mr. Zients. No.
    Mr. Waxman. Are you aware of anything that would suggest 
that Mr. Kaiser's donations to the President were a factor in 
determining whether to grant the Solyndra loan guarantee?
    Mr. Silver. No, sir. Again, I wasn't there but I have no 
reason to believe that.
    Mr. Zients. I was not actively involved but have no reason 
to believe that.
    Mr. Waxman. Can you assure us if the Solyndra decisions 
were made on the merits and that there was no favoritism shown 
towards Solyndra for any reason?
    Mr. Silver. It is my understanding that that is correct.
    Mr. Zients. My understanding is the same.
    Mr. Waxman. Our chairman has made some serious allegations. 
I think the real question before us is whether the vetting was 
done appropriately and whether it was done based on full 
representation by Solyndra about their economic viability. And 
I don't think we ought to use this failure of this particular 
guarantee to discredit was it an important loan guarantee in 
order to move to be able to compete in this area with China and 
to move our country away from dependence on fossil fuel.
    Thank you, Mr. Chairman.
    Mr. Stearns. I thank the gentleman. Dr. Burgess, the 
gentleman from Texas, recognized for 5 minutes.
    Mr. Burgess. And I thank the chairman. And I will agree 
with Ranking Member Waxman. We do want the availability of 
solar at the retail level of this country. I look forward to 
the day where I can reduce my electricity bill by putting some 
type of solar panel on my roof or in my yard, but have we 
advanced that vision of the future with the activities that 
have occurred in regards to this case, and in particular, the 
jurisdictions for which you two are responsible for, the 
Department of Energy and the Office of Management and Budget, 
which does have the responsibility for direct oversight?
    Now, Mr. Zients, in your testimony to us today, you talk 
about pressure testing I believe when you were talking about 
the interagency discussions, an important forum for asking the 
tough questions and pressure-testing assumptions. Well, let us 
think about that for a moment. A lot of emails that have now 
been produced to the committee, to the committee staff, and in 
going through those, we keep coming up against the notion that 
there was pressure all right but this is a pressure cooker. 
This wasn't a pressure test. This was we got to get this thing 
out the door because we have got a groundbreaking. And it might 
involve a trip by the President or a satellite appearance by 
the Vice President. So yes, there was pressure but it was 
pressure applied in pushing this thing out the door. In 
retrospect, was that the wrong kind of pressure to apply?
    Mr. Zients. Are there specific emails that you are 
referring to?
    Mr. Burgess. Yes, I would be happy to do that.
    Mr. Zients. Can I get a copy?
    Mr. Burgess. Were we providing him a copy of those emails? 
I think we are. I don't want to reference anyone's name because 
that is not appropriate.
    Ms. DeGette. Mr. Chairman, if I could be provided a copy of 
those emails, that would be helpful.
    Mr. Burgess. Will do it. We will be glad to do it.
    Mr. Zients. I am just looking at the top line at the dates 
here----
    Mr. Burgess. These are all available.
    Mr. Zients [continuing]. They appear to be in the August 
time frame where I am not, best of my knowledge, and the author 
of any of these emails are actually even on any of these emails 
as I was not actively involved. So I will comment but I don't 
know the intention of any specific email.
    At that period of time, OMB was playing its statutory role 
under FCRA to ensure that an appropriate credit subsidy score 
was given to the project. So this is not about whether the loan 
should go forward or not. This is about the accounting for the 
loan. And there was some scheduling requests from the VP's 
office and the VP's office was interested in potentially being 
part of an announcement of the closing of the very first loan. 
But I want to be crystal clear as to my understanding from my 
interactions with the staff in preparation for this hearing 
that those scheduling requests had no impact whatsoever on the 
credit subsidy score that was given to this project. OMB staff, 
based on its analysis, decided to increase the credit subsidy 
score to make it more conservative and DOE agreed with that, so 
the closing occurred after OMB staff had done a thorough 
analysis of the credit subsidy score and decided to increase 
the credit subsidy score to make it more conservative.
    Mr. Burgess. Well, let us----
    Mr. Zients. But the scheduling logistics had not been----
    Mr. Burgess. I am running out of time. Let me just 
reference August 27, 2009, 4:40 p.m., and this is an email from 
someone in OMB--``as long as we make it crystal clear to the 
Department of Energy that this is only in the interest of time, 
there is no precedent set that I am OK with it, but we also 
need to make sure that they don't jam us on later details so 
there isn't time to negotiate those, too,'' implying that there 
was pressure placed upon----
    Mr. Zients. Well, again, not being involved and not being 
on this email chain, I think what is clear is that OMB staff 
was--to the best of my understanding based on my discussions 
with OMB staff because I was not actively involved--comfortable 
with the credit subsidy score, which is the statutory 
responsibility of OMB, and in fact, the credit subsidy score 
was increased during the period of time----
    Mr. Burgess. Yes, and with all due respect, sir----
    Mr. Zients [continuing]. And DOE agreed with that----
    Mr. Burgess [continuing]. It doesn't sound like they were 
comfortable. They say it is in the interest of time. This time 
we will let it go, but tell those guys over at DOE that they 
are not going to jam us on this also.
    Mr. Zients. In preparation for this hearing, I talked to 
the OMB career staff and no one hesitated in my discussions 
with them as to whether they were comfortable with the final 
determination of the credit subsidy score for this project. And 
as I said, the credit subsidy score was increased--i.e., made 
more conservative--as a result of the OMB analysis and DOE 
agreed with that.
    Mr. Burgess. Let me just in the remaining time, Mr. Silver, 
ask you, this is the filing with the SEC on the S-1 report from 
March 2010 on the planned initial public offering, and 
Solyndra's auditor, PricewaterhouseCoopers, stated the 
company's S-1 amended, ``though the company has suffered 
recurring losses from operations, negative cash flow since 
inception, it has a net stockholder deficit, and it raised 
substantial doubt about its ability to continue as going 
concern,'' did this prompt any curiosity on your part or did it 
change anything about the Department of Energy's behavior about 
this application?
    Mr. Silver. Well, let me respond first, Congressman, as a 
former venture capitalist and tell you that frequently 
companies, particularly high-growth companies like Solyndra, 
will make filings for companies that, while they are growing 
rapidly, still are continuing to burn case. A going concern 
review by an independent auditor is--accompanies that kind of 
scenario. I should also point out that in the time frame----
    Mr. Burgess. Sir, I am going to run out of time, but with 
all due respect, venture capital is different from a government 
investment, a taxpayer subsidy----
    Mr. Stearns. The gentleman's time has expired.
    Mr. Burgess. This is a different universe and your response 
as a venture capitalist is likely not consistent with being a 
good steward of the taxpayers' money. And I will yield back to 
the chairman. Thank you.
    Mr. Stearns. The gentleman yields back. We recognize the 
chairman emeritus of the Energy and Commerce Committee, the 
gentleman from Michigan, Mr. Dingell, for 5 minutes.
    Mr. Dingell. You are most kind. Thank you, Mr. Chairman. I 
am very pleased to see that we are having proper oversight and 
it is my hope as we move forward that if the majority has 
evidence of wrongdoing, they will present it to us so we can 
take proper action.
    Mr. Silver, you say in your testimony that Solyndra first 
applied for a guaranteed loan in 2006 when President Bush was 
still in office, is that correct?
    Mr. Silver. Yes, sir.
    Mr. Dingell. I understand you had people who worked within 
the Loan Program Office and who do the due diligence on 
determining the quality and feasibility of loan applications. 
Are these people political appointees?
    Mr. Silver. No, sir, career----
    Mr. Dingell. They are career?
    Mr. Silver. And analysts and advisors.
    Mr. Dingell. Good. So the staff reviewing application for a 
guaranteed loan over the past 5 years are not political 
appointees but instead are rather career, nonpolitical 
employees who serve from administration to administration, is 
that right?
    Mr. Silver. Yes, sir.
    Mr. Dingell. All right. Now, although I understand that you 
haven't yet been at the loan office, is it your assessment that 
the guaranteed loan was awarded based on the project proposal 
and the strength of the application and not on any political 
influence? Remember, you are under oath.
    Mr. Silver. To the best of my knowledge--and as you point 
out I wasn't there--but to the best of my knowledge, yes.
    Mr. Dingell. OK. So nonpolitical career Department of 
Energy employees while serving under the Bush administration 
recommended a timetable to award Solyndra a guaranteed loan. 
Was this the timetable against which the loan was eventually 
committed?
    Mr. Silver. The career staff identified the timeframes 
after having brought it forward in the first Credit Committee 
as marked for a second Credit Committee and produced it at that 
time, yes.
    Mr. Dingell. All right. Let us go fast-forward a year to 
2010 when Solyndra approached the Department of Energy for 
further assistance. Was this due to low-cost competition from 
Chinese manufacturers, Solyndra needed help? If your office had 
not agreed to restructure the loan, would Solyndra have gone 
bankrupt in 2010?
    Mr. Silver. Yes, sir.
    Mr. Dingell. Now, without the structured loan or 
restructured loan, would Solyndra have had any chance of 
success?
    Mr. Silver. It is hard to imagine how since they had a 
liquidity crisis. They were out of operating capital.
    Mr. Dingell. Now, would the company's 1,100 workers been 
laid off in 2010, then?
    Mr. Silver. I would assume so, yes.
    Mr. Dingell. Solyndra secured an additional $75 million 
from investors as part of a loan restructuring. Is it a 
standard in loan restructuring for new investment to have 
priority in the case of a liquidation?
    Mr. Silver. It is very typical.
    Mr. Dingell. Now, Mr. Chairman, I have been waiting 
anxiously to hear what we have to show that there is wrongdoing 
here, and I am still waiting to see something that makes me be 
concerned that we have here some wrongdoing. And I don't want 
us to proceed just on suspicions or doubtful questions or 
misinterpretations of emails or finding emails where none 
exist. Now, let us try and see what took place.
    First, during the Bush administration, Solyndra submitted a 
pre-application for a loan guarantee. Second, that then a 
financial and technical review were conducted. In October 2007 
the Department of Energy invited Solyndra and 15 other 
applications to submit full applications. Solyndra submitted 
their full application in 2008. Later, in 2008, the Department 
of Energy indicated that Solyndra was in the best position to 
receive the first loan guarantee. You remember this was under 
the Bush administration. In January 2009, during the final days 
of the Bush administration, the Department set forth a timeline 
to complete due diligence on the Solyndra application that 
would lead to approval by the spring of 2009. Next came in the 
administration of President Obama. Now, during that spring of 
2009, the Department continued to do its due diligence and 
completed its work in August. The loan guarantee was issued in 
September 2009, 3 years after the pre-application was 
originally submitted.
    I am looking forward to hearing from the committee 
leadership and from the committee staff is there anything in 
the record to suggest this proposal was rushed through or that 
improper consideration was given or that there was any improper 
or illegal pressure or political activity which might have led 
to us being where we are today? I would urge my colleagues to 
look hard for the facts and take all the facts into 
consideration and to see to it that as we go about our 
business, we are careful in finding the truth and not just 
having a splendid time making unjust accusations regarding the 
program and the administration. Thank you.
    Mr. Stearns. The gentleman's time has expired. I recognize 
the gentleman from Nebraska, Mr. Terry.
    Mr. Terry. Thank you, Mr. Chairman. And I would agree with 
the chairman emeritus that we do need to do our due diligence 
and find out on behalf of the taxpayers what went wrong here. 
And that does need to be our ultimate mission.
    There is a theme that I am picking up in the questioning, 
and that is I think everyone must agree that there is some 
scandal involved in this. And I am reaching this conclusion by 
the amount of time spent to ensure that people believe that 
this was somehow approved and all of the work done under the 
Bush administration. That seems to be the MO is if there is a 
crisis that occurs today, blame it on the past administration.
    And so just to set some facts straight because even you, 
Mr. Silver, mentioned in your written testimony provided to us 
that Solyndra submitted its initial application in 2006 and 
much of the ``extensive due diligence on the transaction was 
conducted between 2006 and 2008,'' but the irrefutable fact is 
that on January 9, 2011, the Bush administration DOE Credit 
Committee remands the Solyndra application calling it premature 
and citing unresolved issues. So it seems to me that not all of 
the ``extensive due diligence'' on the transaction was 
conducted between 2006 and 2008 but that the Bush 
administration said very specifically that the application 
required much more due diligence.
    Then you said, Mr. Silver, if I am correct that you said in 
2011 more due diligence was done that led to the approval. Is 
that a correct statement?
    Mr. Silver. I believe you mean 2009, Congressman?
    Mr. Terry. Well, yes.
    Mr. Silver. Yes, additional due diligence--it is my 
understanding that additional due diligence was done from the 
time the initial Credit Committee remanded it back to the loan 
program effort through to the next Credit Committee, which met 
subsequently in March. And during that time, additional work on 
market research and legal and technical matters and other kinds 
of things that would normally make up the responses to the 
questions that the Credit Committee had asked were developed 
and answered.
    Mr. Terry. Then after the president was inaugurated, an 
email from a DOE staffer states that we are approaching the 
beginning of the approval process for Solyndra again. So the 
work continued on the application, correct?
    Mr. Silver. Yes, that is my understanding.
    Mr. Terry. Now, what we would like to know is--Mr. Waxman 
was going down this path so I am going to follow up on his 
questions--he asked in a way that made you responsible for 
assuming motives of other people. I am just going to ask you 
point-blank. After you started your role at DOE or in your 
role, did you receive any communications from a White House 
employee, personnel, Carol Browner, Rahm Emanuel, anybody 
regarding the Solyndra loan?
    Mr. Silver. You mean in----
    Mr. Terry. Yes or no. Did you----
    Mr. Silver. When I joined?
    Mr. Terry. Yes.
    Mr. Silver. No, when I joined----
    Mr. Terry. You had no communications from anyone----
    Mr. Silver. The Solyndra loan, it was closed in September, 
sir, and I arrived in November.
    Mr. Terry. What about the restructuring time period?
    Mr. Silver. Well, the restructuring occurred approximately 
a year later, was largely conducted on a staff-to-staff basis. 
There were interactions----
    Mr. Terry. Were there interactions then--if you are denying 
that you received any communications directly from the White 
House to you----
    Mr. Silver. No, what I am trying to describe to you----
    Mr. Terry. That is my question, so please answer my 
question. Did you receive during your time there any 
communications from anyone from the White House regarding the 
Solyndra loan? That is an easy question. It is either yes or 
no.
    Mr. Silver. And it actually has an easy answer. We work 
regularly on this transaction and every other transaction with 
our interagency colleagues at OMB and at the----
    Mr. Terry. I said White House.
    Mr. Silver. I am not sure what distinction that is. We work 
with the OMB----
    Mr. Terry. Oh, really?
    Mr. Silver [continuing]. And any----
    Mr. Terry. How about--you want me to start naming 
individuals. Carol Browner and her staff, did you receive any 
communications? I think the question is very clear and you 
are----
    Mr. Silver. It is and what--the answer to this----
    Mr. Stearns. Mr. Silver, you are under oath and you need to 
answer the question yes or no.
    Mr. Silver. The question is do we interact with elements--
with different agencies and the answer to that question is yes, 
extensively.
    Mr. Terry. I did not say different agencies. I said White 
House.
    Mr. Silver. Well, individuals in those agencies, we work--
--
    Mr. Terry. OK. So you did receive communications directly 
to you from somebody in the White House?
    Mr. Silver. I don't recall who would have been involved 
directly. What I can tell you is the discussions around these 
transactions as Mr. Zients referred to are conducted on a 
staff-to-staff--career staff-to-career staff basis working to 
develop the transaction.
    Mr. Terry. So once again, have you received--you received 
any communications regarding the Solyndra loan from anyone from 
the White House?
    Mr. Silver. Well, I mean Mr. Zients and I have talked about 
it.
    Mr. Terry. OK. Mr. Zients, have you? It is fairly clear 
obviously Mr. Silver is not going to answer the question.
    Mr. Zients. Well, again, as to the loan itself, I wasn't 
involved when the loan was closed. As to the restructuring, 
yes, I do interact with components of the White House. I would 
make a distinction between OMB and the White House to get--to 
tap into their expertise on energy and on financial markets.
    Mr. Terry. OK. And who was the person that you were 
communicating with in the White House?
    Mr. Zients. The primary expertise resided at the time what 
was then the Office of Energy and Climate Control.
    Mr. Terry. That was Carol Browner's office?
    Mr. Zients. Carol Browner led that office, yes.
    Mr. Terry. Did they suggest to you--my time is up.
    Mr. Stearns. Thank you, gentleman. And the gentleman from 
Massachusetts, Mr. Markey, is recognized for 5 minutes.
    Mr. Markey. Thank you, Mr. Chairman, very much. I will just 
note, first of all, that if you want to waste American 
taxpayers' dollars, let us talk about the oil industry at 
record high profits getting $41 billion worth of tax money from 
taxpayers. And secondly, if you want to talk about loan 
guarantees, the Southern Company has received a loan guarantee 
15 times larger than Solyndra, and if we are going to reexamine 
whether or not that is a good investment after Fukushima, after 
the earthquake near the North Anna Plant, let us have that 
hearing, because I think that money is in jeopardy if you are 
really concerned. That is 15 times larger. We know we will 
never have a hearing on the oil industry or the nuclear 
industry in this committee. This is all part of an agenda here 
that deals with the solar industry, the wind industry.
    So let us go back in time here, Mr. Silver, and it is back 
in 2009. You are looking at this loan guarantee. What does the 
market look like for solar?
    Mr. Silver. Well, although I wasn't at the Department in 
2009, I do have a point of view on the solar industry then. 
Polysilicon prices were extraordinarily high and the cost--what 
they call balance-of-systems costs of putting conventional 
solar paneling on roofs, which involved penetrating the roofs 
as well, was very, very expensive. So the Solyndra technology, 
which had received a lot of attention during that period, was 
particularly innovative because it addressed both of those key 
problems.
    Mr. Markey. In general you are not providing this financing 
to Fortune 500 companies. You are providing them to companies 
that are largely startups with innovative technologies to 
ensure that we are in this marketplace. Is that not correct?
    Mr. Silver. That is, Congressman, and with the added 
addition that the companies themselves are required to raise 
substantial amounts of capital and Solyndra had already raised 
many, many hundreds of millions of dollars.
    Mr. Markey. Now, when these loan guarantees were being 
provided, at any time did your agency or any part of the 
Federal Government project a 42 percent drop in the price of 
solar panel prices in an 8-month period?
    Mr. Silver. Well, not only did they not project the 42 
percent drop this year, but between 2008 and now, that price 
had dropped about 80 percent. And most analysts were surprised 
by that.
    Mr. Markey. So just so we can have an honest discussion 
here, there is a Moore's Law for solar, and I hold up the 
chart, and that is that every time there is a doubling of solar 
panels worldwide in deployment, the cost of producing them goes 
down by 18 percent. And that phenomenon has become very 
predictable. Now, in 2011, so we can see the forest for the 
trees, the Chinese funded $20 billion for 4 solar companies in 
2010. And we have seen in the first 8 months of this year a 42 
percent collapse in the price of these solar panels. Was that 
foreseeable in 2009?
    Mr. Silver. It was not, although China's commitment to this 
was increasingly clear. And actually, I believe, Congressman, 
that number is closer to $30 billion.
    Mr. Markey. Did anyone in the marketplace predict a 42 
percent drop in the price of these solar panels in 2011?
    Mr. Silver. I can't speak for every analyst out there but 
certainly many, many professionals following the industry were 
surprised.
    Mr. Markey. Were surprised. Now, let us go to the 
marketplace at large. Evergreen went bankrupt this year in the 
United States. SpectraWatt went bankrupt. German Solar SE shut 
down their Arizona solar facility. BP Solar shut down their 
facility in Frederick, Maryland. Emerging Conversion and 
Daystar Technologies lost 80 percent of their market value this 
year. This 42 percent drop this year is as a result of the 
Chinese intervention in this marketplace. This was not knowable 
in 2009. This was not knowable in 2010. This was a market 
intervention.
    Now, if the Republicans think that like Johnny Carson's 
Carnac that there is an envelope, you know, with the answer in 
it that was available in 2009, they are kidding themselves. We 
are in a race. We are in a global race here and we are doing 
our best to make this case to the Republicans on this 
committee. While they keep the loan guarantees for nuclear 
intact as they pass their budget, while they continue to 
protect those oil company tax breaks up to $41 billion, they 
are turning on a pin on a collapsing market here in the United 
States on something that really is related to the fact that we 
are not focusing upon the Chinese intervention into this 
marketplace.
    So I just hope that the administration and their policy of 
financing these kinds of programs--and I think for the most 
part it has been a big success story and I think we have to 
keep that in mind as well--is something that this committee 
keeps in their mind as we move forward.
    I thank you, Mr. Chairman.
    Mr. Stearns. Mr. Sullivan is recognized for 5 minutes.
    Mr. Sullivan. Thank you, Mr. Chairman. I appreciate you 
holding this.
    Mr. Silver, on January 9, 2009, the Credit Committee during 
the Bush administration found the Solyndra deal to be premature 
and stopped all further work. An email sent by DOE Credit 
Committee a few days later stated that it was a unanimous 
decision not to engage in further discussions with Solyndra at 
this time, and yet on January 26, 2009, after the Obama 
administration came in, a DOE staffer notes in an email that 
``DOE has decided to restart the approval process for 
Solyndra.'' What prompted this decision?
    Mr. Silver. Well, Congressman, again, since I wasn't there 
I can only give you my review of the record, but it appears to 
me when the first Credit Committee remanded it back, what they 
specifically did was to say we have specific questions which we 
need answered before we can take this application up again. The 
career staff in the loan programs office then went to work 
answering those questions, and when they had been resolved, 
brought the transaction forward again.
    Mr. Sullivan. This was about 2 weeks before the stimulus 
was signed into law. Didn't that have something to do with it?
    Mr. Silver. Not to my knowledge, no.
    Mr. Sullivan. Secretary Chu directed DOE to accelerate the 
process and deliver the first loan in a matter of months. Is 
that right?
    Mr. Silver. I don't know what the Secretary said 
specifically, but the Recovery Act certainly had a focus on 
bringing projects forward quickly. In fact, as you know, 
Congressman, there is a sunset date of September 30 of this 
year to get the 1705 projects done. And you know, a lot of work 
has gone into this and other programs to move monies as 
efficiently, effectively, and yet as prudently as possible.
    Mr. Sullivan. Solyndra's application was part of Secretary 
Chu's acceleration process. You know that is right, don't you?
    Mr. Silver. I assume that to be true, but again, I wasn't 
there.
    Mr. Sullivan. So you say yes?
    Mr. Silver. I assume that to be the case.
    Mr. Sullivan. OK. What did DOE do to accelerate this 
process? At this time, the DOE loan programs office was very 
thinly staffed, is that right?
    Mr. Silver. It depends on your definition of thinly, but 
yes, there were not very many people there.
    Mr. Sullivan. How many employees did it have?
    Mr. Silver. I don't know at the time, sir, but I believe it 
was between 10 and 20.
    Mr. Sullivan. Did it even have the resources to do the 
review under the Secretary's accelerated time frame?
    Mr. Silver. Yes. Remember, the loan program's professionals 
make use of outside advisors as well.
    Mr. Sullivan. Well, I want to resolve a discrepancy here. 
You stated that Solyndra was accelerated per Secretary Chu's 
policy and yet in your testimony you state that Solyndra 
proceed, ``on the exact timeline that had been developed under 
the Bush administration.'' Which is it and can you clarify 
this?
    Mr. Silver. Well, I don't think those 2 statements are 
incompatible. The career staff in the loan programs office 
identified the March time frame as when they would come back to 
the Credit Committee when the proposal was originally sent back 
to them.
    Mr. Sullivan. You mentioned earlier when I just came in 
that you are a private equity or you worked on Wall Street or 
what did you----
    Mr. Silver. A bit of everything.
    Mr. Sullivan. OK. So you have looked at businesses and you 
have seen if they are worthy or not. In that capacity, would 
you lend a half a billion dollars to this company in the 
information----
    Mr. Silver. Well, I am by training and background both a 
venture capitalist and a hedge fund investor, but I am in 
position really to second-guess having not been there what the 
transaction that occurred. What I can tell you is this. 
Extensive due diligence was done across multiple years on all 
of the relevant characteristics that would go into a typical 
project financing.
    Mr. Sullivan. OK. If we could look at Slide 10, could 
someone pull that up?
    [The information appears at the conclusion of the hearing.]
    I would like to ask you about this, OMB. ``Given the time 
pressures we were under to sign off on Solyndra, we don't have 
time to change this model.'' This is what they are saying 
between each other. ``As long as we make it crystal clear to 
DOE that this was only in the interest of time and that there 
was no precedent set, then I am OK with it. But we also need to 
make sure they don't jam us on later deals so there isn't time 
to negotiate those, too.'' This was on August 27. Biden wants 
to do an appearance very soon after that. The stimulus was done 
on September 4. What do you have to say about this?
    Mr. Zients. I wasn't involved in this but based on what is 
on the screen here, I think this has to do with the closing of 
the transaction and OMB's role at that point is to make sure 
that the credit subsidy score is correct from a budgeting-cost 
perspective. It is not about the loan overall at that stage; it 
is about the credit subsidy score. And my understanding, having 
talked to staff in preparation for this hearing, is that staff 
was very comfortable and had no hesitation as to its final 
determination of the credit subsidy score, which as I mentioned 
earlier, the credit subsidy score has actually increased as a 
result of OMB's analysis and DOE concurred with that. So the 
credit subsidy score was made more conservative in that period 
of time as it was signed off in preparation for closing of the 
loan.
    Mr. Sullivan. Well, she said there was a problem with the 
model. Do you think that is a problem----
    Mr. Zients. Again, not having been there, not knowing the 
author's intent, what I can tell you that in preparation for 
this hearing, I have talked to OMB career staff and there was 
no hesitation that they expressed to me as to whether the final 
credit subsidy score was indeed one that they were comfortable 
with. And it was increased as a result of the OMB analysis and 
DOE agreed with that increase.
    Mr. Sullivan. Well, the Solyndra----
    Mr. Stearns. The gentleman's time has expired.
    Mr. Sullivan. Thank you, Mr. Chairman.
    Mr. Stearns. Ms. Christensen is recognized for 5 minutes.
    Mrs. Christensen. Thank you, Mr. Chairman. I want to also 
just thank our ranking members for insisting that we hear from 
the Solyndra officials. It is important that we get the fullest 
picture, especially since my reading of the testimony suggests 
that DOE and OMB appear to have done adequate due diligence and 
that part of the collapse of Solyndra at least appears to be 
due to forces beyond their control.
    Nevertheless, this subcommittee has the responsibility to 
determine all the facts and apply relevant lessons learned 
going forward. But I also think it is important that we accept 
that innovation always carries some degree of risk, and it is 
also important that we not use the failure in this instance or 
even others as an excuse to turn away from the pursuit of green 
energy, a green economy, and the U.S. leadership in this area.
    So my questions, then, are to Mr. Silver. I would like to 
ask you to take me through the DOE's monitoring system for 
loans as it existed in 2009, 2010, and how it exists now. I do 
want to point out that a series of GAO and DOE Inspector 
General reports dating to the Bush administration have 
identified problems with management and controls in the DOE 
Loan Guarantee Program. So it is fair to point out that these 
programs did not begin with you. Still, it is important to 
ensure accountability for how this program is run.
    So the first question, after the Solyndra loan guarantee 
was first closed in 2009, what mechanisms did DOE use to 
monitor Solyndra's cash flow?
    Mr. Silver. In addition to our origination teams, our 
credit teams, our legal teams, our technical teams, and our 
regulatory teams, we also have a portfolio management group, 
and their responsibility is to monitor transactions post-
closing against the covenants in each individual transaction.
    Mrs. Christensen. Were there site visits to California or--
--
    Mr. Silver. There are regular site visits.
    Mrs. Christensen. How did DOE's practices change when the 
loan was restricted in 2011?
    Mr. Silver. Well, the principle difference was that in 
addition to picking up certain additional collateral for the 
loan, we negotiated and took an observer's seat in this 
particular transaction. Now, I should say, Congresswoman, that 
that is an unusual thing to do and to have. Typically lenders, 
including lenders in the private sector, do not have board 
seats or even generally board observe seats, but we thought it 
was important to do that in order to be able to continue to 
monitor it.
    Mrs. Christensen. So despite this ongoing monitoring, it 
does not appear that DOE anticipated Solyndra's deep financial 
troubles this summer. So Mr. Silver, how would you explain 
this, that you were not able to anticipate the deep financial 
troubles?
    Mr. Silver. Well, as several members have mentioned and as 
I mentioned in my opening remarks, the precipitous price drop 
of the silicon and panel prices has deeply contributed to that. 
I should note that we, too, anticipated there would need to be, 
you know, additional support for this company in the out years 
as it continued to grow, and that was built into the 
restructuring transaction as well.
    Mrs. Christensen. Mr. Silver, I know that Solyndra was 
raided by the FBI and the DOE Inspector General following the 
bankruptcy announcement. Do you know why this raid occurred?
    Mr. Silver. No, ma'am, I have no idea. I am not part of 
that investigation or privy to it.
    Mrs. Christensen. Did Solyndra ever mislead DOE that you 
know of? Do you have any reason to think that the company was 
not providing you with all appropriate information?
    Mr. Silver. I have no reason sitting here today to believe 
that we were misled.
    Mrs. Christensen. So what lessons have you learned? Have 
DOE's loan monitoring practices changed since you began as 
director of the Loan Guarantee Program in the fall of 2009? Do 
you anticipate making further changes in response to the loss 
of taxpayer funds as a result of the Solyndra bankruptcy?
    Mr. Silver. Well, the entire program has changed, 
Congresswoman. When I got there, there were about 35 people. We 
know have between 180 and 200 people, deep bench strength in 
each of the areas that I identified. We built out, among other 
things, an electronic portal which permits applicants to submit 
electronically, thereby capturing all their data and shrinking 
the intake time. I might mention as an aside that we won a 
national award for that software. We built out a complete 
records management piece which had not existed heretofore and 
we will continue to make additional improvements as can.
    Mrs. Christensen. Thank you for this information. One of 
the key roles for the committee moving forward will be to 
understand why DOE did not foresee the Solyndra bankruptcy 
earlier-you have helped us at least some information regarding 
that--and whether there are ways to improve the system from 
monitoring projects that better fit the program. Thank you for 
your responses.
    Mr. Silver. Thank you, ma'am.
    Mrs. Christensen. I yield.
    Mr. Stearns. The gentlelady yields back. The gentlelady 
from Tennessee is recognized for 5 minutes, Ms. Blackburn.
    Mrs. Blackburn. Thank you, Mr. Chairman. And thank you both 
for being here with us. Just a couple of questions and I know 
you have been here for quite a while.
    I have got a couple of emails I want to put up here. Mr. 
Silver, you said you had worked on Wall Street and----
    Mr. Silver. No, I didn't work specifically on Wall Street.
    Mrs. Blackburn. OK.
    Mr. Silver. Midtown but for a hedge fund, yes.
    Mrs. Blackburn. For a hedge fund. OK. So you are pretty 
used to reviewing companies and looking at the history of 
companies and deciding if something is going to be a good 
investment or not, correct?
    Mr. Silver. Yes, ma'am.
    Mrs. Blackburn. OK. And I would imagine that DOE had a file 
that was passed onto you when you came into your position. Did 
they have a file that contained the different loans that had 
been approved and the tracking on those, the accountabilities 
to the taxpayer? Because, you know, we are about fairness for 
the taxpayer.
    Mr. Silver. Yes, as are we, and yes, there were files.
    Mrs. Blackburn. OK. So you did have files. OK. Mr. Zients, 
did you get a file at OMB on Solyndra and the due diligence 
that was done and then the process that was followed?
    Mr. Zients. I became involved with Solyndra around the 
period of the restructuring.
    Mrs. Blackburn. Not the question. Did you receive a file 
that goes back to day one?
    Mr. Zients. No.
    Mrs. Blackburn. So you had no knowledge of the history?
    Mr. Zients. Well, OMB's role here, as I have talked about 
before is specifically on FCRA around----
    Mrs. Blackburn. Sir, not my question. Did you get a file? 
Was there some history of the process?
    Mr. Zients. I was briefed by our staff on the history of 
the process.
    Mrs. Blackburn. But nothing in writing?
    Mr. Zients. I reviewed documents that the staff produced 
but there is not one comprehensive----
    Mrs. Blackburn. Sir----
    Mr. Zients [continuing]. File that I had been exposed to.
    Mrs. Blackburn [continuing]. There is no Solyndra loan 
guarantee file at OMB is what you are saying?
    Mr. Zients. My assumption would be, although I don't--I 
have not seen it--that the career staff, yes, maintains a file 
on Solyndra. That is not something----
    Mrs. Blackburn. But you have not seen that?
    Mr. Zients. No.
    Mrs. Blackburn. OK. All right. Now, there are 2 emails here 
and let us talk about these for a minute. The first one, August 
19, an email between the DOE staff--dated the 19th--stated that 
``We still have a major outstanding issue, the issue of working 
capital assumptions.'' Mr. Silver, I assume you know a little 
bit about that--``has been a major issue repeatedly raised 
since December '08. You want to pay attention to those dates. 
Now, let us look at the next day there is an email. Now, Mr. 
Markey was concerned that no one seemed to be Carnac and have a 
silver ball. Well, it looks like we might have somebody that 
was doing a little bit of looking ahead. So let us talk about 
this. That email says, ``The issue of working capital remains 
unresolved. The issue is cash balances not cost. Solyndra seems 
to agree that the model runs out of cash in September 2011 even 
in the base case without any stress. This is a liquidity 
issue.'' Mr. Silver, what do you say to that?
    Mr. Silver. Well, that would not be surprising in a 
modeling scenario. That is, in fact, exactly what you use 
modeling to do, to identify where there are holes in the 
project. It also does----
    Mrs. Blackburn. Have you ever seen this email?
    Mr. Silver. I have not seen this specific----
    Mrs. Blackburn. This is the first time you have seen this 
email. Were you aware that the liquidity issue had arisen?
    Mr. Silver. I was aware that the liquidity----
    Mrs. Blackburn. Was that in the file?
    Mr. Silver. I don't honestly remember if that was in the 
file or not. Again, I arrived in November----
    Mrs. Blackburn. Just remember you are under oath.
    Mr. Silver. I am deeply aware of that, Congresswoman.
    Mrs. Blackburn. OK. Let us go on to the rest of this.
    Mr. Silver. Just to be clear, though, I arrived in November 
of 2009 and since the loan was already issued at that point, we 
essentially move into the role that a bank managing a mortgage 
would. We manage the loan.
    Mrs. Blackburn. Yes, sir. And I appreciate that. That is 
why I asked if you were passed a file. My assumption would be--
and you know, Mr. Chairman, my goodness, I would think if we 
have got loan guarantee programs going in different agencies 
and there is not a comprehensive file that will give the 
history of that that would show the due diligence that would 
document this, that would show the orderly process that was 
followed, or as Mr. Waxman was so concerned about the vetting 
process, my goodness, we should be reviewing every one of these 
loan programs. Is OMB not looking at this on a comprehensive 
basis to make certain that individuals are meeting their 
timelines, that someone is following this. Are they just 
sending this money out in droves and nobody is doing the 
follow-up? So we will want to do that. Let us look at the rest 
of this email. And I am quoting----
    Ms. DeGette. Chairman, with all due respect, I believe she 
is badgering the witness and I would----
    Mr. Stearns. Let the gentlelady finish her testimony.
    Mrs. Blackburn. ``How we can advance a project that 
hasn't''----
    Ms. DeGette. Time has expired.
    Mrs. Blackburn [continuing]. ``Funded working capital 
requirements if it generates a working capital shortfall of $50 
million when working capital assumptions are entered into this 
model?'' Now, that was the question that was asked. And to all 
of my colleagues, I just think that, you know, when you look at 
this and you see that someone at DOE was asking those questions 
and was looking at that modeling, it should cause us to seek to 
do a little bit more review and oversight. And I yield back.
    Mr. Stearns. The gentlelady's time has expired. Ms. 
Schakowsky is recognized for 5 minutes.
    Ms. Schakowsky. All right. Thank you, Mr. Chairman. You 
know, I agree that we should closely examine what went wrong 
and how the loan guarantee process can be improved if it needs 
improvement. But I am very concerned here that this is an 
attack on a program that, let us face it, when you invest in 
various innovative and novel technologies that we need to do, 
it is not true, Mr. Silver, that there is some inherent risk 
associated with each of these deals, not with just Solyndra?
    Mr. Silver. There is risk and almost by definition in the 
identification of the innovation itself, in building out that 
innovation at scale, there is an old adage that every bank 
wants to be the first bank to do your second loan. The program 
is intended to be the first bank to do the first loan.
    Ms. Schakowsky. You know, my colleagues certainly obviously 
want to make this a political issue, but they also talk about 
not wanting to pick winners and losers. And for heaven's sake, 
as my colleague said, we are investing right now billions of 
dollars in oil and gas companies. We are investing, as my 
colleague Mr. Markey said, in a questionable technology, risky 
technology called nuclear. But I want to know that in selecting 
projects for loan guarantees, what efforts have you taken to 
ensure that you have appropriately diversified our portfolio?
    Mr. Silver. Well, thank you for that question. I want to be 
quite clear on this. The Loan Guarantee Program does not 
perceive itself to be in the business of picking winners or 
losers at all. In fact, the marketplace is the place to do 
that. And as someone who has come directly from that, I 
certainly support and attest to that. We don't actually look at 
projects that have not already garnered or will, as part of the 
process, attract substantial private capital. In fact, private 
capital is one of the bedrock requirements for the issuance of 
a loan guarantee.
    The question isn't really so much are we picking winners 
and losers because we not only, as you point out, invest across 
a diversified portfolio--we invest in wind, solar, geothermal, 
biofuels and the like--we also invest in directly competing 
technologies within those sectors because it is the program 
objective, the program mandate to introduce a wide range of 
innovative technologies so that the marketplace, seeing these 
projects, can then replicate them on their own. And when the 
markets are in those areas, we exit.
    But the real issue is how are we going to pick--if we are 
not going to substantially--if we are not going to be 
significant participants in this, then how are we going to 
build these American companies at all? Because China and the 
rest of the world are spending billions and billions of dollars 
to build out these industries.
    Ms. Schakowsky. Now, on September 2, 2011, a Forbes article 
noted that this program should be judged based on its entire 
portfolio as opposed to one individual loan. I wonder if you 
could talk about that, just put this particular loan in 
context, either one of you.
    Mr. Silver. Absolutely. I am happy to do so. We have 
invested, as I said, in a wide range of technologies. I do want 
to point out that the vast majority of our investments have 
been in generation projects rather than in manufacturing 
projects. And the reason that is important is because 
generation projects have what are called off-take agreements 
through PPAs, power purchase agreements typically with 
utilities, which means that the power that is being created, 
the clean energy power that is being created is already 
contracted for. And it has--the generation projects which make 
up the vast majority of our portfolio have a vastly different 
risk profile than manufacturing projects do. We have actually 
only done 4 manufacturing projects in the 40-odd projects we 
have done across the program.
    Ms. Schakowsky. What would be the consequences do you think 
if this investigation ended up in a conclusion that making 
investments in companies that do alternative energy, solar in 
particular, what would the consequences for our country be if 
we were to divest of those kinds of loans?
    Mr. Silver. I think the consequences would be profound and 
they would be profoundly negative. We are competing with 
countries around the world who see this as one of the largest 
industrial sectors and industrial opportunities of the next 
generation, and if we cede the field, if we walk off of the 
field, there is no way that we can succeed because this--these 
industries are different in kind than perhaps the software 
industry. You need platform companies here in order to be able 
to succeed.
    As I pointed out earlier in my testimony, five of the 
largest solar panel companies are in China. Seven are in Asia. 
The eighth is in Europe, and there are only two here. You need 
to build out at scale. You need to deploy commercially because 
that is how you build out the supply chains in these countries. 
You have to create what economists call demand pull. And if you 
don't do that, you can't keep those supply chains alive and 
they can't, in turn, reduce their costs. So consequently, we 
have underinvested in the supply chains in this country in 
clean energy for decades and we are only now beginning to catch 
up.
    Ms. Schakowsky. Thank you. Thank you for your work.
    Mr. Silver. Thank you.
    Mr. Stearns. The gentlelady's time has expired. The 
gentleman from Georgia, Mr. Gingrey, is recognized for 5 
minutes.
    Mr. Gingrey. Mr. Chairman, thank you.
    I first off wanted to make a statement in regard to a 
couple of my colleagues on the other side of the aisle 
comparing Solyndra--this bankrupt company totally unproven 
technology--to the Southern Company. I take a little exception 
to that comparison. Southern Company owns Mississippi Power, 
Alabama Power, Georgia Power, among others, and employs 
literally thousands of people. It is closely regulated by the 
Georgia Public Service Commission, has 3 nuclear power 
facilities, 2 in Georgia, 1 in Alabama with 5 reactors that 
have been in production for years. So this loan guarantee to 
start up 2 additional reactors at Plant Vogtle by the Southern 
Company, comparing that loan guarantee to this loan guarantee 
for a company like Solyndra is a little disingenuous.
    But let me go ahead and start the questioning with you, Mr. 
Silver. When you met with committee staff in March of this 
year, you represented that the restructuring agreement your 
agency reached with Solyndra in 2011, I believe February, had 
positioned the DOT and the United States taxpayer for maximum 
recovery. But the company is now bankrupt and it turns out the 
government is now in a second position to Solyndra's investors 
in the deal, those that put up an additional 75 million in that 
restructuring. Why did the DOT allow Solyndra's investors to be 
first in line to recover rather than the taxpayer? Under the 
Energy Policy Act, isn't your number one duty to protect the 
taxpayer funds?
    Mr. Silver. It is absolutely one of our essential concerns 
to focus as much as we can on the security of the taxpayer 
monies, and that is why we reached the decision we did. A 
restructuring is always by definition a decision among a set of 
tough choices because it means by definition a company is 
struggling. The fundamental question that we were trying to 
answer----
    Mr. Gingrey. Yes, but let me interrupt you. If you have the 
legal authority to make those tough choices, the Energy Policy 
Act of 2005 expressly states ``the obligation on loan guarantee 
shall be subject to the condition that it is not subordinate to 
other financing.'' This language makes Congress' intent seem 
pretty clear to me, to protect the taxpayers' money. Isn't this 
exactly what the Solyndra restructuring did, make the 
taxpayers' interest subject to other financing? Doesn't the 
Solyndra restructuring violate the law?
    Mr. Silver. Congressman, I am not a lawyer but I will tell 
you that the decision was reviewed by the Loan Guarantee 
counsel, by DOE counsel, and by OMB counsel, and the conclusion 
of that analysis was that projects needed to have--be in the 
senior-secured position at issuance, as indeed this loan was, 
as indeed every of our loans is. But I will tell you--while not 
a lawyer, I will tell you as a businessman that if you do not 
permit restructuring of transactions and the tools required to 
do that, lenders will be----
    Mr. Gingrey. Let me interrupt. I understand that. I 
understand that in the private sector, and of course, you came 
from the private sector. I think you mentioned earlier involved 
in hedge fund activity and that sort of thing and a lot of 
wheeling and dealing and that is permitted. But in this 
particular instance--now, you said you received a legal 
memorandum on DOE's interpretation of the Energy Policy Act, 
correct?
    Mr. Silver. As I said, counsel at--from the loan program at 
the general counsel of the DOE and at OMB all reviewed this 
matter.
    Mr. Gingrey. Who reviewed the memorandum?
    Mr. Silver. Which lawyers?
    Mr. Gingrey. Yes.
    Mr. Silver. I am not sure which.
    Mr. Gingrey. But it was approved by the general counsel. 
You just don't know which lawyers?
    Mr. Silver. I don't know which staff lawyers did the work, 
no, sir.
    Mr. Gingrey. OK. But it was approved by the general 
counsel?
    Mr. Silver. It was certainly reviewed.
    Mr. Gingrey. I want to discuss one part of the legal 
opinion. Will the committee clerk please put the language from 
the statute on the screen? I believe that is slide number 1. 
Yes. Just look at what it says and let me read it to you 
because I am kind of in the corner here and I can't read the 
monitor. But number 3, subordination, ``The obligation shall be 
subject to the condition that the obligation''--the loan--``is 
not subordinate to other financing.'' That is part of the 
Energy Policy Act of 2005. The DOE legal opinion seems to be 
based on the use of the word ``is'' in the statute. The legal 
opinion states, ``The reading of the provision is reinforced by 
the use of the word 'is,' which we viewed as confirming the 
intent that the condition be satisfied at a single point in 
time,'' meaning you can't subordinate when the guarantee is 
issued but you can at restructuring. Is DOE basing its opinion 
that taxpayers can be second in line to investors based on what 
the meaning of 'is' is? Wasn't DOE's tortured interpretation 
exactly the opposite of that plain language in the statute?
    Mr. Silver. I am not a lawyer, sir. I relied on counsel's 
judgment on that.
    Mr. Gingrey. You didn't have a very good lawyer and I think 
you got bad advice. I yield back.
    Mr. Stearns. The gentleman from Texas is recognized for 5 
minutes, Mr. Green.
    Mr. Green. Thank you, Mr. Chairman. And I have some 
questions but I am shocked that my Republican colleagues be 
concerned about somebody coming from a private sector to the 
government payroll. I thought that is what we needed more folks 
from the private sector. So, you know, I don't like wheelie-
dealie either but it sounds terrible when you hear it.
    But Mr. Silver and Mr. Zients, I want to ask some questions 
about that legal basis on restructuring the loan, and if you 
could put that section back up that my colleague from Georgia 
had because that is the series of questions I am going to ask 
about.
    The committee's investigation revealed that there appears 
to have been 2 major legal questions under discussion as the 
Solyndra restructuring was going forward--the first to the 
extent which the DOE had authority to subordinate the U.S. 
creditor position to private investors, and second was whether 
the restructure should be considered a modification of the 
loan. The first question, Mr. Silver, what does it mean to 
subordinate an interest?
    Mr. Silver. It means that new capital coming in would be in 
a prime position on exit depending on the structure of the 
exit. I might point out here, Congressman, that typically in a 
restructuring in which new capital comes in--and you have to 
ask yourself the very obvious question--why would any capital--
new capital come into a troubled situation if they did not come 
in in a prime position? But here--and typically in the private 
sector and in loans in other federal agencies, the prime trumps 
other subordinated capital all the way through. In the 
transaction we structured, we actually were able to ensure that 
it was only in the event of liquidation that that would be a 
senior position. In the event that the company as a sold as a 
turnkey operation, which is still possible, it will not be in a 
senior position.
    Mr. Green. OK. There is language in Section 1702 that my 
colleague pointed out in the Energy Policy Act that the senior 
position is designed to prevent the subordination of 
government's interest in these loans. It reads, ``the 
obligation shall be subject to the condition that the 
obligation is not subordinate to other financing,'' but your 
legal staff determined that there was a legitimate legal basis 
to subordinate the government's interest in Solyndra in this 
case. Can you describe for us your staff's legal rationale?
    Mr. Silver. Yes, as best I can not being a lawyer, and that 
is that the judgment was made that the law required that the 
loans at issuance be in a senior secured position as I said, 
indeed, as Solyndra was and in fact I want to assure the 
committee as all the transactions that we have closed to date 
are. But that in the event that a project struggled and there 
is no surprise as to the fact that projects struggle from time 
to time, we had the authority to figure out other solutions. I 
should remind the committee that absent the ability to do this, 
this company would have closed then with the 1,100 jobs lost 
then and the likelihood of any real recovery to the taxpayer 
being relatively de minimis because at the time the loan was 
restructured, although the physical building has been built, 
the plant had not been fitting out. It is also an adage of 
project finance and particularly restructuring work in project 
finance that the value of a completed project is infinitely 
greater than an incomplete project.
    Mr. Green. The documents provided to the committee by the 
OMB suggest that your staff may have had some concerns about 
this approach. However, ultimately, you did not step in and 
stop DOE from subordinating the interest. Why not?
    Mr. Zients. OMB's role here is in oversight of the program 
and OMB's career staff and lawyers--and again I am not a 
lawyer--determined that----
    Mr. Green. You know, I keep hearing that but I don't know 
if----
    Mr. Zients. General counsel----
    Mr. Green [continuing]. A law license shows anything on 
common sense.
    Mr. Zients. General counsel's determination was that this 
was--was that the DOE approach was reasonable.
    Mr. Silver. Congressman, if I could just add one thing to 
that. You have asked--people have asked about the 
subordination. I want to make it clear that the billion dollars 
of equity--of private equity that went into this company 
originally is wiped out in that scenario. We are not talking 
about all of that private capital coming forward, just the 
newest piece of money that came in in order to provide the 
company with a fighting chance to restructure its operations.
    Mr. Green. The second legal issue raised by the 
restructuring was whether it was a modification of the loan 
agreement. My understanding is that the Federal Credit 
Reporting Act generally prohibits loan modifications that 
increase taxpayer cost but the definition of modification does 
not include a restructuring to work out a troubled loan or a 
loan that is in imminent default. Is my understanding correct?
    Mr. Zients. This situation was ultimately deemed a workout 
for 2 reasons: first, that the company was in imminent default, 
which it clearly--DOE had determined it was; and secondly, that 
it was in the best interest of taxpayers to restructure the 
loan as opposed to liquidation. So when those 2 conditions are 
met, a loan is considered a workout in that scenario.
    Mr. Green. OK. So it was a workout and not a modification?
    Mr. Zients. Yes.
    Mr. Green. OK. Mr. Silver, what was the DOE's rationale for 
determining that restructuring did not constitute a 
modification?
    Mr. Silver. Exactly as Mr. Zients has indicated.
    Mr. Green. Mr. Zients, your staff has also expressed 
concern over whether the restructuring constituted 
modification. What analysis did your staff go through making 
the determination that the change is not a legal modification 
of the loan?
    Mr. Zients. At the beginning of the process when we first 
heard about the financial troubles, the staff's orientation is 
going to be that there could be a modification. As the staff 
worked with DOE to understand the dire financial situation and 
the fact that the company was in imminent default and that 
DOE's analysis was reasonable, that the taxpayers were better 
served through a restructuring rather than a liquidation, OMB 
career staff determined that it was indeed a workout.
    Mr. Stearns. The gentleman's time has expired.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Stearns. The gentleman from Pennsylvania, Mr. Murphy, 
is recognized for 5 minutes.
    Mr. Murphy. Thank you.
    Mr. Silver, I just want to get a couple things on this in 
terms of your expertise. When you were managing director of 
Core Capital Partners, had you ever managed something--a loan 
of this size before?
    Mr. Silver. Core Capital Partners was a venture fund, sir, 
so we didn't provide that. We provided equity.
    Mr. Murphy. You provided equity. Have you ever provided 
equity of this size?
    Mr. Silver. Not individually in a loan at Core Capital but 
in other configurations, yes.
    Mr. Murphy. At Tiger Management had you ever----
    Mr. Silver. Yes, sir.
    Mr. Murphy. So you are used to that. You are used to 
reviewing these things. And I go back to this on Slide 5 if 
somebody could up Slide 5. In this when they had in August of 
2009, someone wrote this. I can't quite read that up there--but 
wrote this in terms of saying that some issues with regard to 
the concerns about the health of the company there, major 
outstanding issues at the point in 2008, but it says an email 
the following day states, ``the issue of working capital 
remains unresolved. The issue is cash balances, not cost. 
Solyndra seems to agree that the model runs out of cash 
September 2011 even in the base case without any stress. There 
is a liquidity issue.'' When did you become aware of that 
email?
    Mr. Silver. I have not seen this specific email. That email 
was written in August of 2009. I arrived in November of 2009. 
There would have been no reason for me to know of its existence 
while we worked on the company but----
    Mr. Murphy. So you would not have known of anybody's 
concern that there wasn't enough capital to keep the company 
going?
    Mr. Silver. Certainly. The career staff monitoring this was 
deeply aware of the issues and----
    Mr. Murphy. And your job is to have oversight over this 
staff?
    Mr. Silver. My job is to have oversight over the staff.
    Mr. Murphy. So you are saying you had oversight but you 
were not aware of a memo saying this company didn't have the 
money to keep going?
    Mr. Silver. Well, I am not aware of this particular email, 
but certainly I was aware of the company's status and 
situation.
    Mr. Murphy. At that time? And yet things were still going 
through?
    Mr. Silver. Well, the loan had already gone through, sir. 
We----
    Mr. Murphy. But what I am concerned about here is as we are 
looking at this--and next we can move forward to the 
restructuring. Now, the restructuring----
    Mr. Silver. Maybe I should clarify exactly what the loan 
was for. We provided a loan guarantee to support the 
construction of a physical plant called Fab 2.
    Mr. Murphy. And when was that approved?
    Mr. Silver. That is what the loan was for. It was approved 
in September and that plant actually was delivered on time and 
on budget. The way the loan worked----
    Mr. Murphy. On time on budget for a company that staff are 
saying couldn't function regardless of what they had in terms 
of a building.
    Mr. Silver. No, that doesn't actually say, sir, that the 
company can't function. That says that there will be a 
liquidity issue in 2011, several years in----
    Mr. Murphy. Meaning they run out of money.
    Mr. Silver. No, meaning that they will have to address that 
issue.
    Mr. Murphy. And if they don't, they run out of money.
    Mr. Silver. Conceivably, yes.
    Mr. Murphy. I am just trying to establish your job is you 
have handled loans like this. Would you offer a loan to a 
company that says they are not going to have the money to pay 
it back unless they make some changes?
    Mr. Silver. Well, again, I wasn't there when this loan was 
issued, sir, but what I can tell you is----
    Mr. Murphy. But in the time you have been there, you became 
aware of this. Did you begin to address these issues with 
Solyndra to say show me the money?
    Mr. Silver. Well, staff talked with the company on a 
regular----
    Mr. Murphy. Sir, I really want you to stop throwing 
everybody else under the bus. I hear you throwing all your 
staff under the bus. I want to know. You are in charge, you 
have handled loans of this size, and now you are saying it is 
everybody else's fault but you except you are in charge. You 
tell me what you as a person in charge did with half a billion 
dollars of taxpayers' money now saying it is all my staff's 
fault, I didn't know, I can't do anything about it. You tell me 
what you are going to tell the taxpayers when we are in the 
hole for so much money in this country and you are dealing with 
this in a very casual cavalier way. Whose fault is it?
    Mr. Silver. Well, sir, first let me say that the 200-odd 
professionals working in the Loan Guarantee Program are 
exceptional professionals----
    Mr. Silver. And you throw them all under the bus it is a 
pretty bumpy ride, but you are the driver, Mr. Silver. You are 
the driver. And now you are saying this is restructured. And 
going back to the slide that says, ``the obligation shall be 
subject to the condition that the obligation is not subordinate 
to other financing and now it gets restructured so the 
taxpayers don't get their money back.
    Mr. Silver. The restructuring--any restructuring, 
Congressman, is based on a binary decision as to what is the 
better outcome for recovery, a liquidation, a sale of assets at 
a moment in time or a restructuring.
    Mr. Murphy. Who was it that made the decision that this act 
passed into law by the Federal Government was going to not be 
adhered to? Who made that decision?
    Mr. Silver. As I said it was reviewed by legal counsel for 
the loan program----
    Mr. Murphy. So you have no responsibility in this either. 
So we are throwing him under the bus, too?
    Mr. Silver. I am not a lawyer, sir. I rely on counsel.
    Mr. Murphy. Are we throwing her under the bus, too? Did the 
Secretary of Energy have anything to do with this decision or 
is he under the bus, too?
    Mr. Silver. Not to my knowledge.
    Mr. Murphy. So no one is responsible. This is an incredible 
organization you work for. No one in the Federal Government is 
responsible for half a billion dollars of taxpayers' money. 
This is phenomenal. What do you do for a living? If you don't 
know what is happening and everybody else is to blame, what do 
we go back and tell our constituents who have to work hard with 
so many people in this country in poverty, so many people in 
problems, we are saying this federal agency is saying we don't 
take any responsibility. It is everybody else's fault.
    Mr. Silver. We work to the fullest of our capabilities, 
Congressman, to ensure that these projects are as de-risked as 
possible----
    Mr. Murphy. I understand but now the taxpayers are on the 
hook for this.
    Mr. Silver. As was pointed out earlier, there are always 
challenges in investing in innovation. And I should point out 
that Congress through the appropriation of $2.4 billion of 
credit----
    Mr. Murphy. When did this company actually get their check?
    Mr. Silver. It doesn't work like that, Congressman. They 
draw against a loan----
    Mr. Murphy. Exactly. And at any point you could have 
stopped it when you found out the information that they 
couldn't exist. And that was under your watch, Mr. Silver.
    Mr. Silver. Our transaction--our loan was for the 
construction of a physical plant.
    Mr. Murphy. And at some point when you realized they 
couldn't function anymore in that physical plant, that is when 
you step in and take leadership and stop throwing your staff 
under the bus. I yield back.
    Mr. Stearns. The gentleman yields back, but the question 
Mr. Murphy is really asking, should someone be fired, Mr. 
Silver? Should anybody be fired? Yes or no?
    Mr. Silver. The people in the Loan Guarantee Program at the 
Department of Energy, at OMB, our colleagues at OMB and alike 
have worked----
    Mr. Stearns. OK. So you are saying no one should be fired.
    Mr. Silver. I am saying that we are doing the best job we 
know how to do----
    Mr. Stearns. All right. All right. I understand what you 
are saying. The gentleman from Virginia, Mr. Griffith, is 
recognized for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman. If we could have 
Slide 1 again. Yes, I am concerned about this ``is'' situation, 
but I would point out in paragraphs 1 and 2 it references that 
``no guarantee shall be made unless'' which gives some 
flexibility, but in paragraph 3 of Section 1702 it says, ``the 
obligation shall be subject to condition that the obligation is 
not subordinate to other financing. Have you read the 
memorandum of law on this?
    Mr. Silver. I have not read the full memorandum, no, but I 
have been briefed by counsel----
    Mr. Griffith. Would it shock you to know that if you read 
it and you pay attention to what is being said--and I have it 
right here. I would be happy to give you a copy with my notes 
on it if you want them. It looks like it is a law school 
project where you are told to come up with an answer. Here is 
the question, give me the right answer, defend it the best you 
can. That is what it looks like.
    Because under this analysis, what it says is is that if we 
close the loan in the morning and at lunch somebody has an 
epiphany and says you know what? I think that we should see if 
we can get some more money from somebody else and we are going 
to subordinate that money and we are not going to follow this 
paragraph. Because there is no line. And in fact somebody 
raised that issue the memorandum points out. Somebody raised 
the issue. Should there be a line between when the loan is 
granted and possible default? And they said no, that is not 
necessary because the law doesn't say that. You can change it 
anytime you want to if the Secretary thinks it is appropriate. 
Does that make good common sense as Mr. Green pointed out to 
you? You don't have to be a lawyer to know good common sense. 
Does it make common sense that the Congress of the United 
States responsible for setting our legislative policy would say 
that you are not to subordinate but under the interpretation of 
your lawyers, they could subordinate it after lunch for a loan 
closed in the morning? Does that make good common sense to you, 
sir?
    Mr. Silver. Well, Congressman, what makes sense to me is to 
ensure that we have the tools available to us to do whatever is 
necessary in a troubled situation to secure the taxpayers' 
interest.
    Mr. Griffith. Even if it is in violation of the law and 
what common sense would tell you, the common English always 
trumps legal mumbo-jumbo and the common English makes it clear 
you are not to subordinate. But in January when you were at the 
helm your people subordinated $75 million of this money, 
American taxpayer dollars to private investors. And part of the 
deal was they were going to invest more money in August. Isn't 
that true?
    Mr. Silver. That is true.
    Mr. Griffith. And they did not do so. Isn't that also true?
    Mr. Silver. That is true.
    Mr. Griffith. And when did your observer tell you that they 
weren't going to invest anymore money so that you might have 
been able to anticipate the bankruptcy? When did your observer 
tell you that?
    Mr. Silver. In late July.
    Mr. Griffith. And weren't we trying to get information from 
you all at that time or was that the other fellow?
    Mr. Silver. I don't know what you are referring to, 
Congressman.
    Mr. Griffith. The documents that we were requesting when we 
had a subpoena. I guess that was in----
    Mr. Silver. We sent you, as I said, 35,000 pages of 
material.
    Mr. Griffith [continuing]. July. All right. Just so we 
know, you have got all these other loans out there, 4 to 
manufacturers, which would be in a similar situation to this 
one. Have you subordinated any of that money?
    Mr. Silver. No other transactions have had subordinations. 
I would go further and say that of the 2--there are only 2 
deals that have actually closed and completed construction and 
both of those are repaying on a timely basis.
    Mr. Griffith. All right. And if you didn't look at the 
memorandum, attached to the memorandum there are all kinds of 
charts on how Solyndra is going to make money. Did you look at 
those financial charts?
    Mr. Silver. Sure, I have seen the company's financials.
    Mr. Griffith. All right. You earlier testified that part of 
the reason Solyndra went under was the fact that the Chinese 
were able to make their product cheaper and the Europeans 
stopped buying. Now, while it may have gotten worse, wasn't 
that also true in January when you restructured this loan?
    Mr. Silver. It has been true for the last several years.
    Mr. Griffith. OK. In that I would have to ask you, then, 
when you look at these numbers, how in the world if you know 
that and your analysts have told you that, how in the world 
could you anticipate that profits at Solyndra would double next 
year? Because that is in all the models that are attached to 
the legal memorandum.
    Mr. Silver. I will leave it to the company's management 
team to describe their financial projections, but what I will 
say to you----
    Mr. Griffith. Wait a minute. Wait a minute. You are 
concerned enough you put an observer on the board and you 
subordinated American taxpayer dollars but you are going to 
leave it to their management to determine how they can say that 
they are going to double it? Doesn't that sound like that is 
not common sense again?
    Mr. Silver. Well, with all due respect, revenues are not 
actually the driver of how a loan or loan guarantee would 
necessarily get paid. What we focus on are cash flows and those 
can be managed in a variety of different ways.
    Mr. Griffith. But you would acknowledge that if their model 
was somewhat weak to begin with--and I recognize there is risk 
whenever you are doing something new--but if their model was 
weak to begin with and then market gets worse, doesn't that 
mean that maybe we should have just not thrown good money after 
bad because now we are in a worse position in the bankruptcy 
courts to get our money back, are we not?
    Mr. Silver. Well, at the time----
    Mr. Griffith. Are we in worse position than we would have 
been if we had just let them go into bankruptcy, Chapter 11, 
last January? We are or are we not?
    Mr. Silver. That will depend--not necessarily. That will 
depend on the outcome of the bankruptcy. As I tried to indicate 
before, when you are looking at this issue and admitting that 
there are no good choices, one of the issues is liquidation and 
you have to determine a liquidation----
    Mr. Griffith. Is it the administration's policy that 
bankruptcy is a good thing?
    Mr. Silver. I can't speak for the administration but common 
sense would suggest that it is not.
    Mr. Griffith. I would agree with you. I yield back.
    Mr. Stearns. The gentleman yields back, time has expired. 
The gentleman from California, Mr. Bilbray, is recognized for 5 
minutes.
    Mr. Bilbray. Thank you very much, Mr. Chairman. Mr. 
Chairman, before I go on, I would like to just address the 
ranking member of this committee because I hope she recognizes 
and we all recognize this is not a Democrat or Republican issue 
when we are talking about this ``is.'' This is specifically a 
threat to the legislative process when you can have an attorney 
play this word game and does that mean that Democrat or 
Republican, when they specifically direct in legislation that 
we now have to say not only it will not happen but we must say 
it will not and shall never be allowed to happen? Do we have to 
play this word game? Because I don't think it is a Democrat or 
Republican issue. I think this is an issue about the law is the 
law and I don't care how convoluted an attorney wants to do it. 
This doesn't pass the smell test in any way in the world. So I 
just think this is really an affront on both sides of the aisle 
by this manipulation. And just admit it that it was. We tried 
to get the job done and we crossed over a line to a commonsense 
person and anybody rational would say you crossed the line of 
what the law specifically said.
    Now, that aside, there are a lot people talking about solar 
power here, some of us who worked at citing solar factories 
here. Mr. Silver, are you comfortable, first of all, with the 
thin film technology that was chosen by this company? Did you 
have any concerns about them using thin film technology?
    Mr. Silver. Congressman, I am, first of all, not a solar 
technical analyst but I am highly comfortable with the fact 
that the solar experts at the Department of Energy, of whom 
there are many, and the independent engineers which were well 
known and well respected firms were qualified----
    Mr. Bilbray. Were you informed that there has been more 
false starts and more failure in thin film than any other form 
of photovoltaic production?
    Mr. Silver. I don't know that to be true or not but----
    Mr. Bilbray. OK. And were you aware that when we talk about 
China that China has concentrated almost ostensibly in 
polycrystalline technology and avoid thin film?
    Mr. Silver. Well, China has focused on the market segment 
you are describing in part because it is a very cost-effective 
way to mass produce those panels. The Solyndra technology was 
designed in its time and place to circumvent or to overcome 2 
fundamental challenges--the very high price of polysilicon and 
the installation costs which they refer to as----
    Mr. Bilbray. And they also have in fact the historical 
problem of a lack of durability and the loss of proficiency of 
thin film as opposed to mono- and poly-technologies. But my 
question to you, you are a business man. You are looking at a 
company. Did you review their proposal for the construction of 
their factory, the technology, the siting of it, the planned 
development of it, and its related costs and oversight?
    Mr. Silver. I am sorry. What is the----
    Mr. Bilbray. Did you look at where they were talking about 
building this factory, how they were building it, and the 
related issues of the cost of just building the factory?
    Mr. Silver. No, sir, because the loan was issued before I 
arrived at the Department.
    Mr. Bilbray. OK. When you went and renegotiated it, did you 
take a look at what was being proposed?
    Mr. Silver. Well, at that point, the plant was largely 
built, although it was not, as I say, fitted out.
    Mr. Bilbray. OK. Did anybody down the line raise the issue 
that the proposal was to build the facility in the State of 
California in the Bay area in a nonattainment area, can you 
think of as a business man anywhere in America where you 
probably have more regulatory obstructionism to the 
construction of a manufacturing operation than you would have 
in a nonattainment area in the State of California?
    Mr. Silver. I am not qualified to answer that question, but 
what I can say is that the investors that backed this company 
and the management team that originally led it must have 
concluded that this was the right place to do it.
    Mr. Bilbray. Mr. Silver, are you aware of anybody in your 
department that have notified grant applicants that if they 
want to go get the grant that their production should be moved 
out of the State of California to a State that has less 
regulatory obstructionism?
    Mr. Silver. We don't issue grants in the loan program, sir, 
but I am not aware of that, no.
    Mr. Bilbray. OK. Well, maybe we ought to talk about the 
fact--let me just point out, this grant application was asking 
to take 30 acres of agricultural land in the State of 
California in a nonattainment area. It was going to be required 
to be able to go not just through the DOD and the U.S. but 
having to get the Environmental Quality Act under Sequel for 
California, has to get a permit from the city, air quality from 
the Bay area, air quality which is nonattainment area with some 
of the strictest air pollution regs in the entire world. It was 
going to require a general permit for discharge and storm 
water, which means that not only did you have the California 
environmental agencies involved, not only did you have the 
State Water Quality Control Board involved, you had the local 
regional water Quality Control Board that you have to get a 
permit from.
    The fact is is that the California Department of 
Occupational Safety, which has some of the most restrictive 
regulations in the world you had to get a permit from, you had 
the hazardous waste generation, which California again under 
HAZMAT has some of the most restricted funds. Then you get into 
wastewater discharge, and these are just some of the permits 
down the line.
    Nobody in your department or when they reviewed this raised 
the issue that this is not only a terrible place to try to site 
a facility but you are proposing--didn't anybody raise the 
issue of why build a whole new facility rather than moving into 
an existing abandoned facility in a State that has 12 percent 
unemployment and huge empty resources? Anybody even talk about 
the question of why would you build a new facility when there 
are warehouses available?
    Mr. Chairman? Would he answer the question?
    Mr. Stearns. Time has expired but you are welcome, Mr. 
Silver, to answer the question yes or no.
    Mr. Silver. Sure, I will to the best of my knowledge. At 
the risk of repeating myself since I wasn't there, I don't know 
what the nature of the discussions were, but I can tell you 
that applicants for loan guarantees are required to have all of 
their siting permits and other kinds of permits in place by the 
time the project is undertaken.
    Mr. Bilbray. And all of it was stated down that it will 
attain it before construction when they get in the line? And 
all I got to say is somebody who is siting--we are siting 
existing warehouses. It is absurd with the kind of vacancy we 
have in the State of California for anybody to even talk about 
or come to you or any government agency and say we want to 
build a whole new area on ag land. I yield back.
    Mr. Stearns. The time of the gentleman has expired. The 
gentleman from Louisiana, Mr. Scalise, is recognized for 5 
minutes.
    Mr. Scalise. Thank you, Mr. Chairman. I want to thank you 
for calling this hearing. You know, we have been pressing on 
this issue and asking a lot of questions about this Solyndra 
loan program for months now on this subcommittee, but I think 
it is really important that we have this hearing now because 
while Solyndra was touted as really one of the poster children 
by President Obama of his first stimulus bill, and clearly 
there is a lot of evidence that shows that this was something 
that the White House really wanted to move through quickly and 
the emails indicate that.
    But while this was one of the poster children of the first 
stimulus bill, the President right now is touting what I call 
son of stimulus, another bill to come through, spend more 
taxpayer money, to do more things like this. And in fact if you 
look at some of the issues that we have raised about this loan 
program, some of these projects that were funded by stimulus, 
just Solyndra alone was touted to create 3,000 jobs. The 
President touted that. It is going to be a great success story. 
And of course, we have seen the failure there. And a lot of us 
are questioning this kind of double down son of stimulus 
approach where they are going to come back and do more of this 
kind of same failed policy of just spending money we don't 
have.
    And, you know, of course the President said in front of our 
chamber last week, pass the bill now. We hadn't even seen the 
bill. The President didn't even give us the text of the bill 
and he said pass the bill now, called on the American people 
ask us to pass the bill now. I hope you understand now why a 
lot of us are real skeptical when the President says pass a 
bill now because he did that with the stimulus bill and we see 
the failure there. He did that with the healthcare bill. We are 
still unearthing problems there. So when the President says 
pass a bill, you can wonder why some of us say let me read the 
bill first and let us look at the details.
    But now when we get specifically to this issue of what 
happened with Solyndra, Mr. Silver, I know you have testified 
that you weren't in your position until November of 2009. When 
you came in, you have acknowledged there was a file on 
Solyndra. Did you read that file?
    Mr. Silver. I read through all of the materials for the 
entire program when I arrived.
    Mr. Scalise. Did you see the concerns that were being 
raised by your own agency back then prior to your coming that 
under what they were looking at, Solyndra could go bankrupt by 
September of 2011?
    Mr. Silver. I certainly saw all of the materials that were, 
you know, related to that discussion. I need to reemphasize, 
Congressman, that the loan guarantee was specifically for the 
construction of a physical factory, which was done. And the way 
that works----
    Mr. Scalise. And look, it is your job ultimately to go 
through that loan guarantee and see if there are things that 
meet the taxpayer interests----
    Mr. Silver. That is correct.
    Mr. Scalise [continuing]. But also I think you need to also 
be aware of the way that the program is being implemented. 
After you came in, the Government Accountability Office did a 
report that was, I think, pretty scathing about your loan 
program. They actually made some recommendations. They pointed 
out some problems. They pointed out, again, after you came in, 
GAO put this report out. They pointed out that the loan program 
treated applicants inconsistently favoring some and 
disadvantaging others. And they gave examples. Did you read 
this GAO report?
    Mr. Silver. I did, Congressman, and if you will give me a 
minute to respond to----
    Mr. Scalise. I can't give you that long. I don't have that 
much time.
    Mr. Silver [continuing]. The GAO question. First, let me 
note that while the report did come out after I arrived, it 
covers the 2008 and 2009 time period, and so I was there for 
approximately 1 month----
    Mr. Scalise. So did you make any changes based on the 
problems that they now know?
    Mr. Silver. Yes, we have actually made substantial changes 
as we have grown the organization.
    Mr. Scalise. All right. But let me ask you this. You were 
here after you all did the restructuring of Solyndra's loan. 
Who made the decision to put the taxpayers in the back of the 
line and subordinate in violation of federal law? Who made that 
decision?
    Mr. Silver. Well, first, Congressman, as I have said 
before, I don't know that it was in violation of any law. There 
were multiple----
    Mr. Scalise. Someone made the decision. Did you make the 
decision to subordinate----
    Mr. Silver. There were a variety of legal----
    Mr. Scalise. Did you? Did you make it?
    Mr. Silver. The loan program----
    Mr. Scalise. This is a yes or no question. Did you make the 
decision to subordinate the taxpayers and put them in the back 
of the line when the decision was made to restructure because 
you were there?
    Mr. Silver. The question is not--does not have a yes or no 
answer, Congressman.
    Mr. Scalise. So you don't know? You either made the 
decision or you didn't. I think----
    Mr. Silver. The process----
    Mr. Scalise [continuing]. That is a straightforward 
question. And look, we have been asking for months now, in 
fact, we on this subcommittee asked your agency for some of 
these documents prior to the modification of the loan, prior to 
the restructuring, and you all stonewalled us as you are 
stonewalling right now refusing to answer a direct question. 
And $535 million of taxpayer money is at stake. Maybe if you 
would have given us that information back months ago when we 
asked for it before you restructured, the taxpayers wouldn't be 
in the back of the line today. So you can understand, I would 
hope, why we are saying who made the decision to put the 
taxpayers in the back of the line? Can you get me that 
information if you can't answer it directly now?
    Mr. Silver. I am happy to meet with you to describe the----
    Mr. Scalise. No, I want in writing--I am going to ask on 
behalf of the committee, Mr. Chairman, if you can get us in 
writing the names of the people in the decision-making 
process--and it might be multiple people--who made the decision 
to put the taxpayers in the back of the line meaning 
subordinate the taxpayers in what many of us think are in 
violation of the law. I don't know what your counsel thinks and 
your counsel may be part of this list, but I want to know if 
you are part of the list. I want to know if the Secretary is 
part of the list. I want to know if anyone in the White House 
is part of that decision-making chain that said we are going to 
subordinate the taxpayers of the United States in restructuring 
this Solyndra loan. I think we deserve that answer and I am 
asking you to get that information, however many people it is. 
But somebody made that decision or multiple people, but you 
can't say nobody made it because the decision was made. Would 
you at least agree with that and then get that information to 
this committee?
    Mr. Silver. We will work with you to provide you what you 
need.
    Mr. Scalise. Thank you. And I yield back.
    Mr. Stearns. The gentleman's time has expired. The 
gentleman from Colorado, Mr. Gardner, is recognized for 5 
minutes.
    Mr. Gardner. Thank you, Mr. Chairman, and thank you to the 
witnesses as well for your time today. And I would yield the 30 
seconds to my colleague, Mr. Bilbray, from California.
    Mr. Bilbray. Mr. Silver, my biggest concern I just want to 
say in closing as somebody who supports solar energy, I think 
we got to keep the science not the blind faith, and it appears 
to me that this entire process was driven more by an assumption 
that anything solar was good and you could force it through and 
it was all going to work out. And the lack of critical review 
for this production I think is the greatest threat for future 
solar. It is this kind of blind faith that we have got to 
avoid. This should be driven by science and good investment, 
not by an assumption that whatever is renewable obviously is 
going to be great. And I think this failure was driven more by 
that. I don't think it was a criminal intent. But that criminal 
intent you can bust one guy. The trouble is with this kind of 
prejudice for a technology blindly, there is more threat to 
that happening in the future and not just financially but the 
energy independence of this country and the competitiveness of 
this country. And that is what I am critical on.
    Mr. Silver. Congressman, I wholeheartedly agree with you 
that we ought to back the science, which is why a large group 
of sophisticated private investors who have done their own--had 
done their own due diligence, why the loan program staff from 
the 2007 to 2009 time frame using independent engineers, other 
outside advisors, and the solar experts at Department of Energy 
came to that conclusion.
    Mr. Bilbray. Well, the record shows that there was 
political interjection, there was PR issues. The preconceived 
idea that if it was solar, it had to be a great package, and 
frankly there is good stuff, there is bad stuff, and the 
greatest threat to the good stuff is allowing garbage to get 
through the system and being treated as if its sacred rather 
than being critical about it. And it wasn't critical enough and 
history has proven that it wasn't a critical review of this. We 
got to make sure that doesn't happen again. I yield back to the 
gentleman.
    Mr. Gardner. Thank you. And reclaiming my time.
    Mr. Silver, I want to go back to this issue of the emails 
and the dismissal by the Credit Committee of this project. 
January 9--it is a Friday--2009, an email was sent from the 
Credit Committee remanding the Solyndra application calling it 
premature and citing a number of unresolved issues. In your 
testimony, you have said that this was over nothing big, no big 
details----
    Mr. Silver. No, I didn't. I never said that, Congressman. 
What I said was the Credit Committee remanded it back for 
additional work and due diligence was done on that work. And 
then it was brought forward in the time frame that--I should--
if I may----
    Mr. Gardner. Well, let me just talk----
    Mr. Silver [continuing]. I would like to just point out one 
other----
    Mr. Gardner [continuing]. About this due diligence----
    Mr. Silver. I would like to just point out one other thing 
which is that----
    Mr. Gardner. Reclaiming my time. This is my time. I am 
sorry because I want to talk about these matters of due 
diligence on January 9, what you said, due diligence took place 
over. Let me read these to you. It is Slide #2 if you could put 
that on there. ``There is presently not an independent market 
study addressing long-term prospects for this specific company 
beyond the sales agreement already placed. Since the 
independent credit assessment raised the issue of obsolescence 
in marketing this project, it is important to have an 
independent analysis of that issue as well as the current state 
of the competitive market.'' Point 2, ``while the sales 
agreement is said to have been analyzed by the outside legal 
advisor assigned to this case, the committee did not have 
access to this document.'' Point 3, ``there are questions 
regarding the nature and strength of the parent guarantee for 
the completion of the project.'' Point 4, ``while it is 
encouraging to see the apparent progress in the development of 
the product at the Fab 1 facility, there is concern regarding 
the scale-up of production assumed in the plant for Fab 2.'' 
That was in an email on January 9. That is the areas of due 
diligence that you are saying that you did and you did it by 
January 26, a Monday, 2009?
    Mr. Silver. Congressman, I don't know where--what dates you 
are referring to. Let me----
    Mr. Gardner. These are the emails when the Credit Committee 
said no, we are not going to do this and then all of a sudden 
an email just days later, 10 working days later----
    Ms. DeGette. Will the gentleman yield?
    Mr. Gardner [continuing]. We are going to go forward.
    Ms. DeGette. Does the gentleman have copies of those 
emails? The minority has----
    Mr. Gardner. I am happy to provide----
    Ms. DeGette. I would appreciate that.
    Mr. Gardner. Sure.
    Ms. DeGette. We don't have copies of those emails and I 
don't think the witness does either and I am getting a little 
lost here.
    Mr. Gardner. On January 9, 2009, the Credit Committee sent 
an email, and I think if you go to Slide 4 you can see what I 
am talking about. There we go, 2009, talking about the Credit 
Committee remand of Solyndra application calling it premature. 
January 26, we are approaching the beginning of the approval 
process. So the areas of due diligence that you said took place 
took place in 10 working days? These are pretty significant 
issues.
    Mr. Silver. No, that is not accurate, Congressman, and if 
you will give me just a moment to try to answer your question. 
There are actually--there is actually an extended period of due 
diligence that takes place here. The Credit Committee--the 
first Credit Committee met; then there was a several-month 
period before it met again and I need to make sure this is 
clear because I don't think it is because I don't----
    Mr. Gardner. It didn't meet when they made their decision 
to move forward?
    Mr. Silver. What gets approved at that juncture, 
Congressman, is a conditional commitment, not the final close 
of the loan. The loan itself didn't close until September and 
so additional due diligence takes place from the conditional 
commitment through the close of the loan, as is true in every 
transaction.
    Mr. Gardner. What changed, then, between January 9 when 
they needed that information and January 26, 10 days later, 
when they evidently didn't need that information.
    Mr. Silver. I don't know what the January 26 date is that 
you are referring to.
    Mr. Gardner. The January 26 email was right there. It says, 
``a DOE staff member states that we are approaching the 
beginning of the approval process for Solyndra again.'' The 
Credit Committee met and said they didn't do it because they 
needed this information.
    Mr. Silver. Why do you assume that language says we are 
beginning--approaching the beginning of an approval process 
necessarily means anything about the time frame for which due--
under which due diligence took place?
    Mr. Gardner. Well, I am assuming that the Credit Committee, 
their observations were taken into account, were they not?
    Mr. Silver. Absolutely, but the beginning--as I read it as 
you are now showing it to me, we are approaching the beginning 
of the approval process, that suggests a pretty open-ended 
period of time during which due diligence was----
    Mr. Gardner. So the Credit Committee then at that point, it 
doesn't matter what the Credit Committee is concerned----
    Mr. Silver. No, the Credit Committee met again in March.
    Mr. Gardner. Because they said we are going to end this.
    Mr. Silver. No, they said that we were--they were going to 
meet again in March, which they did.
    Mr. Dingell. Mr. Chairman, where are all----
    Mr. Stearns. The gentleman's time has expired.
    Mr. Dingell. Mr. Chairman, where are----
    Mr. Stearns. We are on the first round----
    Mr. Dingell. I have a unanimous consent request----
    Mr. Stearns. Yes, you are recognized.
    Mr. Dingell. Can we put all of these emails into the 
record? I am sitting here, I am seeing a wee bit of information 
carefully yellow-lined that is supposed to tell me what has 
happened here. I don't think there is any lawyer that would 
tell you that that would be sufficient evidence of anything. 
The whole document should be placed before us so we know----
    Mr. Stearns. Well----
    Mr. Dingell. If there is wrongdoing here, by golly, let us 
dig it out. But let us see the whole thing.
    Mr. Stearns. OK.
    Mr. Dingell. So far we are getting a lot of assumptions and 
understandings and comments from the other side in which they 
are saying oh, this is terrible. What has happened here? But I 
don't know what has happened and to speak perfectly frank with 
you, I don't see anything up there which tells me that we have 
a clear picture of the problems to which we are inquiring. So 
if we are going to inquire, let us inquire fairly. Let us let 
everybody see them. Is it possible that my Republican 
colleagues have seen these papers and the rest of us have not?
    Mr. Stearns. We will take the constructive criticism under 
advisement. We have unanimous consent in which all the 
documents will be made available and a part.
    Mr. Stearns. And I ask my side, the counsel, to provide the 
gentleman and your side all these documents, which we have. And 
they have been produced, I am told, so I guess the question is 
they haven't got to you. Is that a fair assumption?
    Ms. DeGette. Well, if the gentleman will yield?
    Mr. Dingell. I want them in the record, Mr. Chairman.
    Mr. Stearns. Oh, OK. So you have the same documents we do, 
you just want to make sure they are part of the record?
    Mr. Dingell. I want----
    Ms. DeGette. If the gentleman will yield?
    Mr. Dingell [continuing]. To see them----
    Mr. Stearns. And we pass the unanimous consent----
    Mr. Dingell [continuing]. I want to know what they said----
    Mr. Stearns. OK.
    Mr. Dingell [continuing]. And I want them in the record.
    Mr. Stearns. They will be put in the record. We had 
unanimous consent to do so.
    Ms. DeGette. Yes, and if the gentleman would yield?
    Mr. Stearns. Yes.
    Ms. DeGette. We were told that the documents were produced 
under an agreement with the majority that they were to be 
confidential and were not to be copied or in any way 
disseminated. We----
    Mr. Stearns. At the request of OMB, right?
    Ms. DeGette. OK. But----
    Mr. Stearns. Yes.
    Ms. DeGette [continuing]. What happened was in between 
yesterday when I found this out at about 7:00 p.m. last night 
and today, it turned out that lo, number one, the majority 
released a number of these documents to the press and, number 
two, the majority apparently took some of these documents and 
excerpted them in the way that the chairman emeritus is saying 
and put them on slides, which we have never been provided. I am 
going to tell you, Mr. Chairman, I have been on this 
subcommittee for 15 years and I am just as much concerned about 
this Solyndra loan as everybody else is, but the way that the 
information has just been parceled out, the witnesses don't 
have the full copies of the emails in front of them, the 
minority doesn't have the full copies of the emails in front of 
them until we asked for them, that is not in the grand 
tradition of this subcommittee.
    Mr. Stearns. We have heard your argument in your opening 
statement and we made a unanimous consent that you all be part 
of the document. I am told that you were given, your staff was 
given all these documents. OMB----
    Ms. DeGette. We were told we couldn't copy it.
    Mr. Stearns. OMB is the one that specified that. We have 
now agreed that we are going to make them all public.
    Ms. DeGette. Mr. Chairman, they were subpoenaed from OMB. 
OMB doesn't have the right to tell us whether we can copy----
    Mr. Stearns. I understand that.
    Ms. DeGette [continuing]. The documents or not.
    Mr. Stearns. I understand that but we have all agreed that 
OMB can't tell us and we are going to make these public.
    Ms. DeGette. Thank you.
    Mr. Stearns. And so I appreciate your concern. We have a 
unanimous consent from a member who is on the committee but not 
on the subcommittee, the gentleman from Kansas, Mr. Pompeo. Is 
there any objection to allowing him in the first round--we are 
going to go for a second round----
    Mr. Waxman. Well----
    Mr. Stearns [continuing]. Is there any objection to allow 
him to ask questions?
    Mr. Dingell. I have no objection but I would like to 
understand if we are going to get those documents and if we are 
going to have a second----
    Mr. Stearns. Your point is you have the documents but you 
want to make sure the documents are available to----
    Mr. Dingell. No, I want to see them.
    Mr. Stearns. OK. Well, as I understand from my counsel, we 
have provided all the documents to you. They were produced to 
both sides. You have them. Now, is it possible your staff has 
not made them available to you?
    Mr. Dingell. I understand that it is the committee staff to 
make these available to all members of the committee and I 
understand this committee staff works for all of us.
    Mr. Stearns. Well, I think that----
    Mr. Dingell. And if I am in error----
    Mr. Stearns. My staff has told me that we have----
    Mr. Dingell [continuing]. Tell me so.
    Mr. Stearns [continuing]. Provided you----
    Ms. DeGette. Mr. Chairman, what happened was we were told 
we could look at the documents but we couldn't copy them and 
that under some kind of agreement the majority made with the 
OMB that the documents could not be disseminated in any way, 
which is frankly a ridiculous agreement----
    Mr. Stearns. Well, no, I think you made that----
    Ms. DeGette [continuing]. If the majority made that, but in 
addition, always in the past in this subcommittee, if we 
questioned on documents, we had the full document available for 
everybody and for the witnesses so that they could review those 
and give their answers. Instead, what we have had today is 
these slides which were made taking quotes out of the documents 
without providing the documents to anybody.
    Mr. Stearns. In conclusion, I think the fact that you and 
Mr. Dingell's point is that these documents should have been 
made available in a tab so that they can go to the tab.
    Mr. Sullivan. Mr. Chairman? Mr. Chairman, if I can ask a 
question?
    Mr. Stearns. Sure.
    Mr. Sullivan. I think from everything I am hearing, the 
emails that are in question are emails from Department of 
Energy staff. Doesn't Mr. Silver already have access to all of 
that?
    Mr. Stearns. He doesn't necessarily have access----
    Mr. Sullivan. Chairman, those are people that work under 
him in his agency who communicated back and forth that we had 
to subpoena, but I don't think he has to subpoena to get his 
own internal documents from----
    Mr. Dingell. Mr. Chairman, we are not complaining about 
whether Mr. Silver has these emails or not. I am complaining 
that we do not have the emails.
    Ms. DeGette. Well, and also----
    Mr. Dingell. And I find myself affronted that I am reading 
about these things in the newspaper and am not having them 
presented to me. That is a most curious way----
    Mr. Stearns. OK. All right.
    Mr. Dingell. --to proceed about a congressional 
investigation.
    Mr. Stearns. Well, we have a little disagreement here but 
out of deference to you, I will take your criticism under 
advisement. And let us continue on.
    Mr. Dingell. That does not comfort----
    Mr. Zients. May we have a 2-minute break?
    Mr. Dingell [continuing]. Me when you take it under 
advisement. That means I might hear about it----
    Mr. Stearns. Well, I think----
    Mr. Dingell [continuing]. Sometime before the end of the 
session if I am lucky.
    Mr. Stearns. All right.
    Mr. Dingell. I do not view that as being an adequate answer 
for my concerns. I don't like the precedent which I see being 
set here that I am going to read about these things in the 
press. And I don't like at all the fact that we are having all 
manners of inferences drawn by the majority while the minority 
has not seen the documents. And so I am not comforted by these 
matters being taken under advisement.
    Mr. Stearns. Well, the gentleman has done this job much 
more than----
    Mr. Dingell. They should be addressed now----
    Mr. Stearns. Yes.
    Mr. Dingell [continuing]. Not at some future----
    Mr. Stearns. OK. The gentleman----
    Mr. Dingell [continuing]. Time.
    Mr. Stearns [continuing]. Has done this job more years than 
I have ever done it or will do. I respect his opinion. We have 
a little disagreement and the fact is we say we have given you 
all the documents. The fact that you don't have it in front of 
you is not necessarily our fault because your staff----
    Mr. Dingell. Maybe I have to raise the question of whose 
staff we are going to fire. Are we going to fire the majority 
staff or the minority staff?
    Mr. Stearns. Well, I think there is a----
    Mr. Dingell. If the majority staff is making this kind of a 
decision, they are going well beyond their powers----
    Mr. Stearns. Well----
    Mr. Dingell [continuing]. And well beyond their 
authorities. If the minority staff is doing it, we are going to 
thrash this out inside the minority and find out why in the 
hell they are doing it this way.
    Mr. Stearns. I suggest you do that and then you and I talk.
    Mr. Dingell. Well, I suggest that we talk now because this 
is the business of the committee and I find the business of the 
committee being conducted in a curious way.
    Mr. Stearns. Well, the curious way is that you don't 
recognize that you have all the documents when my staff has 
provided all the documents to you. So we are a little puzzled 
why we are discussing why you don't have all the documents when 
you do.
    Ms. DeGette. No, the problem is----
    Mr. Dingell. Where are the documents----
    Mr. Stearns. Let Mr. Dingell finish.
    Mr. Dingell [continuing]. Then----
    Mr. Stearns. OK.
    Mr. Dingell [continuing]. If I have had them presented to 
me, I am anxious to see them.
    Mr. Stearns. OK. Well, I think what we are going to do is 
continue this discussion, but I want to let the gentleman from 
Kansas--I recognize him for 5 minutes.
    Mr. Pompeo. Thank you, Mr. Chairman. And thank you to the 
minority for allowing me to participate in the hearing today.
    You know, Mr. Waxman started this hearing an awful long 
time ago talking about the fact that the Solyndra folks came in 
his office in July, told him everything was great and then 
filed bankruptcy shortly thereafter and he couldn't understand 
why. There is a simple reason. Nobody in that room had any skin 
in the game. This is exactly what we get when the Federal 
Government tries to put money into businesses and try to pick 
winners and losers. And in fact because I have heard Mr. Zients 
speak, your task is really to pick just amongst losers. Every 
one of these has a credit subsidy, right? Is that correct? The 
Federal Credit Reform Act, you are out there looking at every 
one of these loans and deciding how much of a loser this 
guarantee is going to be.
    Mr. Zients. No, I mean the point is to put a credit 
allowance----
    Mr. Pompeo. A score, a cost to the taxpayer.
    Mr. Zients. That is the purpose of the program----
    Mr. Pompeo. Right.
    Mr. Zients [continuing]. Is the 1705 program----
    Mr. Pompeo. Right.
    Mr. Zients [continuing]. Does loans with credit subsidies.
    Mr. Pompeo. Right. Look, I am very familiar with FCRA. I 
actually, oddly enough, wrote about this when I was in law 
school and was published so I know a fair amount about the 
process that you go through there. And you talked about your 
score having changed. What were the 2 scores that were given 
both in 2009 and then I guess twice in 2011?
    Mr. Zients. Well, the score in 2009, I don't know the exact 
percent of the score----
    Mr. Pompeo. And you got that----
    Mr. Zients [continuing]. But it increased----
    Mr. Pompeo. If you can get me the 2 scores, what the 
original scoring was and what the subsequent scoring was?
    Mr. Zients. I am sorry?
    Mr. Pompeo. Can you provide to me and to this committee the 
original score and the subsequent score?
    Mr. Zients. Yes, we can follow up on that request.
    Mr. Pompeo. OK. So you will provide that information to the 
committee?
    Mr. Zients. We will work with staff to make sure that that 
information is provided.
    Mr. Pompeo. Right. And then you will give us also the score 
in 2011 during the restructuring? You decided this was how much 
additional subsidy will need to be provided.
    Mr. Zients. Well, in 2011 as part of the restructuring, the 
determination was that it was a workout based on the fact that 
the loan was in imminent default and that a workout or a 
restructuring was in the best interest of taxpayers. That would 
be reflected, the cost of that, in the budget.
    Mr. Pompeo. So it was a negative score. It was good for the 
taxpayers that this restructuring was taking place?
    Mr. Zients. No.
    Mr. Pompeo. It was going to cost them less?
    Mr. Zients. No, the restructuring in the budget--in the 
annual budget it will be reflected that the loan--the condition 
of the loan----
    Mr. Pompeo. This is exactly what happens when folks without 
skin in the game get involved in trying to do credit analysis. 
Let me go back, Mr. Silver, I want to ask you. Mr. Markey spoke 
about Carnac, that no one could have known what was going to 
happen to the price of photovoltaic cells, PV cells, that this 
was just unimaginable that Solyndra's sales price would fall 
below its cost of production. Do you agree with that? And he 
said in 2008 who could have known?
    Mr. Silver. Well, I think many, many analysts and observers 
have been surprised by the speed and rate of the decline in 
cell prices, yes.
    Mr. Pompeo. Mr. Chairman, I ask unanimous consent to place 
into the record an article. It is from August 4, 2008. It 
appeared in Xconomy. It is written by a man named Mark 
Modzelewski, the technology commentator. In August of 2008 he 
wrote, ``the cost of PVs, you hear a lot about companies 
working toward price parity and grid parity--and here is the 
potentially really bad news for investors. Some big players in 
the private equity and research side have hypothesized that the 
price of solar cells is about to plummet so quickly that 
manufacturers will enter a netherworld where their cost of 
production exceeds their sales price.'' So it didn't take 
Carnac. It just took Mark. Is that correct?
    Mr. Dingell. What is the status of----
    Mr. Stearns. The gentleman will--does he have a point of 
information?
    Mr. Dingell. No, I don't.
    Mr. Stearns. OK.
    Mr. Dingell. I have a reservation to a unanimous consent 
request just made.
    Mr. Stearns. OK. The gentleman from Michigan objects and it 
will not be put in the record.
    Mr. Dingell. I don't object. I just want to know are the 
papers, the emails and other things that I have been discussing 
with the chair going to be put in the record and are they going 
to be made available to us?
    Mr. Stearns. Yes, they are.
    Mr. Dingell. I want to make sure everybody is treated 
alike.
    Mr. Stearns. Absolutely.
    Mr. Dingell. If the gentleman wants to put something in, I 
probably won't object, but I just want to make sure that I am 
getting what I----
    Mr. Stearns. With that understanding, do you still object?
    Mr. Dingell. I don't object.
    Mr. Stearns. All right.
    Mr. Pompeo. Thank you.
    Mr. Stearns. With unanimous consent, so ordered.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] 74404.033
    
    [GRAPHIC] [TIFF OMITTED] 74404.034
    
    [GRAPHIC] [TIFF OMITTED] 74404.035
    
    [GRAPHIC] [TIFF OMITTED] 74404.036
    
    Mr. Pompeo. Thank you. Thank you, Mr. Chairman. Thank you, 
Mr. Dingell. Mr. Silver, was DOE aware of these concerns? I 
know you weren't there at the time but you said there are 
files. Were they aware of the concerns about the pricing of 
these cells which were central to Solyndra's ability to repay 
the government's money?
    Mr. Silver. Well, Solyndra's cylindrical thin film cells 
were always more expensive than conventional matters, but the 
issue is total cost of ownership and you have to combine the 
cost of the cell with the installation, the balance of systems 
payments to understand the total cost of ownership. And at that 
time and in that place, that was a very competitive 
opportunity.
    Mr. Pompeo. I understand. You know, you have said you have 
gone from 35 to 180 folks or so in your organization.
    Mr. Silver. Approximately.
    Mr. Pompeo. You said that proudly. It troubles me a great 
deal that the Federal Government has an agency that has grown 
by almost 6 times. I hope you hired Mark as one of those folks 
that you brought on board going from 30 to 180.
    Mr. Silver. Actually, we have hired an enormously large and 
talented pool of former private sector, public finance experts 
and executives, so I think we have built a very good team. And 
it was designed simply to exist to put out monies----
    Mr. Pompeo. I appreciate that. You talked about this loss 
of market share, that we have lost this market share because 
these prices have fallen. Isn't that precisely what these 
programs are intended to do, to develop products so that the 
cost of production will come down and solar can compete with 
all of the other great energies in the world?
    Mr. Silver. That----
    Mr. Pompeo. Shouldn't you be thrilled that the price has 
come down? Instead, you act as if it is sad because we lost 
half a billion dollars of taxpayer money.
    Mr. Silver. No, it is--you are completely correct. It is 
our collective effort to try to find innovative technology to 
in fact do that. We issued--just as an example, we issued a 
different solar manufacturing loan guarantee just recently to a 
company whose improvement is a process improvement rather than 
a product improvement----
    Mr. Pompeo. Right.
    Mr. Silver [continuing]. And allows it to cut the cost of 
solar panel manufacturing by 50 percent.
    Mr. Pompeo. Right. So the globe succeeded in reducing the 
price but the American taxpayers lost half a billion dollars by 
us trying to pick a particular business that was going to 
benefit from that price reduction. Isn't that precisely what 
happened here?
    Mr. Silver. Well, what is happening is that we are putting 
together a portfolio of innovation----
    Mr. Pompeo. This was a bad outcome. I have listened. I have 
been here for the entire hearing today save for about 2 
minutes, and I have heard not a single person stand up and take 
any accountability for a single dollar of taxpayer money that 
is gone. We ask who made decisions, we asked who was 
responsible, and the two of you stand here and point to other 
people and take no accountability to the taxpayers in America 
and in Kansas for having lost half a billion of their dollars. 
And for me, that is unacceptable. I yield back my time, Mr. 
Chairman.
    Mr. Stearns. The gentleman's time has expired. The 
witnesses have indicated a request--personal request of 5-
minute break, so we will recess our subcommittee and come back 
at 12:30.
    Mr. Silver. Thank you.
    Mr. Stearns. And we appreciate your support. I remind all 
members we are going to have a second round.
    [Recess.]
    Mr. Stearns. The Committee on Oversight and Investigation 
will reconvene and we will start our second round. And if the 
witnesses will have forbearance here, we will try and wrap up 
very soon. There are a couple on my side and just I think one 
at this side if Mr. Dingell doesn't show up.
    I will start with my questions here and I need someone in 
counsel here to take care of the clock so that I keep myself on 
schedule.
    Mr. Silver, I was just going back to when I asked you 
questions in the beginning. In response to my question about 
Department of Energy conducting due diligence back in 2006, you 
testified under oath--we are reading exactly what you said. We 
got the exact transcript. ``Actually, I didn't say that it was 
conducted in 2006. I said the application was received in 2006 
and due diligence began and continued from late 2007 through 
2008.'' But this is at odds and opposite with the written 
testimony that you submitted to the committee where you state, 
``extensive due diligence on the transaction was conducted 
between 2006 and the end of 2008.'' Did the ``extensive due 
diligence'' that you referred to beginning at the end of 2000, 
as you stated in your verbal testimony, or the 2006, as you 
submitted in your written testimony? I am giving you an 
opportunity to correct it.
    Mr. Silver. Thank you. I don't think those statements are 
incompatible. The solicitation was issued in 2006 and pre-
applications were received at that time. The Loan Program 
Office received 143, began reviews of those----
    Mr. Stearns. Do you stand by your written testimony or your 
oral testimony?
    Mr. Silver. There is due diligence that takes place in 
order to ensure eligibility and then there is further due 
diligence that takes place in order to----
    Mr. Stearns. Well, you said to me that due diligence was 
not conducted in 2006 but yet in your written testimony it says 
it was. So which is which? Just yes or no. Is it your written 
testimony or your oral testimony this morning?
    Mr. Silver. Well, it is both, Congressman. There are 
certain kinds of----
    Mr. Stearns. You can't have due diligence in 2006 because 
in one you said it wasn't and the other you said it was.
    Mr. Silver. The due diligence done in 2006 was to ensure 
the eligibility of the project and----
    Mr. Stearns. So it was 2 different types of due diligence 
is what you are saying.
    Mr. Silver. Yes, sir, exactly.
    Mr. Stearns. And what are these 2 different types?
    Mr. Silver. Well, the----
    Mr. Stearns. Due diligence to me means due diligence. Are 
you saying due diligence has two different meanings?
    Mr. Silver. I am. Due diligence here--I am exactly saying 
that. Due diligence here was to decide whether or not an 
application was in fact eligible, and therefore, the due 
diligence was around technical and financial issues only. Once 
it was deemed eligible, it was--the company was invited to 
submit a full application and full due diligence began. That 
would include substantially greater kinds of due diligence than 
what was done to ensure eligibility.
    Mr. Stearns. OK. I certainly give you an opportunity to 
correct that.
    Mr. Zients, you testified that OMB did ``a thorough 
examination and analysis.'' And Mr. Silver, you also testified 
that DOE conducted months of rigorous and comprehensive due 
diligence and documentation. I think both of you have indicated 
that. Is that correct?
    Mr. Zients. I assume this is around the credit subsidy?
    Mr. Stearns. Well----
    Mr. Zients. It is hard to react to that----
    Mr. Stearns. OK.
    Mr. Zients [continuing]. Out of context. If you give me the 
full context----
    Mr. Stearns. Yes. Well, the full context is whether 
Solyndra itself would be a viable company and that doing this 
due diligence we are talking about, both of you had performed 
due diligence in that respect. So----
    Mr. Zients. Just to be clear, OMB's statutory 
responsibilities around FCRA and the credit subsidy----
    Mr. Stearns. OK.
    Mr. Zients [continuing]. And around the credit subsidy 
score, yes, it was a thorough analysis.
    Mr. Stearns. OK. So when I am alluding to the fact we had 2 
government agencies doing what they are supposed to do under 
the law and both of you testified that you did your thorough 
analysis, examination, rigorous and comprehensive due diligence 
and documentation. So the question I think for me on this 
committee and I think for both Democrats and Republicans, this 
creates some very serious questions about each of your 
abilities to put aside the administration's what appears to 
be--and I still stand by this--a political agenda. And you 
should have protected the taxpayers and made some forceful 
actions here after this analysis because you should have seen 
the problems and you should have said taxpayers need to be 
protected and this has got to stop. And I think what, in the 
larger sense, we are worried about is with this project and 
others that are stimulus projects is the comprehensive analysis 
done by both your agencies sufficient so the taxpayers can feel 
a good deal of comfort that you will protect taxpayers in the 
future and we won't see these out-of-control stimulus projects 
like Solyndra continue. So that is my basic concern, and I 
think anybody that watches this hearing will have the same 
concern that you folks did your due diligence, did the 
comprehensive, and yet this thing not only went into bankruptcy 
but now we have the FBI investigating. And that is what I would 
like to move to, Mr. Silver, with you.
    You said you are a venture capitalist. This company 
Solyndra raised $1.5 billion. As I understand it, roughly a 
billion dollars from venture capitalists plus the taxpayers at 
half a billion plus the hedge funds came in for $75 million. Is 
that correct?
    Mr. Silver. Approximately, yes.
    Mr. Stearns. OK, approximately. So let us say 1.5 billion, 
and they did a burn rate of 1.5 billion in less than 2 years, 
is that correct?
    Mr. Silver. Not--a burn rate would be the amount of money 
they go through per month----
    Mr. Stearns. Well, let us say they went through a 
significant cash burn, is that a correct statement?
    Mr. Silver. Yes, they did.
    Mr. Stearns. Now, with all your experience on the private 
sector and in hedge funds that you talked about, don't you 
think that to look at that kind of cash burn rate would send 
some alarms to you and to others at the Department of Energy, 
something is seriously wrong here, and you have got to protect 
taxpayers?
    Mr. Silver. I think you have to put this in context, 
Congressman. The company's revenues actually were--grew very 
dramatically during this period. They had $6 million of revenue 
in 2008. They had $100 million in revenue of 2009, $140 million 
in revenue in 2010, and so that is what you would expect a burn 
rate----
    Mr. Stearns. But even the emails we have shown you said 
that they are going to run out of money by September 2011. So I 
guess the problem we have is what was Solyndra burning all this 
money on? Do you know? Can you tell me today? Of this 1.5 
billion, where was it all going?
    Mr. Silver. In the most general terms--and I can't give you 
dollars and cents sitting here today--but they built this brand 
new huge fabrication facility, which was approximately a 700-
and-change-million-dollar facility equipped with advanced-state 
robotics. They had a smaller prototype plant if you will called 
Fab 1, and they had hired--which was also part of the set of 
objectives--they had hired hundreds of additional people. There 
were 3,000 people who were involved in the construction of 
the----
    Mr. Stearns. OK. I will accept what you are saying. I am 
just saying with your experience as a venture capitalist, I am 
surprised that you didn't see this cash burn rate as a serious 
flag----
    Mr. Silver. We did, Congressman, and we talked with the 
company about it regularly, but I need to underscore something 
I said before. As lenders and particularly with lender 
liability issues, we are not actually in a position to force a 
company----
    Mr. Stearns. OK.
    Mr. Silver [continuing]. To do anything. So there were 
regular----
    Mr. Stearns. Let me just close by this question. In your 
mind's eye, why did the FBI raid Solyndra?
    Mr. Silver. I have no idea, sir.
    Mr. Stearns. Was it a surprise to you?
    Mr. Silver. Yes.
    Mr. Stearns. Was it a surprise to you?
    Mr. Zients. Yes.
    Mr. Stearns. And all your colleagues have no idea why the 
FBI raided it? And you had no advanced warning?
    Mr. Silver. I can't speak for all my colleagues but I was 
not aware of any investigation.
    Mr. Stearns. Do you suspect there is a reason why?
    Mr. Silver. I wouldn't even hazard a guess, sir.
    Mr. Stearns. OK. My time has expired. The ranking member is 
recognized for 5 minutes.
    Ms. DeGette. Thank you, Mr. Chairman.
    I guess, Mr. Silver, I would ask you what were the main 
reasons DOE concluded Solyndra was worth the government's 
investment?
    Mr. Silver. In 2008 and 2009, as the due diligence was 
being done, the price of polysilicon, which is the fundamental 
component for building out conventional solar panels, was very 
high and had been high for an extended period. It was expected 
to remain high. In addition, the cost of installation, as I 
have indicated, called balance-of-systems costs for installing 
conventional solar paneling is very expensive. That is because 
the panels themselves are flat, they need to penetrate the 
roof, there are air uplift issues and the like. The cylindrical 
thin film technology obviates all of that, and while the 
cylinders themselves are more expensive than the panels, the 
total cost of ownership, particularly absent the price of the 
expensive polysilicon was very attractive.
    Ms. DeGette. So what happened in the market or with 
technology that caused those 2 things to not pan out basically?
    Mr. Silver. Well, a number of different things. First, the 
price of poly silicon actually came down more dramatically than 
expected as plants came on quickly to ramp up production. China 
began flooding the world market with increasingly inexpensive 
conventional solar panels because, as we have discussed 
earlier, the Chinese Government through both the China 
Development Bank and other smaller banks has provided multiple 
tens of billions of dollars of credit and credit subsidies plus 
other forms of support to their solar manufacturing industry. 
In addition, other countries have become actively involved in 
supporting those areas as well. So all of that drove the price 
curve down in a very significant fashion.
    Ms. DeGette. And here is my question. Why didn't DOE 
predict those events?
    Mr. Silver. I think we did understand that there were 
challenges in the marketplace. The fundamental responsibility 
and objective of this program is to identify innovative 
technologies that can be built out at scale and therefore 
leapfrog the traditional price curves that these technologies 
are on. But if the slope of the curve is more dramatic than 
anticipated, you will have this kind of event.
    Ms. DeGette. So you did predict it in a way but you didn't 
think it would be this dramatic or what?
    Mr. Silver. Well, we have--as you know, we have a large 
number of solar experts and solar industry experts at the 
Department. In addition, on this particular project, a number 
of different analysts and independent advisors were brought on 
board to analyze this as well.
    Ms. DeGette. Do you think there are things DOE could have 
done to prevent really this whole debacle with the Solyndra 
loan? Was there more due diligence that could have been done? 
Was it rushed too fast to approval? What could have been done?
    Mr. Silver. It clearly wasn't rushed too fast because there 
were several years of due diligence that went on. There are 
always going to be changes and shifts in market dynamics. I 
remind the committee that the loan which was to build out the 
plant actually built out the plant on time and on budget and at 
the same time revenues were dramatically increasing. There was 
a significant--as I--again, I--there was a significant customer 
base as well. But I guess the fundamental challenge is to 
ensure that we are doing everything we can to de-risk these 
projects, and that is why we build in--the terms and conditions 
of these things are, you know, dozens and dozens and dozens of 
pages long to do everything we can to de-risk these projects.
    Ms. DeGette. So you don't think there is anything else that 
could have been done here? Is that your bottom line?
    Mr. Silver. By the time of the restructuring, the plant was 
built but had not been fitted out, and so one might 
conceivably, you know, have identified a different plant 
configuration. But again, I hesitate to second-guess because it 
is the private sector that brought this project forward. I want 
to remind the committee----
    Ms. DeGette. Yes. I don't have much time left. Mr. Zients, 
what is your opinion? Is there anything we could have done to 
predict this or to stop this?
    Mr. Zients. Well, I think it is the nature of backing 
innovative technologies, that there are technology risks in 
some situations, market risks--we are competing in a global 
market so I think the lesson learned here is that marketplaces 
can change even more rapidly than one would have anticipated in 
terms of the cost curve that we talked about before. I don't 
think anyone would have thought that the cost could decrease 
and the price could decrease so dramatically. Going forward, we 
need to make sure that we understand those types of market 
shifts can occur.
    Ms. DeGette. Thank you.
    Mr. Chairman, I just want to reiterate my request for 
unanimous consent that the documents that have been referred to 
in the hearing today by the members be included in the record. 
And in addition, there is a document that I have which I think 
would help complete the record. It is the Credit Committee 
paper request for loan guarantee approval dated March 11, 2009. 
And I think that would help answer some of the follow-up 
questions about what happened after this January 9 meeting. My 
only one concern is at the top of this document it does say 
``restricted distribution, privileged business information,'' 
and as I flip through it, it does look like there might be 
business information. So the caveat I would have is to look and 
see if there is privileged business information in here before 
we make the whole thing part of the record.
    Mr. Stearns. OK. By unanimous consent, so ordered.
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    Mr. Stearns. And also we want to put our supplemental 
report by unanimous consent also.
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    Ms. DeGette. Thank you.
    Mr. Stearns. With that, we will move to Mr. Griffith. The 
gentleman from Virginia is recognized for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman.
    Mr. Silver, we talked earlier about other companies in 
similar circumstances, and I am not sure that I asked the 
question on observers. I asked others that had been 
subordinated, whether the taxpayers' money had been 
subordinated. Are there observers on any other boards as a part 
of this Loan Guarantee Program?
    Mr. Silver. No, sir. Nor would there typically be.
    Mr. Griffith. And in regard to the observer, I am 
concerned. You indicated to me that they told you that 
bankruptcy was most likely by the end of July. Is that not what 
you told me earlier?
    Mr. Silver. That the company was, you know, facing imminent 
troubles. I don't know that I would describe it as bankruptcy 
because, of course----
    Mr. Griffith. Because I asked bankruptcy before and you 
said end of July.
    Mr. Silver. Well, they were clearly having financial 
troubles again and we are going to need to figure out what to 
do or would face a bankruptcy.
    Mr. Griffith. All right. Because that raises a real concern 
for me that I think every member of this committee is concerned 
about. Apparently they--not you all--Solyndra was here on 
Capitol Hill speaking to Members of Congress indicating 
everything was on track at the same time that your observer was 
telling you all that there was a problem. Again, I am not 
saying that you all knew they were up here telling fibs, but I 
am concerned that they were up here telling fibs. That being 
said, what was your observer's role, because clearly they were 
in trouble, and what recommendations did he make to you all and 
did you all send word through him to the board on what they 
should do to protect the taxpayer dollars?
    Mr. Silver. Well, first, Congressman, in this particular 
case, the observer is a woman----
    Mr. Griffith. Thank you.
    Mr. Silver [continuing]. But what she did--and she is also 
the head of our portfolio management group and a career civil 
servant who ran that express function at the Export Import Bank 
for many, many years. She is a highly----
    Mr. Griffith. OK.
    Mr. Silver [continuing]. Highly achieved----
    Mr. Griffith. She is a great lady.
    Mr. Silver. Great lady.
    Mr. Griffith. I am not going to dispute that. What did she 
say we should do? Did she give you all advice on what should be 
done? Did she take messages back to the board saying we want to 
protect the taxpayer dollars? I mean they laid off all the 
employees. Why couldn't they have laid off half--those kind of 
questions. Was that going on?
    Mr. Silver. Yes, on a regular basis.
    Mr. Griffith. And can you provide us some kind of written 
documentation as to what was going on and what steps were being 
taken to try to protect the taxpayers' dollars once you learned 
that even after the restructuring, this company was going to 
fail or was likely to fail?
    Mr. Silver. I don't know if there are any documents 
specifically related to that, but I do know that we have now 
turned over, as I said, close to----
    Mr. Griffith. I understand. I am asking you if you can----
    Mr. Silver. I don't think there are any other documents. I 
mean I think we have----
    Mr. Griffith. I am asking you to create a document. Can 
somebody give us something in writing as to what was being done 
from July until the announcement that they were going bankrupt 
to try to protect the taxpayers' dollars?
    Mr. Silver. We can certainly work with you on that, yes.
    Mr. Griffith. All right. Thank you. And all the problems 
that you cite regarding Solyndra with maybe the exception of 
the cost of the polysilicon--I apologize if I got that wrong--
dealing with the competition from China and the economic 
instability in Europe and so forth where they buy more of these 
things, on the other loans that you have, are those pressures 
not also present?
    Mr. Silver. Well, as I said, the vast majority of our 
portfolio----
    Mr. Griffith. Or production. I am talking about the 4 
manufacturing.
    Mr. Silver. They are to a certain degree. The project that 
I made reference to earlier actually is a process project 
rather than a product product. So it produces a standard 
conventional panel, but it does it in a much more cost-
effective way with about half the use of materials and about 
half the time. So it is a bit of a different configuration.
    Mr. Griffith. So how much money do we have--that we have 
guaranteed a loan for that company?
    Mr. Silver. I think--I will have to check the exact number 
but it is about $135 million.
    Mr. Griffith. OK. So we gave 535 to the company that is 
riskier and 135 to one. And are they doing well?
    Mr. Silver. So far. Again, these projects are only now just 
beginning construction most of them.
    Mr. Griffith. Will you tell us if these companies start to 
have problems so that we can anticipate this and try to figure 
out what we need to do as the folks who are ultimately 
responsible for the spending of the taxpayers' money?
    Mr. Silver. Happy to work with you on that, sir.
    Mr. Griffith. All right. And then, you know, we act like 
sometimes--and I know there is no perfect world and maybe one 
guy or one gal got it right, but we act like, you know, we 
didn't see this coming and yet, you know, there are indications 
that somebody on your team--and I know you weren't there at the 
time the loan was made, but somebody on your team had it 
figured out and I am just wondering what steps have you taken 
knowing that someone on your team raised a concern that the 
models wouldn't work. What steps are you taking to make sure 
that even it is a minority viewpoint, when it comes to spending 
half a billion dollars of the taxpayers' money, that maybe you 
will pay attention to every warning sign.
    Mr. Silver. Well, as a matter of practice, with every 
transaction we do, we run a series of sensitivity analyses 
which change variables in the assumptions and therefore----
    Mr. Griffith. Is that different now than it was in August 
of 2009 when somebody raised the warning flag and nobody seemed 
to pay attention?
    Mr. Silver. I don't know for sure but I doubt it. I doubt 
that it was different. I mean it----
    Mr. Griffith. You are using the same model?
    Mr. Silver. It is standard practice to run sensitivity 
analyses.
    Mr. Griffith. And now that we have had this hearing, are 
you going to go back and take a look at it and see if you can 
come up with a better-tuned or finer-tuned model?
    Mr. Silver. We will continue to work with OMB to improve 
the models, yes.
    Mr. Griffith. All right. I yield back my time.
    Mr. Stearns. The gentleman yields back his time and the 
gentleman emeritus of the Energy and Commerce Committee is 
recognized for 5 minutes, Mr. Dingell of Michigan.
    Mr. Dingell. Mr. Chairman, I thank you for your courtesy.
    I got a few little questions here to ask. I have been 
looking sort of at how these events occurred and perhaps, Mr. 
Silver, you could help me with this. On January 9, Solyndra 
transaction was reviewed by a DOE Credit Committee and remanded 
for further analysis, right?
    Mr. Silver. Yes, sir.
    Mr. Dingell. It was not rejected.
    Mr. Silver. I am sorry?
    Mr. Dingell. It was not rejected. It just----
    Mr. Silver. It was not formally rejected. It was remanded 
back.
    Mr. Dingell. OK. Then, on the 15th of January, loan program 
staff notified DOE Credit Review Board that it had developed a 
schedule to complete Solyndra due diligence that would bring 
the project to approval in early March 2009 and final closing 
by early to mid-April 2009, is that right?
    Mr. Silver. I think that was the original projection.
    Mr. Dingell. OK. Then, Obama came into office on January 
20, 2009, 5 days later. So then, if I look here I see on 
February, March 2009, DOE continues to negotiate terms and 
conditions with Solyndra, is that right?
    Mr. Silver. I believe so, yes, sir.
    Mr. Dingell. OK. And then on March 12, DOE Credit Committee 
considers and approves Solyndra transaction. Is that right?
    Mr. Silver. Yes, a recommendation for----
    Mr. Dingell. Who was on that Credit Committee?
    Mr. Silver. I would have to get you the specific names but 
it is the same group----
    Mr. Dingell. Please.
    Mr. Silver [continuing]. Of career professionals that were 
on the first committee.
    Mr. Dingell. No political appointees?
    Mr. Silver. No political appointees, no, sir.
    Mr. Dingell. All right. So then, on the 20th of March, DOE 
issued a conditional commitment to Solyndra, is that right?
    Mr. Silver. That is correct.
    Mr. Dingell. Now, what were the conditions in that 
conditional commitment?
    Mr. Silver. Well, there were a number of them. Conditions 
precedent are simply things that company, the applicant, needs 
to do in order to complete its responsibilities before we can 
close.
    Mr. Dingell. And what you say is if you do those things, we 
will make----
    Mr. Silver. Right. Among them, for example, was the raise 
of an additional several hundred million dollars of capital, 
which they did. And during the time they were doing their CP 
work, we were continuing to do additional due diligence. It is 
important to remember that due diligence continues post-
conditional commitment all the way to final close.
    Mr. Dingell. OK. Now, then, on the 27th of April, 
independent market consultant report was submitted, is that 
right?
    Mr. Silver. I believe so, yes.
    Mr. Dingell. Now, what did that report contain?
    Mr. Silver. Well, the market--and independent market report 
generally describes the market for the product, examines the 
competitive landscape, looks at relative cost attributes, and 
the kind of classic documentation you would describe around 
that.
    Mr. Dingell. OK. Now, my colleagues on the other side of 
the aisle appear to be of the view that at some point, the 
Department of Energy denied the loan to Solyndra on January 9 
of 2009. Now, isn't it true that at that time the Department's 
Credit Review Board simply asked for further information and 
did not reject the request?
    Mr. Silver. The Credit Committee, sir, not the Credit 
Review Board. But yes, the Credit Committee.
    Mr. Dingell. OK. And then in your comments you have 
indicated shortly after the request for more information, the 
Loan Program Office outlined a timeline to complete the due 
diligence on the Solyndra request. Is that right?
    Mr. Silver. Yes, sir.
    Mr. Dingell. When did that occur? What date or 
approximately what time?
    Mr. Silver. I don't know the exact date but they came back 
rather quickly and said we will be in a position to bring this 
back some time in the March time frame.
    Mr. Dingell. OK. Now, when was that timeline developed? 
Before or after President Obama came into office?
    Mr. Silver. Before the Obama administration took office.
    Mr. Dingell. It was, OK. So what I am seeing here, then, 
this was followed up by the bankruptcy of Solyndra. When was 
that bankruptcy filed?
    Mr. Silver. I don't know the specific date but sometime in 
early September.
    Mr. Dingell. All right. Now----
    Mr. Stearns. The gentleman--it is September 6 of this year 
is the bankruptcy.
    Mr. Dingell. Thank you, Mr. Chairman. I would note that the 
bankruptcy, though, is not complete. It is going to throw 
Solyndra into reorganization. Is that right?
    Mr. Silver. I believe so.
    Mr. Dingell. So the end result of that will be that the 
United States will be a creditor, right?
    Mr. Silver. I am sorry, will be what?
    Mr. Dingell. The United States will be a creditor?
    Mr. Silver. A creditor, yes. I am sorry. Um-hum.
    Mr. Dingell. And now, the practical result of that is that, 
first of all, we have done things to get ourselves in a 
position where we see that Solyndra had a chance, at least 
during this, to provide jobs, put forward a new technology in 
the United States. Is that right?
    Mr. Silver. Yes, sir. The value--the analysis that produced 
the going concern valuation suggested that it was a 2 to 4x 
greater recovery likely to the taxpayer than a liquidation 
analysis.
    Mr. Dingell. OK. And during that time, the buildings and so 
forth were completed?
    Mr. Silver. Yes.
    Mr. Dingell. Is that right? And I want to thank you, Mr. 
Chairman, for your courtesy here, but I just got just a couple 
more small questions.
    I would note that the government's chance of recovery from 
that reorganization are better both in amount and certainty 
than if we had seen Solyndra go into bankruptcy earlier, is 
that right?
    Mr. Silver. We expect so. We will have to see what happens 
actually in the bankruptcy process, but we have a completed and 
operating plant fully fitted out, inventory and all kinds of 
things that did not exist during the first restructuring.
    Mr. Dingell. Very good.
    Mr. Chairman, you are very kind. Thank you for your 
courtesy.
    Mr. Stearns. The gentleman's time has expired. Then we 
recognize the gentleman from Texas, Dr. Burgess, for 5 minutes.
    Mr. Burgess. Thank you, Mr. Chairman.
    Gentlemen, I appreciate your perseverance and endurance in 
the hearing today.
    This morning's Washington Post references an email exchange 
between an assistant to Rahm Emanuel, then the White House 
Chief of Staff, August 31 of 2009, to the Office of Management 
and Budget about the upcoming announcement where we talked 
about this before. This was the groundbreaking where Secretary 
Chu was going to be at the company on September 4 and Vice 
President Biden was going to appear by satellite. And this 
staffer was concerned about the upcoming Biden announcement on 
Solyndra and asked whether there is anything we can do to help 
speed along the OMB side? And an OMB staffer responded, ``I 
would prefer this announcement be postponed. This is the first 
loan guarantee that we should have full review with all hands 
on deck and make sure we get it right.'' I mean that seems 
pretty reasonable from OMB.
    Now, when the OMB staff briefed committee staff last 
spring, well, there was, as you know, quite a lot of difficulty 
in getting any of these documents to the committee staff from 
OMB. It took 4 months to get any emails or communications in 
reviewing Solyndra's loan guarantee. And in fact this committee 
in July had a business meeting to subpoena those documents 
because we were having no success in acquiring those. And now 
we have them and we see that the White House scheduled 
announcement date before the OMB even began reviewing the deal 
in August 2009, we also see that OMB was aware that the 
groundbreaking event and it felt time pressures to do their 
work possibly resulting in the use of a wrong financial model. 
Is this why the committee had to subpoena the documents? Was 
there something here that you didn't want us to see?
    Mr. Zients. Can I see the email that you are referring to?
    Mr. Burgess. Well, actually, it is a Washington Post 
article from this morning, but I am sure we have the same 
emails in the document binder that can be provided.
    Ms. DeGette. Mr. Chairman, give him the email.
    Mr. Stearns. Gentlemen, continue. The gentleman has the 
time.
    Mr. Burgess. Well, they are looking for the emails and we 
will come back to that. Let me just ask for both of you, would 
you be able to provide to this committee, not today but get 
back to us and provide the names to the committee of every 
career and political appointee at both Department of Energy and 
Office of Management and Budget and the West Wing who worked on 
the project or inquired about the project and provide access to 
committee staff to any of those individuals that the committee 
believes is necessary to question for this investigation.
    Mr. Zients. OMB has been cooperating with the committee----
    Mr. Burgess. Sir, we subpoenaed the documents in July. You 
can't characterize that as cooperation.
    Mr. Zients. A few days before the subpoena, which we 
thought was unnecessary, we turned over----
    Mr. Burgess. Unnecessary? We had this hearing----
    Mr. Zients [continuing]. 1,000 pages----
    Mr. Burgess [continuing]. And your chair was empty in July. 
Your chair was empty. There was no one there. No one responded.
    Mr. Zients. Well, as to that, I was given less than 4 days' 
notice. I had a personal reason why I could not be here. I 
expressed to Chairman Stearns directly on the telephone that I 
was willing to come if there could have been an alternative 
time. The decision was made there was no alternative time but I 
want to be clear that I was willing to come to the committee as 
long as I had either sufficient notice----
    Mr. Burgess. In the sense of time, I mean this has been 
going on for a long time.
    Mr. Zients. So in----
    Mr. Burgess. And here is the thing that is really 
concerning a lot of us. Had you responded to the committee 
staff, had you responded to the committee's request, could we 
perhaps have preserved some of those taxpayer dollars that have 
now been lost in a bankruptcy proceeding and subordinated to a 
venture capital firm?
    Mr. Zients. Prior to----
    Mr. Burgess. Had there been cooperation from your office, 
would this loss to the taxpayer have been as great?
    Mr. Zients. Prior to the subpoena, which I believe was mid-
July, OMB worked with committee staff, turned over 1,000 pages 
of documents, did numerous meetings. Since mid-July OMB has 
turned over over 9,000 pages of documents. There have been----
    Mr. Burgess. Yes, sir, I have got to interrupt you because 
I am going to run out of time. That letter was in March and it 
took a long time to get anything back.
    Mr. Zients. I am sorry?
    Mr. Burgess. I have a couple of things--and you have gotten 
now the emails. I am going to ask you to take those and we will 
get you the question in writing, and I would appreciate a 
response to that question----
    Mr. Zients. I am sorry, can you repeat the question?
    Mr. Burgess. Well, I am going to submit the question to you 
in writing regarding those emails so we are all clear about 
what we are asking and what we are answering. And then I also 
have a memo from October 25 of 2010 to the President from Carol 
Browner, Ron Klain, and Larry Summers. And I have a series of 
questions that I want to ask you about this memo as well, and 
because of time constraints, obviously, I can't get to them. We 
will provide you this memo and we will provide you the 
questions. And I would appreciate a timely response to those 
interrogatories. Thank you.
    Mr. Zients. Thank you.
    Mr. Burgess. And I will yield back, Mr. Chairman.
    Mr. Stearns. The gentleman yields back.
    Mr. Scalise is recognized for 5 minutes.
    Mr. Scalise. Thank you, Mr. Chairman.
    I want to ask Mr. Zients--is that the proper way to say it? 
I want to get that right.
    Mr. Zients. Thank you.
    Mr. Scalise. Sure. You were at OMB throughout this whole 
process with Solyndra from when they got the original loan?
    Mr. Zients. No.
    Mr. Scalise. When did you come into OMB?
    Mr. Zients. When I came into OMB I was confirmed by the 
Senate in late June of 2009. So the conditional commitment 
period, the earlier administration period I was not at OMB.
    Mr. Scalise. And when was the loan to Solyndra finalized?
    Mr. Zients. In September so I was there----
    Mr. Scalise. So you were there at OMB----
    Mr. Zients. I was at OMB at the time. I was not----
    Mr. Scalise. At the time that Solyndra first got the loan, 
first was approved----
    Mr. Zients. When it closed, yes.
    Mr. Scalise [continuing]. For and got the loan.
    Mr. Zients. When it closed.
    Mr. Scalise. Following up on some of the questions that Dr. 
Burgess had----
    Mr. Zients. Just to clarify, I was not personally involved 
in----
    Mr. Scalise. Well, and these are the questions that I am 
going to ask you about because there is involvement between OMB 
and the Department of Energy and the White House, and what we 
have been trying to establish is just exactly what was that 
relationship between OMB, the Department of Energy, and the 
White House relating to the Solyndra loan? And of course, we 
did start asking for this information months ago. Prior to the 
restructuring--and your office was not complying and getting us 
some of the information we were requesting to the point we did 
have to subpoena. And there is a timeline issue that a lot of 
us have concerns with, too, because if we were able to stop the 
restructuring from happening, for example, then the taxpayers 
would not have been pushed in the back of the line to where now 
they are subordinated in bankruptcy----
    Mr. Zients. Just so we have our timelines correct, I 
believe that the restructuring was completed in February.
    Mr. Scalise. And our staff started asking for some of this 
documentation prior to that time.
    Mr. Zients. Is that--that is not my understanding.
    Mr. Scalise. That is the timeline I have. But regardless of 
that, I want to get to some of these specific emails because 
these emails span throughout the entire length of the Solyndra 
loan and restructuring, and it seems to indicate a pattern. 
Starting going back in Slide 7 if we can put that up and that 
way you can see it--and by the way, these emails were all 
provided to the minority as soon as we got them. So everybody 
had access to these emails on this committee and subcommittee.
    Ms. DeGette. Does the witness have these emails that Mr. 
Scalise is referring to?
    Mr. Scalise. I think they just gave him these emails. Some 
of these came from----
    Mr. Zients. I don't think that----
    Mr. Scalise [continuing]. His own agency, of course. Some 
of these are from OMB.
    Mr. Zients. Talking about specific emails, I agree with the 
Congresswoman----
    Mr. Scalise. Well, and I want to ask you a question about 
this email. I think it does show though--what I want to do is 
show that there was a pattern of expediency, of rushing----
    Ms. DeGette. Does the witness have this email?
    Mr. Stearns. Point of order? What is your point of order?
    Mr. Zients. I do--if I am going to respond to an email, I 
need to make sure I have it.
    Mr. Stearns. Does Mr. Zients have that?
    Mr. Scalise. Mr. Chairman, is the clock still running? If 
we can just get the clock to stop while----
    Mr. Stearns. Well, we gave you about 2 minutes before you 
even started the clock, so you are well into it. But now the 
witness has the emails, is that correct?
    Mr. Zients. I am going to need to absorb this. What he has 
just handed me is not what is on the screen. I can look through 
and see----
    Mr. Scalise. Page 7, I will read the quote. ``In 
congressional testimony''--and by the way this is congressional 
testimony. This isn't some email that we just got. This was 
testimony going back to March of 2009, a senior Department of 
Energy official said that Secretary Chu ``has directed us to 
accelerate the process significantly'' talking about the loan 
process. And I will go to some OMB emails. Of course, on page 9 
on Slide 9----
    Mr. Zients. The email I have in front of me to the best of 
my knowledge--and again, I wasn't actually in seat on March 17, 
2009, but to the best of my knowledge doesn't have any OMB 
people on it, so it is very difficult----
    Mr. Scalise. Right, but there is a March of 2009 email on 
Slide 9, ``this deal is not ready for prime time.'' Go to the 
next slide. ``Given the time pressure we are under to sign off 
on Solyndra, we don't have time to change the model''--that is 
an OMB staff email from August of 2009 after you came on board. 
Another quote from that same email, ``but we also need to make 
sure they don't jam us on later deals so there is a time to 
negotiate those, too.'' Next page----
    Mr. Zients. So----
    Mr. Scalise [continuing]. More OMB emails. And I will ask 
if I want to get all of these into record. Again, they are 
available to both committee staffs. ``If there is anything we 
can help speed along on the OMB side''----
    Mr. Zients. If I am going to respond, then I need to--we 
need to as we go case by case, I need to understand what email 
you are referring to, I need to have that email in front of 
me----
    Mr. Scalise. Sure. There is a communication on Slide 11, 
for example, August 31, 2009, the special assistant noted the 
Vice President's announcement at Solyndra on September 4 and 
whether ``there is anything we can help speed along on OMB 
side.'' So were you involved? And forget about the emails. Were 
you involved in any communications with the White House to push 
the Department of Energy to speed this thing along?
    Mr. Zients. No.
    Mr. Scalise. You were not?
    Mr. Zients. No.
    Mr. Scalise. Were you aware that anyone else at OMB was 
involved----
    Mr. Zients. I am now aware in my preparation for the 
hearing that there was a request from the Vice President's 
office about scheduling logistics for a potential event. This 
again has nothing to do with the decision to give the loan or 
not give the loan to the company. This process has to do with 
OMB's statutory responsibility to determine the right credit 
subsidy. The right--the credit subsidy was actually increased 
during----
    Mr. Scalise. Well, then I don't know if that was credit 
subsidies. I will go to Slide 12 because this is specifically 
an OMB email and I will read it and you can look at it.
    Mr. Zients. Well, OMB----
    Mr. Scalise. This is an OMB email that specifically talks 
about the approval. ``We have ended up with a situation of 
having to do rushed approvals on a couple of occasions, and we 
are worried about Solyndra at the end of the week. We would 
prefer to have sufficient time to do our due diligence reviews 
and have the approval set the date for the announcement rather 
than the other way around.'' This was a communication between 
OMB and Terrell McSweeny at the office of the Vice President.
    Mr. Zients. This does have to do with the credit subsidy 
score. This does not have to do with the yes/no on the loan. 
This has to do with the credit subsidy score. As I mentioned 
before, the credit subsidy score was actually increased----
    Mr. Scalise. Right. And so the question, then--and I am 
almost out of time----
    Mr. Zients. Let me just say one thing.
    Mr. Scalise. There is clear----
    Mr. Zients. In my preparation for this hearing----
    Mr. Scalise [continuing]. Communication between OMB and the 
White House and Department of Energy regarding all this, 
whether it was just about a ribbon cutting, but I think it 
shows that crony capitalism is running amok relating to this 
program. And I think this is a classic example. And there was a 
PricewaterhouseCoopers study that was done back in 2010. USA 
Today writes about it in an article, in an editorial today when 
they talk about PricewaterhouseCoopers saying there is 
substantial doubt about its ability to continue going as a 
concern, Solyndra. And so this was over a year ago they 
reported a serious concern about Solyndra going forward and 
obviously----
    Mr. Zients. That is----
    Mr. Scalise [continuing]. That was pushed back from the 
administration somewhere to push this thing along.
    Mr. Zients. I am sorry. The chronology of events is not 
consistent. You are asking about a period of time in August/
September of 2009. You are now referencing----
    Mr. Scalise. I am going throughout the whole process. I am 
not just focusing----
    Mr. Zients. You are now referencing----
    Mr. Scalise [continuing]. On one area because there was a 
loan, there was a restructuring. There has continued to be----
    Mr. Zients. To respond to your question about----
    Mr. Scalise [continuing]. Advancements of plenty and yet 
there were warning signs at every level, and yet it seems like 
crony capitalism was trumping the smart decision-making process 
and due diligence that should have been going on and a lot of 
these emails show that out to be the case. And yet $535 million 
of taxpayer money are now at risk. And so I hope you can 
understand and maybe you weren't directly involved but somebody 
at your agency was----
    Mr. Stearns. The gentleman's time has expired.
    Mr. Scalise [continuing]. In that chain. I yield back.
    Mr. Stearns. The gentleman from--Mr. Griffith is recognized 
for 5 minutes. Oh, Mr. Markey. Mr. Markey, do you wish to ask 
questions in the second round? Yes, I mean you are up if you 
want to go right now.
    Mr. Markey. May I reserve this time?
    Mr. Stearns. OK. You can reserve, yes. Mr. Griffith from 
Virginia is recognized for 5 minutes.
    Mr. Griffith. Mr. Chairman, I already had a second round. I 
am glad to take a third round.
    Mr. Stearns. OK. Then we can go to the gentleman who is not 
on the subcommittee but he is on the full committee, the 
gentleman from Kansas is recognized for 5 minutes.
    Mr. Pompeo. Thank you, Mr. Chairman.
    Mr. Zients, following up on Representative Scalise, were 
you not aware that the staff was being jammed, that they were 
being rushed? Were you at any time aware that they were being 
hurried and that they felt hurried or were you just oblivious 
to that?
    Mr. Zients. What period of time are we talking about?
    Mr. Pompeo. At any. How about we will start at any----
    Mr. Zients. No.
    Mr. Pompeo [continuing]. Period of time.
    Mr. Zients. So I was not involved so I would not have been 
aware at the time. In my preparation for this hearing----
    Mr. Pompeo. Um-hum.
    Mr. Zients [continuing]. I talked to OMB staff, and again, 
what we are talking about here is the credit subsidy.
    Mr. Pompeo. I understand.
    Mr. Zients. And on the credit subsidy, the OMB staff has 
presented to me that they had no hesitation as to the final 
decision, and the final decision of the credit subsidy actually 
increased the credit subsidy----
    Mr. Pompeo. Right.
    Mr. Zients [continuing]. Which made it more conservative.
    Mr. Pompeo. Right, they could still have been wrong because 
they were hurried. Do you think these emails, they were just 
wrong, they were making this stuff, they weren't hurried? When 
they----
    Mr. Zients. At the end of the day, the OMB career staff, 
which has deep expertise in credit scoring, felt comfortable--
--
    Mr. Pompeo. Yes.
    Mr. Zients [continuing]. With the credit subsidy score.
    Mr. Pompeo. That expertise is very apparent in a half a 
billion dollars being lost by the American taxpayer. It is 
readily apparent to us.
    Mr. Zients, there is a January 4 memorandum I want to just 
read to you. It is an OMB memorandum prepared by the OMB staff. 
It says, ``even under DOE's proposed restructuring, we are 
skeptical about the long-term viability of the company. 
Bankruptcy or default are real possibilities and Solyndra's 
product is priced at a premium in the market with rapidly 
declining prices and the company's cost structure does not 
cover operating margins. It is not clear that Solyndra would be 
able to achieve the scale and efficiency improvements necessary 
to improve margins.'' This was during the restructuring time. 
Why did OMB not stop the restructuring from going forward?
    Mr. Zients. OMB----
    Mr. Pompeo. Or recommend that?
    Mr. Zients. OMB pressure-tested DOE's analysis. OMB 
determined that the company was in imminent default, and then 
OMB determined that DOE's recommendation that the company be 
restructured was preferable to liquidation, that that was a 
reasonable outcome that DOE had reached.
    Mr. Pompeo. Would you please provide the witness, there is 
a series of emails in and around that same time, January 4, 
2011, one of them at 2:08 p.m.? Can you just make sure he has 
got a copy of that? Thank you.
    I will summarize but this is an email chain where it is 
very clear that the data are suggesting to staff at this moment 
in time that liquidation will cost the taxpayers a lower loss 
than will restructuring. Do you see, it says liquidation--it is 
underlined, it has got some analysis for expected recovery, and 
then it shows ``restructured, expected loss.'' The difference 
under bankruptcy at the time they expected losses estimated by 
this person on your staff to be $141 million, and it says if we 
do the restructuring, your staff says it will be about $385 
million loss. Do you see what I am referring to there?
    Mr. Zients. Yes. I am not on this email chain but----
    Mr. Pompeo. No, sir, you are not, but they work for you.
    Mr. Zients. I am sorry?
    Mr. Pompeo. You are not on the chain but they work for you.
    Mr. Zients. Right. So, you know, our staff is obviously 
pressure-testing and understanding an evolving situation, the 
restructuring was actually done in February----
    Mr. Pompeo. Right.
    Mr. Zients [continuing]. Off of DOE's recommendation. OMB 
decided that that was reasonable. At this point in time, there 
was information that the staff was looking at. The information 
obviously evolved across that period of time. As OMB got more 
information, the DOE made its final recommendation. OMB 
determined that DOE's recommendation was reasonable to 
restructure the loan.
    Mr. Pompeo. Can you show me that evolution because there is 
no evidence in the documents I have reviewed of any evolution. 
This is what your agency though on January 4 of 2011, and I 
have seen no data that would suggest there was an evolution 
other than your testimony here this morning.
    Mr. Zients. Well, first of all, this is an email from one 
analyst----
    Mr. Pompeo. Multiple emails.
    Mr. Zients. I would not represent----
    Mr. Pompeo. Read the whole----
    Mr. Zients [continuing]. That that is to what the agency--
--
    Mr. Pompeo. Read the whole chain, sir. These folks think 
this is a horrible idea to go forward with this restructuring. 
They think the taxpayers will lose. And these are the only 
government officials in the entire process that seem to me to 
have demonstrated to have concern for taxpayer finances.
    Mr. Zients. OMB's role here is to make sure that this 
budgeted for correctly. Ultimately, DOE has--is ultimately 
responsible for the decision as to whether or not to 
restructure or liquidate.
    Mr. Pompeo. Yes.
    Mr. Zients. OMB determined that that was a reasonable 
conclusion.
    Mr. Pompeo. Do you think it was a reasonable conclusion 
today, sitting here today? Do you think it was a reasonable 
conclusion?
    Mr. Zients. It is unclear----
    Mr. Pompeo. Well, what is your opinion, sir? Do you think 
it was a reasonable conclusion?
    Mr. Zients. To restructure the loan when it does?
    Mr. Pompeo. Um-hum.
    Mr. Zients. I think that there is reason to believe that 
that was reasonable at that point in time.
    Mr. Pompeo. Reason to believe it was reasonable and you are 
not a lawyer? I mean an answer like that----
    Mr. Zients. It was a reasonable conclusion at that point in 
time.
    Mr. Pompeo. Mr. Silver, do you think it was a reasonable 
conclusion to do the restructuring at this time?
    Mr. Silver. Yes, I do, Congressman. We did a detailed 
liquidation analysis, which suggested that the returns would be 
2 to 4x below what they would be as a going concern. And to do 
that, we evaluated the price of the buildings and the land. We 
also evaluated the value of inventory on a going concern basis. 
What you do on a going concern basis, just to be clear, is you 
match it with what are called IBA----
    Mr. Pompeo. I am very familiar with that----
    Mr. Silver. So you use--and since you are, you will know 
that we scour the market for comparables. We took the low end 
of the comparables, and then we measured that against the 
liquidation.
    Mr. Pompeo. So you were just wrong? But you still believe 
you might be right because----
    Mr. Silver. Well, you don't know what will happen----
    Mr. Pompeo. Right. So what do you think? Do you think we 
did a good deal?
    Mr. Silver. I think that when you are called on to make a 
judgment at the time with the best available information you 
have, you go with the probabilistic return.
    Mr. Pompeo. Right. And so you think it was realistic to 
subordinate the taxpayer at that time as well as part of that 
restructuring?
    Mr. Silver. Every piece of data that we had from 
independent analysts about the technology at that time--which 
we re-underwrote the technology and the market space. We had 
another market report done--all seemed to suggest that that 
could happen.
    Mr. Pompeo. I appreciate it. I just want to ask one more 
question. My time is up. I have listened to you for several 
hours now, just yes or no, do you both just treat this as just 
the normal cost of doing business? Is that how you think this 
failure at Solyndra--you just think this was the normal cost of 
doing business? You talk about portfolio theory, this stuff 
happens, bad things happen. Would you both just say yes or no? 
This is just the way things go? Yes or no.
    Mr. Silver. I think that while it is very regrettable, the 
loss was anticipated and when Congress set out the credit--
appropriated credit subsidy----
    Mr. Pompeo. You think it is very normal. Mr. Zients?
    Mr. Zients. It is not normal. It is a very disappointing 
outcome, but it comes with the terrain of backing innovative 
technologies.
    Mr. Pompeo. Yes, it is part of what happens when the 
government gets involved in things like this. I agree.
    Mr. Silver. Well, it is also what is required in order to 
compete successfully with what is happening around the world, 
particularly in China.
    Mr. Pompeo. Solyndra certainly wasn't capable of competing 
even in spite of all of this government assistance, were they?
    Mr. Stearns. The gentleman's time has expired.
    Mr. Pompeo. Thank you. Thank you, Mr. Chairman.
    Mr. Stearns. I think we are ready to close----
    Mr. Markey. Mr. Chairman?
    Mr. Stearns. --end the committee unless the gentleman from 
Massachusetts wishes to participate in the second round.
    Mr. Markey. Mr. Chairman? Mr. Chairman.
    Mr. Stearns. Oh, Mr. Bilbray, too. So Mr. Bilbray, you will 
be after the gentleman from Massachusetts. We have recognized 
Mr. Markey for 5 minutes.
    Mr. Markey. Thank you, Mr. Chairman.
    I have to compliment my Republican colleagues on their 
discipline, but after weighing these relentless and very 
serious allegations of lawbreaking and inappropriate 
politicization of the loan guarantee process, I am unconvinced. 
Three years of due diligence was exercised in considering this 
application. OMB completed their review process, albeit in 
expedited manner due to the nature of a Recovery Act that 
needed to get money out the door as quickly as possible. I 
would add that the chairman of the subcommittee and the full 
committee expressed a need to get Recovery Act money out the 
door quickly after that law was passed.
    Mr. Silver, do you believe that the Department cut corners 
in considering this loan guarantee in the months and years 
leading up to its finalization in September of 2009?
    Mr. Silver. Again, with a review of the record--I wasn't 
there, but with a review of the record, no, I don't believe so.
    Mr. Markey. Mr. Zients, was OMB able to do and exercise 
their oversight role to complete a comprehensive review of the 
Department of Energy's loan package to Solyndra?
    Mr. Zients. Yes. My belief is yes.
    Mr. Markey. When you pulled thousands of pages of emails, 
can you tell whatever story you would like when you look back 
retrospectively? You know, we live life forwards but we 
understand it backwards. Is it possible to----
    Mr. Silver. I believe that----
    Mr. Markey [continuing]. Create any storyline?
    Mr. Silver. I believe that can happen, yes, sir.
    Mr. Markey. The majority has chosen to politicize this 
program and it is attempting to discredit clean energy the same 
way they have tried to do to climate science. It is that 
simple. That simple.
    What this really reminds me of, to be honest with you, is 
the late 1990s after this committee had passed the 
Telecommunications Act of 1990 and there was a boom on 
broadband. And many companies failed. Pets.com., the list is 
long. On the other hand, there were companies that, in the new 
environment that we had created, were successful. EBay, Amazon, 
Google, YouTube, the list goes on. There were many successes, 
many failures because we created a paranoia-inducing Darwinian 
marketplace. What is different here, of course, and what no one 
anticipated in 2009--although we were in a competition with the 
Chinese--and by the way, when we passed the Telecommunications 
Act, we were trying to make sure we branded it Made in the USA, 
which we did. That is how people view that internet revolution 
in Egypt and Tunisia and countries around the world. But here, 
the Chinese have now decided to dump $20 billion into 4 
companies. Can you talk about that, Mr. Silver? Can you talk 
about this environment now within which American solar 
companies, wind companies are now competing against a state-run 
set of corporations against our private-sector companies?
    Mr. Silver. Yes, Congressman, I would be happy to. Not 
only, as you pointed out, has China underwritten its solar 
manufacturing industry with tens and tens of billions of 
dollars, they have, as I indicated earlier, produced and 
provided a wide array of additional support facilities 
including free land and other kinds of things. There are also 
mechanisms in place for the purchase of those panels in the 
domestic market that don't exist here.
    But I don't think we should limit our focus to China alone. 
Countries around the world understand the importance and the 
viability of this space, and it is important that we take this 
as a global challenge. There will only be one opportunity for 
us to become a winner here and if we miss that window, we will 
have missed a multitrillion-dollar market.
    Mr. Markey. I thank you. I think if we keep China here as 
the headline and we understand what we were trying to do in 
putting together a plan, we had a plan for telecom. China and 
the United States are pretty much starting at the same point in 
solar and wind. We were trying to put together a plan, 
batteries as well.
    Let me also say this. You can look back and I can right now 
say there is an NRC senior scientist who has a memo to all the 
NRC commissioners saying that the AP1000, which is the reactor 
the Southern Company wants to build, will crack like a glass 
cup if there is an earthquake. Now, you can keep that memo and 
you can say that is the reason we should give no loan 
guarantees to the Southern Company or other companies. We can 
just say we waited in the totality of all the evidence.
    I am hearing my Republican colleagues expressing a great 
deal of angst about whether or not a $535 million loan 
guarantee should have been given to Solyndra when there is no 
evidence that they have expressed any concerns about far larger 
guarantees that have been given to the Southern Company, to 
other companies that could in fact wind up with billions of 
dollars ultimately being put on the shoulders of the taxpayers 
in our country. And I am talking specifically about the nuclear 
sector. There is a fundamental crisis happening in Japan and 
Germany and other countries. We are part of a global story and 
it is impacting the domestic nuclear industry. Those loan 
guarantees could come back to haunt the taxpayers in our 
country and I hope that we see a similar interest in that 
subject, because that is happening right now. And now is the 
time for this committee to exercise the due diligence to 
protect the taxpayer.
    Thank you, Mr. Chairman.
    Mr. Stearns. The gentleman's time has expired and the 
gentleman from California, Mr. Bilbray, is recognized.
    Mr. Bilbray. Yes, Mr. Chairman. Let me join with my 
colleague from Massachusetts and call for a hearing on the 
nuclear issue because I think, you know, the gentleman from 
Massachusetts has to remember that like just last week in San 
Diego, the plants shut down exactly as planned during a 
blackout exactly as posed to get the facts from Japan. And as 
somebody who has a nuclear facility in his county, I am more 
confident now of the safety of our technology than I was 
beforehand and remind the gentleman from Massachusetts that the 
beautiful bay of San Diego Bay is full of nuclear reactors 
being run by 20-something-year-old kids. And it is safer and 
cleaner because we have those reactors in San Diego Bay. But 
getting back to the issue here is that the technology was not 
keeping up with the hype. And as somebody that still feels 
strongly about the opportunity of clean technology, I think the 
inappropriate application of political influence or 
perception--and I don't think this was an intentional misdeed. 
I think it is a much deeper problem that this was a prejudiced 
for a broad definition of technology as if somehow this was 
going to be the answer for everything.
    First of all, let me clarify the gentleman from 
Massachusetts pointed out that China has been aggressive on 
this, I will remind you that this plant was cited where the 
electricity was 22 cents a kilowatt, twice of what it is in 
Ohio and where China is producing them in an area where there 
is 6 cents a kilowatt is what they are charging. So, Mr. 
Silver, all of this does relate to the productivity and the 
ability to compete in a world market, doesn't it?
    Mr. Silver. Yes. Certainly, citing issues are relevant.
    Mr. Bilbray. And shouldn't these things be considered along 
with the specific technology that is being proposed to provide 
a certain product by asking for the grant?
    Mr. Silver. Once again, Congressman, we don't provide 
grants, but I think what you mean is----
    Mr. Bilbray. The loan guarantee.
    Mr. Silver. The technologies that we underwrite are those 
that are spelled out in the legislation. We don't search out 
those that aren't.
    Mr. Bilbray. OK. I have a question for you specifically. 
This part of the stimulus bill, San Diego we are siting a 
French facility to build solar panels specifically because we 
have a stationary source. First thing we do is not try to build 
a new facility. California, as everyone knows, has had 
businesses fleeing. We have huge open warehouses, and the logic 
our mayor is making and we are making working with him is why 
don't we go ahead and retrofit existing structures rather than 
building one? The fact that this was proposing to take virgin 
farmland and go from the ground up and build all the 
construction of a whole new building with all the related so-
called stimulus of building on virgin land on the ground up, 
did that have any influence in the fact that this was included 
in the stimulus bill, not just the green part of it, of the 
hope that all solar was going to be good, but the fact that you 
had a whole new factory being build in California, probably the 
only one even being considered? Do you think that had any 
influence on the approval of this process that the fact that 
they were capitalizing a whole new facility rather than 
retrofitting an existing one?
    Mr. Silver. I don't know how to answer that. The 
applications that we receive come in from the sponsors 
themselves, so the proposal, the project has already been put 
together by private sector actors, including the investors in 
whatever project it is.
    Mr. Bilbray. But that is in the prospectus.
    Mr. Silver. No, they are making--they are actually filing 
an application for a specific--funding for a specific project.
    Mr. Bilbray. But the technical review had that in 
consideration.
    Mr. Silver. Well, the technical review----
    Mr. Bilbray. That was part of the documentation they gave 
the Technical Review Board.
    Mr. Silver. The technical review is intended to ensure that 
the technology works, which clearly it did--they sold hundreds 
of millions of dollars worth of product--and to ensure that the 
plant will be built in such a way as to produce them 
appropriately.
    Mr. Bilbray. OK. So in other words, do you or do you not 
feel that the fact that they had a major capital improvement 
proposed in this package helped sell it as part of the stimulus 
package?
    Mr. Silver. I don't know the answer to that. We don't 
evaluate projects on the basis of their impact for non-project-
specific activities. We manage them against a criteria and 
objectives of the program.
    Mr. Bilbray. OK. I am going to ask you again because you 
had time to talk to your staff about it. Are you aware or has 
anybody made you aware of your agency actually intervening 
about the siting of where production sites should be placed as 
a condition of getting the loan guarantee?
    Mr. Silver. I am not aware of that, no.
    Mr. Bilbray. OK. I would ask you to specifically ask that 
question and investigate that question.
    Mr. Silver. I am happy to do so.
    Mr. Bilbray. Because I have good information that that 
specifically has been made a condition of some grants, at least 
one, that the production line needs to built in a certain area 
and not in another area and that is something that has been 
documented to me very strongly. And I think it is real 
critical.
    My biggest problem here, again, is that the perception that 
solar is good means all solar proposals are good and why don't 
we move it?
    Mr. Silver. Congressman, if I may, we received literally 
hundreds and hundreds of applications, dozens and dozens of 
solar----
    Mr. Bilbray. Let me just say that this was a half-a-
billion-dollar mistake and I would ask that we point out that 
there was an action taken by your body under a justification of 
a legal definition that I think is a threat to both Democrats 
and Republicans that the word ``is'' is, and that for somebody 
to sit there and ignore the law and redefine the word ``is'' I 
think the American people are outraged that a half-a-billion-
dollar issue was raised while legal jargon was ignoring the 
fact that the law is in there. And I don't think Democrat or 
Republican wants to have to add in every law that it will never 
happen.
    I yield back to the gentleman.
    Mr. Stearns. The gentleman's time has expired. I think we 
have finished and we have had a very good discussion. I want to 
thank the witnesses.
    Does the ranking gentlelady have any concluding comments 
before I wrap up?
    Ms. DeGette. I want to thank the witnesses for coming 
today. I think we had a very spirited and interesting 
discussion about both the specifics of this deal and also the 
future of Federal Government's role in solar energy. I am very 
much looking forward to the testimony of the executives of 
Solyndra next week and I would hope, Mr. Chairman, that we can 
have a more orderly way of presenting documents.
    Mr. Markey. Would the gentlelady yield?
    Ms. DeGette. I yield, sure.
    Mr. Stearns. Well, we are just trying to conclude this----
    Mr. Markey. Through the gentlelady I would like to urge 
that we have a hearing on the risk premium which DOE and OMB 
are charging to the nuclear industry for loan guarantees post-
Fukushima and post the Wall Street reassessment. This is 
happening right now. We should get ahead of this issue and hold 
these hearings.
    Mr. Stearns. I will take that under advisement.
    Let me conclude by just saying to both of you that I think 
you should, based upon what I hear today, go back and look at 
all solar panel projects of stimulus package. I think when you 
realize that the solar industry is truly dependent on subsidies 
and the government pays about 30 percent of the cost of 
businesses to invest, consumers get a federal tax credit of 
$2,000 for their renewables, States are throwing in a hefty 
portion of additional incentives, and they are offering a 
subsidy of residential solar as much as $2.50 per installed 
watt, and you look at all of this and you do the analysis, even 
at $140 a barrel, the idea that solar panels are going to break 
even is questionable. So I think with that, particularly in 
light of what is happening in China, I think your office would 
be well to look at all the other stimulus package dealing with 
photovoltaic cells.
    And with that, the subcommittee is adjourned.
    Mr. Burgess. Mr. Chairman?
    Mr. Stearns. Yes?
    Mr. Burgess. May I just ask a question before adjourning? 
Our written questions will be permitted and they will be 
responded to and included in the record?
    Mr. Stearns. They will. They will be. And the witnesses 
will be responsible for answering these questions under the 
order of the House.
    Mr. Burgess. And further, Mr. Chairman, I am grateful we 
have the CEO and CFO of Solyndra coming in. I think it is very 
important that we have the Secretary of Energy and the 
chairman----
    Mr. Stearns. I think Secretary Chu should be invited, I 
think he should attend, and because the questions both sides 
have brought up, I think his credibility on this project should 
be part of the witness process. And so I think----
    Mr. Burgess. Secretary Lew as well?
    Mr. Stearns. Secretary Lew as well, yes.
    Mr. Burgess. All right. Thank you.
    Mr. Stearns. Thank you. Subcommittee is adjourned.
    [Whereupon, at 1:38 p.m., the subcommittee was adjourned.]
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