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




  THE SOLYNDRA FAILURE: VIEWS FROM DEPARTMENT OF ENERGY SECRETARY CHU

=======================================================================

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               ----------                              

                           NOVEMBER 17, 2011

                               ----------                              

                           Serial No. 112-104


      Printed for the use of the Committee on Energy and Commerce















  THE SOLYNDRA FAILURE: VIEWS FROM DEPARTMENT OF ENERGY SECRETARY CHU

=======================================================================

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                           NOVEMBER 17, 2011

                               __________

                           Serial No. 112-104







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      Printed for the use of the Committee on Energy and Commerce

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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....................................    11
    Prepared statement...........................................    13
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................    14
    Prepared statement...........................................    15
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................    17
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, prepared statement.............................   565

                                Witness

Steven Chu, Secretary, Department of Energy......................    19
    Prepared statement...........................................    21
    Answers to submitted questions...............................   567

                           Submitted Material

Letter, dated November 10, 2011, from Mary Anne Sullivan, 
  Partner, Hogan Lovells UP LLP, to Mr. Waxman, submitted by Ms. 
  DeGette........................................................     8
Article, ``Solyndra: Energy Dept. pushed firm to keep layoffs 
  quiet until after midterms,'' dated December 13, 2010, The 
  Washington Post, submitted by Mr. Gingrey......................    64
Letter, dated December 13, 2010, from Jonathan Silver, Executive 
  Director, Loan Programs Office, Department of Energy, to 
  Solyndra Inc., submitted by Mr. Griffith.......................    71
Solyndra Chronology, undated, submitted by Mr. Barton............    87
Email, dated January 4, 2011, to Kelly T. Colyar and Fouad P. 
  Saad, submitted by Ms. DeGette.................................   116
Subcommittee exhibit binder......................................   123

 
  THE SOLYNDRA FAILURE: VIEWS FROM DEPARTMENT OF ENERGY SECRETARY CHU

                              ----------                              


                      THURSDAY, NOVEMBER 17, 2011

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:03 a.m., in 
Room 2123, Rayburn House Office Building, Hon. Cliff Stearns 
(chairman of the subcommittee) presiding.
    Members present: Representatives Stearns, Terry, Myrick, 
Sullivan, Murphy, Burgess, Blackburn, Bilbray, Gingrey, 
Scalise, Griffith, Barton, Upton (ex officio), DeGette, 
Schakowsky, Ross, Markey, Green, Christensen, Dingell, and 
Waxman (ex officio).
    Also present: Representatives Pompeo and Kinzinger.
    Staff present: Carl Anderson, Counsel, Oversight; Michael 
Beckerman, Deputy Staff Director; Allison Busbee, Legislative 
Clerk; Stacy Cline, Counsel, Oversight; Todd Harrison, Chief 
Counsel, Oversight and Investigations; Kirby Howard, 
Legislative Clerk; Alexa Marrero, Communications Director; 
Carly McWilliams, Legislative Clerk; Andrew Powaleny, Assistant 
Press Secretary; Krista Rosenthall, Counsel to Chairman 
Emeritus; Alan Slobodin, Deputy Chief Counsel, Oversight; Sam 
Spector, Counsel, Oversight; Peter Spencer, Professional Staff 
Member, Oversight; John Stone, Counsel; James Thomas, Policy 
Coordinator, Oversight; Kristin Amerling, Minority Chief 
Counsel and Oversight Staff Director; Alvin Banks, Assistant 
Clerk; Jeff Baran, Minority Senior Counsel; Phil Barnett, 
Minority Staff Director; Stacia Cardille, Minority Counsel; 
Brian Cohen, Minority Investigations Staff Director and Senior 
Policy Advisor; Karen Lightfoot, Minority Communications 
Director and Senior Policy Advisor; and Matt Siegler, Minority 
Counsel.

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

    Mr. Stearns. Good morning, everybody. We will open the 
subcommittee hearing of Oversight and Investigations on the 
Solyndra failure and views from the Department of Energy 
Secretary Chu.
    My colleagues, we welcome this hearing of the Subcommittee 
on Oversight and Investigations to further examine the 
Department of Energy's review and approval for the $535 million 
loan guarantee to Solyndra as well as its repeated efforts to 
keep this company atop President Obama's green-jobs pedestal. 
While our investigation continues, it is readily apparent that 
senior officials in the administration put politics before the 
stewardship of taxpayers' dollars.
    My colleagues, we have methodically investigated the 
circumstances surrounding Solyndra's failure for 9 months now 
and have followed the facts every step of the way. Our goal is 
to determine why the Department of Energy and the 
administration tied themselves so closely to Solyndra and why 
they were so desperate to repeatedly prop up this company. Why 
did DOE make these bad decisions? And what can we do to prevent 
a waste of taxpayer dollars in the future?
    But as our investigation has unfolded, many more questions 
have emerged about the loan guarantee to Solyndra, the 
subsequent restructuring and subordination of the taxpayers' 
money, and the extent of the White House involvement. So, 
today, we are focused on the loss of $535 million of taxpayers' 
money.
    When DOE was reviewing the Solyndra application at the end 
of the Bush administration, too many issues with the parent 
company's cash flow and liquidity remained unresolved, leading 
them to end discussions with Solyndra and remand the 
application itself.
    Later that month, President Obama was inaugurated, and 
Secretary Chu took over the reins of the Department of Energy. 
He implemented an acceleration policy for the loan guarantee 
reviews. And despite the deal posing significant financial 
problems, Solyndra was labeled a litmus test for the program's 
ability to fund good projects--quickly, too.
    Secretary Chu and Vice President Biden's ribbon-cutting 
ceremony was scheduled before DOE even presented the final deal 
to OMB. OMB staff did not feel as though they had sufficient 
time to conduct adequate due diligence, and their concerns 
about models showing Solyndra running out of cash in September 
2011, prophetically, were apparently ignored.
    Only 6 months after the loan closed, Solyndra's financial 
problems became increasingly severe. Nonetheless, President 
Obama visited Solyndra in May of 2010 and proclaimed, quote, 
``The true engine of economic growth will always be companies 
like Solyndra,'' end quote.
    It is important to understand how Secretary Chu addressed 
these concerns and the extent of authority he was granted to 
make sure this company, so closely connected with the fate of 
President Obama's green-jobs agenda, ultimately succeeded. In 
the fall of 2010, just 1 year after the loan closed, Solyndra 
had basically flat-lined and started to default on the terms of 
the loan. Documents show DOE granting the company several 
waivers, including waivers from Davis-Bacon requirements, and 
desperately trying to figure out ways to keep it afloat.
    In early December, after several lengthy negotiation 
sessions with Solyndra's primary investors and despite clear 
language in the statute barring them to from doing so, DOE made 
a last-minute offer that would subordinate taxpayers with 
regard to the first $75 million recovered in the event of 
liquidation. We have since uncovered serious disagreements 
within the administration about not only the legality of this 
arrangement but whether it was a good deal for anyone involved 
but the rich hedge-fund investors.
    As I said before, if Solyndra really is a litmus test, we 
have a much bigger problem on our hands. Two of the first three 
deals approved under Secretary Chu's acceleration policy have 
now blown up and filed for bankruptcy. GAO has serious concerns 
about DOE's ability to monitor the loans. The White House 
itself now has initiated a review of the portfolio. No one has 
admitted any fault whatsoever, and the President and our 
Democrat colleagues just shrug it off and say, ``Hey, sometimes 
things just don't work out,'' end quote.
    The administration is still refusing to allow DOE and OMB 
witnesses to testify under oath. And OMB refuses to make some 
important witnesses available to us at all, with no one from 
the administration taking responsibility.
    With that, that concludes my opening statement, and I 
recognize my distinguished colleague, Ms. DeGette from 
Colorado.
    [The prepared statement of Mr. Stearns follows:]


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    Ms. DeGette. Thank you.
    Before I start my opening statement, Mr. Chairman, which 
witnesses has the White House refused to produce to testify 
under oath? Please give me their names.
    Mr. Stearns. We will be glad to give you a list, and 
certainly----
    Ms. DeGette. If I could have a list before----
    Mr. Stearns. Sure.
    Ms. DeGette [continuing]. The conclusion of this hearing--
--
    Mr. Stearns. We will be glad to give it to you.
    Ms. DeGette [continuing]. We will use our exercise to get 
those witnesses. Thank----
    Mr. Stearns. Just between you and me, I think you know.
    Ms. DeGette [continuing]. You very much. No, I would like 
to know, please. Thank you.

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

    Now, Mr. Secretary, I would like to welcome you and thank 
you for joining us today. Mr. Waxman and I have been urging the 
majority for some number of weeks now to have you over to 
discuss the important and legitimate issues relating to the 
Solyndra loan guarantee and the broader issue of the efficacy 
of loan guarantees for solar energy.
    This investigation, we all believe, is of critical 
importance to the American public, both so we can get to the 
bottom of what happened to over half a billion dollars of 
taxpayer money in the short term and also to ensure the 
knowledge we gain from this situation can inform our efforts to 
drive American clean energy innovation for the long term.
    Unfortunately, instead of conducting a serious inquiry into 
the facts relating to Solyndra and the lessons we can learn 
from this case, the majority, to date, as evidenced by my 
colleague's opening statement, has focused on firing partisan 
broadsides at the Obama administration. For example, 2 weeks 
ago, the committee created an unnecessary and unprecedented 
subpoena battle with the White House, despite good-faith 
efforts on the part of the White House to negotiate an 
accommodation to produce information regarding key committee 
concerns in the investigation. And then, last week, when the 
White House did produce documents, the majority selectively 
released to the press three emails that presented a distorted 
account of Mr. Kaiser's activities while withholding documents 
and communications, as well as statements by Mr. Kaiser in his 
interview with both Democratic and Republican staff, that 
directly contradicted the majority's interpretation.
    But let me be clear: None of us on my side of the aisle are 
here to defend or to apologize for the actions of anyone in the 
administration or in the White House in particular. In my 15 
years on this committee, we have had a strong tradition of 
thorough and meaningful bipartisan investigations. And as 
ranking member of this distinguished subcommittee, it had been 
my hope that we could have continued that tradition in order to 
fulfill our oversight duties to the American people. 
Unfortunately, this has not been the case.
    The point of this inquiry should not be to score partisan 
victories or to smear individuals who happen to support one 
political party over the other. What we should be trying to do 
is figure out what happened with the Solyndra loan guarantee so 
we can bring accountability to the American people and improve 
our ability to advance the United States as a leader in the 
clean energy market.
    Toward that end, I hope the Secretary's appearance here can 
provide relevant information on several key issues that we are 
allegedly investigating.
    First, we need to examine whether appropriate due diligence 
occurred before DOE's September 2009 approval of the loan 
guarantee. Committee staff recently conducted interviews of key 
former and current DOE officials who were involved with the 
loan guarantee decisions, including Steve Isakowitz, who was 
appointed by President Bush and served as chief financial 
officer from July 2007, under the Bush administration, through 
July 2011, under the Obama administration.
    Mr. Isakowitz told the committee staff that he believed the 
DOE award of a loan guarantee to Solyndra was based on the 
merits and that Secretary Chu did not ask anyone to cut corners 
on the decision. Other DOE officials who were interviewed made 
similar statements. I am looking forward to hearing the 
Secretary's perspective on the process that led to the Solyndra 
loan guarantee award.
    Second, we need to look at whether DOE exercised good 
judgment by restructuring the loan guarantee and subordinating 
part of the government's interest in early 2011 when Solyndra 
was verging on default. Some members of this committee have 
alleged that subordination violates the Energy Policy Act. To 
help the committee assess this issue, we asked a former DOE 
general counsel to review DOE's legal rationale for 
subordination.
    The former DOE general counsel concluded the analysis was 
reasonable, stating, quote, ``I conclude from the statute, the 
loan guarantee regulations, and DOE's prior interpretations of 
Section 1702 that, had it expressly considered the question of 
its authority to subordinate its guaranteed debt in a post-
restructuring before the Solyndra default situation arose, DOE 
likely would have reached the same conclusion reflected in the 
opinion and that its conclusion is legally supported,'' end 
quote.
    Mr. Chairman, I ask unanimous consent that this letter be 
included in the record today.
    Mr. Stearns. So ordered.
    Ms. DeGette. Thank you.
    [The letter follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Ms. DeGette. Along those lines, I would like to hear from 
Secretary Chu about the lessons we can learn from DOE's 
experience with restructuring the Solyndra loan guarantee.
    Third, I would like to hear from the Secretary regarding 
the status of DOE's efforts to monitor the Solyndra loan 
guarantee and the extent to which this has evolved over his 
tenure. I hope the Secretary can give us insight into whether 
Solyndra made accurate representations to DOE throughout the 
loan guarantee process.
    And, finally, given the majority's heavy emphasis on 
allegations relating to corruption, we also need to hear from 
the Secretary whether political fundraising by Mr. Kaiser or 
anyone else had any bearing on decisions relating to the 
Solyndra loan guarantee.
    More broadly, I hope this three-ring circus leads us to a 
robust discussion relating to the state of our national energy 
policy and, in particular, renewable energy. This situation is 
an excellent opportunity for us to learn how to best develop 
and implement policies that provide U.S. innovators the support 
they need to make the United States a clean energy market 
leader.
    Thank you very much, Mr. Chairman.
    Mr. Stearns. I thank my colleague.
    I now recognize the full chairman of the Energy and 
Commerce Committee, the distinguished 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, for holding this 
hearing on the Department of Energy's role in the approval and 
subsequent restructuring of the Solyndra loan guarantee.
    And welcome, Mr. Secretary.
    The central focus of the investigation is to understand why 
DOE did and what it did and how we find ourselves with this 
taxpayer-funded debacle. The number of red flags about Solyndra 
that were raised along the way, many from within DOE, and 
either ignored or minimized by senior officials is astonishing. 
Before the loan guarantee was approved, DOE and OMB staff 
repeatedly questioned the financial health of Solyndra. And 
based on the rate it was burning through cash and other 
troubling issues, the truth is, the expert staff were, indeed, 
concerned that the company was bound to fail.
    We have heard from President Obama and even from you, Mr. 
Secretary, that nobody had a crystal ball and no one could have 
predicted Solyndra's demise. But the truth is that DOE staff 
did predict this. One of the models reviewed by DOE staff 
specifically showed that Solyndra would run out of cash in 
September of 2011. And in March of 2010, just 6 months after 
the initial loan agreement was finalized, Solyndra's auditors 
echoed many of the same issues about working capital and 
recurring losses and warned that Solyndra was going to have 
problems staying afloat.
    These concerns were not only shared by industry experts, 
they reached the highest levels of the West Wing. Yet, at DOE, 
officials were shrugging it off and calling it par for the 
course. Two months later, the President actually went to 
Solyndra's headquarters and gave a speech touting the company 
as an economic success story, in spite of numerous warnings 
from both supporters and government staffers.
    These are just a few examples of the red flags DOE could 
have acted on to limit taxpayer losses. Instead, at every 
opportunity, Solyndra and DOE officials, including you, Mr. 
Secretary, publicly assured the American people that Solyndra 
was on track and would eventually thrive, right up until the 
time that Solyndra declared bankruptcy.
    They continued telling this story even when they clearly 
should have known it was not the case. DOE was receiving 
financial reports showing that Solyndra was bleeding cash and 
going bankrupt. DOE also failed to mention that, behind the 
scenes, they were continually taking extraordinary steps to 
keep Solyndra on financial life support.
    So, Mr. Secretary, what did you know about the situation at 
Solyndra, when did you know it, and how did you act on that 
information, if at all? These are important questions that all 
of us will be asking today. Your testimony is an important 
piece of the overall puzzle, and we will work methodically, 
following the facts, to get to the bottom of why taxpayers are 
now on the hook for more than half a billion dollars.
    And I yield back the balance of my time to Mr. Barton.
    [The prepared statement of Mr. Upton follows:]

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    Mr. Stearns. Mr. Barton is recognized for the balance of 
the time.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. Thank you, Chairman Upton and Chairman Stearns.
    And thank you, Mr. Secretary, for being here this morning. 
We appreciate you agreeing to voluntarily testify about the 
Solyndra loan guarantee program. I have been on this committee 
25 years. Rarely, if ever, have I seen a more--to put it as 
positively as possible, a more mismanaged program than the 
Solyndra loan guarantee. We are hopeful that you will be able 
to answer a number of our questions today. And I know, as a man 
of integrity, you are going to do your best, because I do 
sincerely mean that, that you are a man of integrity.
    But the first question that I hope you will answer is, why 
did the Obama Department of Energy reverse the Bush Department 
of Energy decision that the Solyndra loan guarantee was not 
ready for prime time? To this day, that puzzles me.
    Secondly, I would like to hear your answer as to why 
apparently you made the decision to violate the clear letter of 
the law in Title XVII of the Energy Policy Act that plainly 
states that a loan guarantee financed by the taxpayers cannot 
be subordinated to private investors. That just absolutely 
puzzles me.
    And, finally, what guarantees do we have on behalf of the 
taxpayers that changes are going to be made in the existing 
loans that have been put out on this program, I think to the 
tune of about $16 billion, that we are not going to have a 
repeat of this fiasco?
    This is an important program. I happen to continue to 
support a loan guarantee for alternative energy, contrary to 
what some of my friends on the Democratic side of the aisle 
state. But I cannot continue to support it if we can't get some 
assurances that this isn't going to be history that will be 
repeated.
    So thank you, Mr. Secretary, for being here, and I look 
forward to your answers.
    [The prepared statement of Mr. Barton follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Stearns. I thank my colleague and recognize the 
distinguished gentleman from California, the ranking member of 
the full Energy and Commerce Committee, Mr. Waxman.

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

    Mr. Waxman. Thank you, Mr. Chairman.
    And, Secretary Chu, I want to welcome you to our hearing 
today.
    As I have said from the outset, I believe in this oversight 
on the Solyndra loan guarantee issue. It is part of our job. We 
want to know about these taxpayers' dollars that have been lost 
and how we can learn from this experience not to have it 
repeated.
    But I don't support the way Chairman Stearns and Chairman 
Upton have been running this investigation. They held an empty-
chair hearing. They humiliated witnesses for asserting their 
constitutional rights. They denied Democratic requests for 
witnesses. They resisted the release of exculpatory documents 
and provoked a gratuitous conflict with the White House. And, 
just last week, they released cherry-picked emails that were 
contradicted by other documents and unjustly smeared George 
Kaiser. And, as we learned today in the newspaper, they 
criticize you for awarding loan guarantees at the same time 
they were seeking loan guarantees for solar energy projects in 
their own districts.
    That is no way to conduct a responsible investigation. We 
should be fair and impartial, and our goal should be to find 
the truth.
    We also need to put this investigation into context and ask 
the most important question: How do we make the transition to 
the clean energy economy of the future?
    Last week, the International Energy Agency released its 
``World Energy Outlook.'' While Solyndra stories made news 
across the country, there was virtually no coverage of the 
International Energy Agency's findings, yet they are far more 
important to the future of our country and the business of this 
committee than whether the Department of Energy asked Solyndra 
to delay announcing a plant closure.
    The International Energy Agency found, and I quote, ``We 
cannot afford to delay further action to tackle climate change 
if the long-term target of limiting the global average 
temperature increase to 2 degrees Celsius is to be achieved. If 
stringent new action is not forthcoming by 2017, the energy-
related infrastructure then in place will generate all the CO2 
emissions allowed, leaving no room for additional power plants, 
factories, and other infrastructure unless they are zero-
carbon.''
    What this means is that our future depends on developing 
clean energy. There will be $38 trillion invested in the new 
energy infrastructure over the next 20 years. Our economic 
growth, our national security will be determined by whether we 
succeed in building these new industries.
    Our competitors recognize this. China spent $30 billion to 
subsidize solar energy in the last year alone, and jobs in 
manufacturing facilities are booming in China as a result. Our 
chairman of the subcommittee says the answer is to give up. 
Last month, Mr. Stearns said, and I quote, ``The United States 
can't compete with China to make solar panels and wind 
turbines.''
     Well, I don't believe in surrender, Mr. Chairman. We can't 
out-compete China, but to succeed we have to reject the anti-
science, anti-progress policies of the Republicans in Congress 
and their oil and coal industry allies.
    The agenda of congressional Republicans is clear: Do 
everything possible to maintain our addiction to fossil fuels 
and cripple clean energy companies that could compete with oil 
and coal. House Republicans voted against putting a price on 
carbon pollution, which would have created market opportunities 
for clean energy. House Republicans voted to slash funding for 
energy research and development into the clean technologies. 
And now they are opposing government investments in solar, 
wind, and other clean energy companies.
    We need to move past Solyndra and to begin addressing our 
pressing energy challenges. The voluminous records before the 
committee--and we have received over 186,000 pages of documents 
from the Department of Energy, over 13,000 pages from the 
Office of Management and Budget, over 1,000 pages from the 
White House, nearly 200 pages of documents from the Treasury--
all of these records show that the decision to award a loan 
guarantee to Solyndra was based on the merits, not political 
considerations. As Steve Isakowitz, a Bush appointee, the chief 
financial officer at DOE, told us, the integrity of the review 
process was never compromised.
    It is time for House Republicans to stop dancing on 
Solyndra's grave and start getting serious about energy policy. 
And it is shameful for members of this committee to deny the 
science and pretend that we do not need a comprehensive clean 
energy policy.
    Something far more important is at stake today than scoring 
partisan political points. The future of our economy and the 
health of our planet will be at risk until we find a way to 
come together and enact policies that stop weather-changing 
carbon pollution and make our Nation the world leader in clean 
energy.
    Thank you, Mr. Chairman.
    Mr. Stearns. I thank the gentleman.
    Since he--I will take the chairman's prerogative here, 
since you mentioned my quote from NPR. It was taken out of 
context. And without elaborating, I would point out that if we 
intend to subsidize our industries to compete with China, who 
is subsidizing their industries, I think that is not a good way 
to handle it.
    With that, now we will welcome our witness, Secretary Chu, 
and thank him for coming.
    You have a book to your left there with tabs with lots of 
quotes that the committee members will be using, so we will 
just refer you to that tab.
    Before we go any further, we have a member from the full 
committee, from Kansas, Mr. Pompeo--oh, Mr. Kinzinger from 
Illinois, rather, is here as a member from the full committee, 
but he does not want to participate, but he would like to be in 
the hearing, with unanimous consent. Is that acceptable to the 
minority?
    So ordered. He is welcome.
    As you know, Mr. Secretary, the testimony you are about 
give is subject to Title 18, Section 1001 of the United States 
Code. When holding an investigative hearing, this committee has 
a practice of taking testimony under oath. Do you have any 
objection to testifying under oath?
    Mr. Chu. No.
    Mr. Stearns. 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?
    Mr. Chu. No.
    Mr. Stearns. In that case, if you would please rise and 
raise your right hand, I will swear you in.
    [Witness sworn.]
    Mr. Stearns. Welcome. And, Mr. Secretary Chu, you are 
welcome to give your opening statement, 5 minutes.

    STATEMENT OF STEVEN CHU, SECRETARY, DEPARTMENT OF ENERGY

    Mr. Chu. Thank you, Chairman Stearns, and thank you, 
Ranking Member DeGette and members of the subcommittee, for the 
opportunity to speak with you today.
    Investments in clean energy reached a record $243 billion 
last year. Solar photovoltaic systems alone represent a global 
market worth more than $80 billion a year today. In the coming 
decades, the clean energy sector is expected to grow by 
hundreds of billions of dollars.
    We are in a fierce global race to capture this market. In 
the past year and a half, the China Development Bank has 
offered more than $34 billion in credit lines to China's solar 
companies. China is not alone. To strengthen their countries' 
competitiveness, governments around the world are providing 
strong support to their clean energy industries. Germany and 
Canada operate government-backed clean energy lending programs. 
And more than 50 countries offer some type of public financing 
for clean energy projects.
    In the United States, Congress established Section 1703 and 
1705 loan guarantee programs as well as the Advanced Technology 
Vehicles Manufacturing program, all of which provide support to 
cutting-edge clean energy industries that involve technology 
and market risks. In so doing, Congress appropriated nearly $10 
billion to cover potential losses in our total loan portfolio, 
thereby acknowledging the inherent risks of funding new and 
innovative technologies and also ensuring that those risks are 
properly accounted for in the budget.
    We appreciate the support that the loan programs received 
from many Members of Congress, who have urged us to accelerate 
our efforts and to fund worthy projects in their States. In 
total, the Department received nearly 500 congressional letters 
about the loan programs.
    Through the loan programs, the Department of Energy is 
supporting 38 clean energy projects that are expected to employ 
more than 60,000 Americans, generate enough clean electricity 
to power 3 million homes, and displace more than 300 million 
gallons of gasoline annually. These important investments are 
helping to make America more competitive in a global clean 
energy economy.
    Today, we are here to specifically discuss the Solyndra 
loan guarantee. The Department takes our obligation to the 
taxpayers seriously and welcomes the opportunity to discuss 
this matter. As you know, the Department has consistently 
cooperated with the committee's investigation, providing more 
than 186,000 pages of documents, appearing at hearings, and 
briefing or being interviewed by committee staff eight times.
    As this extensive record has made clear, the loan guarantee 
to Solyndra was subject to proper, rigorous scrutiny and 
healthy debate during every phase of the process. As the 
Secretary of Energy, the final decisions on Solyndra were mine, 
and I made them with the best interests of the taxpayer in 
mind.
    And I want to be clear: Over the course of Solyndra's loan 
guarantee, I did not make any decision based on political 
considerations. My decision to guarantee a loan to Solyndra was 
based on the analysis of experienced professionals and on the 
strength of the information they had available to them at the 
time.
    Solyndra's potential was widely recognized outside the 
Department. Highly sophisticated, professional private 
investors, after conducting their own reviews, had collectively 
invested nearly a billion dollars in the company, which was 
named as one of the world's, quote, ``50 Most Innovative 
Companies'' by MIT's Technology Review in February of 2010. In 
March of 2010, the Wall Street Journal included Solyndra in its 
ranking, ``The Next Big Thing: The Top 50 Venture-Backed 
Companies.''
    It is common for it to take some time for startup 
companies, especially manufacturing companies, to turn a 
profit. And in the 2 years since the Department issued the loan 
guarantee, Solyndra faced deteriorating market conditions. 
Solar PV production has expanded at the same time, and the 
demand has softened due to the global economic downturn and the 
decline in subsidies in countries including Spain, Italy, and 
Germany. The result has been an acute drop in the price of 
solar cells, which has taken a toll among many solar companies 
in Europe, Asia, and the United States.
    Meanwhile, countries like China are playing to win in the 
solar industry. China has invested aggressively to support its 
companies, and, in recent years, China's market share in solar 
cell and solar module production has grown significantly, to 
roughly half the market today.
    While we are disappointed in the outcome of this particular 
loan, we support Congress' mandate to finance the deployment of 
innovative technologies and believe that our portfolio of loans 
does so responsibly. The President asked for a review of the 
Department's loan portfolio. We support that review, and I look 
forward to the results.
    The Energy Department is committed to continually improving 
and applying lessons learned in everything we do because the 
stakes could not be higher for our country. When it comes to 
the clean energy race, America faces a simple choice: compete 
or accept defeat. I believe we can and must compete.
    I thank you and welcome your questions.
    [The prepared statement of Mr. Chu follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Stearns. Thank you, Mr. Secretary.
    And I will start off with my questions. As I mentioned, we 
have a book to your left there with different tabs we will be 
asking you to look at. When my questions are asked, I would 
like you to answer ``yes'' or ``no,'' and I phrased my 
questions in such a way that you could do that.
    In that book, on tab 5, there is an interview you had with 
the Wall Street Journal on February 6th, 2009. And you were 
simply asked what percentage of the roughly $37 billion that 
you had to spend at DOE for these loan guarantee programs. You 
replied you wanted about half to be spent in a year.
    So the question is, are you aware that the Department of 
Energy inspector general testified just this month that the 
Department had spent, not allocated, had spent only 45 percent 
of the stimulus funds nearly 3 years later, yes or no?
    Mr. Chu. I am aware that we did not----
    Mr. Stearns. OK, just--you are aware, yes.
    So the Department of Energy stimulus program failed to meet 
even your, based upon that interview in the Wall Street 
Journal, 50 percent performance target you set. Is that 
correct?
    Mr. Chu. That is correct.
    Mr. Stearns. OK.
    Now, you have repeatedly stated, in hindsight--you keep 
mentioning hindsight, 20/20--no one could have predicted about 
Solyndra going bankrupt. But here is the crux and here is the 
problem we have: In August 2009--and this is tab 14--before you 
signed off on the loan guarantee, one of your own Department of 
Energy staffers actually predicted, prophetically, that 
Solyndra would go bankrupt. And I will quote: ``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.''
    So the bankruptcy was predicted 2 years ahead of time. 
Knowing of this assessment, you are the Secretary of Energy, 
continued to give tranches of money to Solyndra all through the 
next 2 years, even though your staff had predicted that 
Solyndra would go bankrupt in September 2011.
    When you signed off on the loan guarantees, were you aware 
of this, of these emails and of these concerns from DOE? And 
OMB emails also showed that. Were you aware of that, that 
Solyndra was a bad bet, yes or no?
    Mr. Chu. This is not--sir, this is not a yes-or-no 
question. Let me explain the context of what this----
    Mr. Stearns. Well, I----
    Ms. DeGette. You know, let's hear him out.
    Mr. Chu [continuing]. Email was about.
    Mr. Stearns. OK. OK.
    Ms. DeGette. Do you want the information?
    Mr. Stearns. I don't want you to take all my time, but can 
you just give a short answer?
    Mr. Chu. Very shortly, this email--the cash flow had to do 
with the construction of Fab 2 facility. And if you look at the 
full analysis of that facility and the cash flow of that 
facility, it was going to go very rapidly into the black. In 
fact, that Fab 2 facility was completed on time, on budget. And 
the parent company----
    Mr. Stearns. OK, I understand that. But yes or no, were you 
aware of these DOE emails that said it would go bankrupt? That 
is the basic question. Were you aware of them, yes or no?
    Mr. Chu. I wasn't aware of this particular email at the 
time.
    Mr. Stearns. Were you not aware of it?
    Mr. Chu. I was--it was an issue of an analysis that was in 
the----
    Mr. Stearns. No, the question is, were you aware that your 
own staff that worked for you was predicting bankruptcy in 
2011, prophetically, 2 years, yes or no?
    Mr. Chu. It wasn't predicting bankruptcy of the company. It 
was predicting a cash-flow issue that, upon further analysis, 
did not appear and, in fact, did not appear in reality.
    Mr. Stearns. Were you aware of it at the time?
    Mr. Chu. I was not aware of this email at the time.
    Mr. Stearns. OK.
    During an interview with committee staff, the DOE chief 
financial officer admitted that he did not remember the 
Department validating any assumptions about the Chinese market 
before approving the application.
    Was that, in hindsight, the Department should have known? 
And wasn't that the failure of DOE?
    Mr. Chu. Could you repeat the question, please?
    Mr. Stearns. Sure. Basically, just asking, did you do any 
research about the Chinese market before you approved this 
loan, yes or no?
    Mr. Chu. I personally did not do it, but I am----
    Mr. Stearns. OK.
    Mr. Chu [continuing]. Sure my loan people have done many 
market surveys.
    Mr. Stearns. OK.
    When Solyndra ran into financial problems and you 
authorized taxpayers' funds to be subordinated to these two 
hedge funds, were you aware that DOE staff originally told 
Argonaut and the DOE funds could not be subordinated under the 
Energy Policy Act of 2005, yes or no?
    Mr. Chu. When we discussed the subordination of the loan 
with my general counsel, it was the decision of the general 
counsel of the Department of Energy--their considered opinion 
was that the subordination was proper.
    Mr. Stearns. OK.
    The President recently appointed Mr. Allison to look at the 
DOE's loan, the entire portfolio. Doesn't the fact that the 
President appointed somebody outside of DOE show that he 
doesn't think you have the wherewithal, the financial acumen, 
to step in and actually understand the condition of all these 
loan guarantees? Doesn't this mean simply--it does to me--that 
the President has lost confidence in you and your management--
your financial-management acumen of this loan guarantee 
program?
    Mr. Chu. We welcome outside eyes, and we welcome Herb 
Allison and his investigation. I made no bones about it. I 
should also say, before that happened, we, ourselves, within 
the loan program, we looked outside the loan----
    Mr. Stearns. So, basically, you don't take it as any 
affront on your----
    Mr. Chu. Pardon? Pardon?
    Mr. Stearns. You don't take it as a personal affront on 
your integrity to run the DOE that the President has an outside 
group looking at it?
    Mr. Chu. No. I----
    Mr. Stearns. I accept that.
    Mr. Chu [continuing]. I--I----
    Mr. Stearns. Let me complete with one last question. Were 
you aware in early 2011 that, to subordinate this loan, the 
chief financial officer of the Department of Treasury said, in 
his 28 years, he has never seen taxpayers subordinated to 
outside commercial loans? Were you aware that Mr. Burner said 
that?
    Mr. Chu. No, I was not aware he said that.
    Mr. Stearns. Are you aware of it today?
    Mr. Chu. Yes.
    Mr. Stearns. And do you think that he is right, or do you 
disagree with him?
    Mr. Chu. I believe that other loan--like OPIC and Ex-Im, 
have, in some cases, subordinated loans.
    Mr. Stearns. We are talking about taxpayers.
    Mr. Chu. Well, OPIC and Ex-Im----
    Mr. Stearns. All right.
    Mr. Chu [continuing]. Serve the taxpayers.
    Mr. Stearns. My time has expired, and we recognize the 
gentlelady from Colorado.
    Ms. DeGette. Thank you very much, Mr. Chairman.
    Secretary Chu, did any Obama campaign donor ever contact 
you and ask you to take any action relating to the Solyndra 
loan guarantee or to the restructuring of that loan guarantee?
    Mr. Chu. No. No one did. No Obama campaign----
    Ms. DeGette. You are under oath.
    Mr. Chu. Yes.
    Ms. DeGette. OK.
    Now, are you, as Secretary of Energy, aware, personally 
aware, of any contact by any Obama campaign donor to any 
employee of the Department of Energy asking them to take any 
action relating to the loan guarantee or to the restructuring?
    Mr. Chu. I am not aware of any such----
    Ms. DeGette. Have you asked your employees and the folks 
involved with Solyndra if they----
    Mr. Chu. They were having discussions, and no one has said 
that something like that occurred. No one----
    Ms. DeGette. OK.
    Mr. Chu. They, in fact, said that, to the best of their 
knowledge, it has not occurred.
    Ms. DeGette. Did anyone from the White House ever contact 
you--anyone from the White House ever contact you--to take any 
action on the Solyndra loan guarantee or restructuring for any 
reason other than the actual financial analysis?
    Mr. Chu. No.
    Ms. DeGette. Now, are you aware of any contact by someone 
from the White House to anybody in the DOE? Did anybody bring 
that to your attention, asking them to take an unusual action 
relating to the loan guarantee or to the restructuring?
    Mr. Chu. No, I am aware of no communication from White 
House to Department of Energy saying to make the loan or to 
restructure.
    Ms. DeGette. Now, in your responses to the chairman's 
question, you said the decisions were yours based on 
professionals within the Department. Briefly, can you describe 
the process for--I mean, originally, the loan was not approved 
under the Obama administration; it was the Bush administration. 
But, certainly, the tranches of money were given under the 
stimulus, and then there was the restructuring.
    So the question is, which professionals did you rely on 
within the Department to make those decisions?
    Mr. Chu. So, what happened when I came in as Secretary of 
Energy is that there was, beginning with the confirmation 
hearings, tremendous interest in the loan program, getting it 
going. When I came into the Department, I asked, what are the 
loans first in line that have been prepared? And I was told by 
Department of Energy career people that Solyndra was the first 
loan; this was first in line.
    Ms. DeGette. These are people who had been there 
previously. They were career Department of----
    Mr. Chu. They were career people who had been there during 
the previous administration.
    Ms. DeGette. OK.
    Mr. Chu. And they said that this was the first in line. It 
went before--I think in early January it went before the review 
committee, the credit review committee. And the credit review 
committee said there was incomplete information, we needed more 
information, for example on market surveys, things of that 
nature. So they gave it back to the loan originators--again, 
career people--and said, we need more information before we can 
make a decision yes or no.
    And so that is what happened. So, one set of career people 
told the loan originators, go back and we need this additional 
information before we can make an up-or-down vote.
    Ms. DeGette. And then what happened?
    Mr. Chu. And then, several months later, after these things 
were obtained--market surveys, things of that nature--they came 
back to the credit review committee, and, at that time, the 
same career folks said, ``OK, you have satisfied our questions, 
and we recommend moving forward with the loan.''
    Ms. DeGette. And so you moved forward with the loan.
    Mr. Chu. Right. At that time----
    Ms. DeGette. Now, then, some months later, the bottom 
really fell out. Why do you think that happened? Was it 
improper reviews and data used by the career people in that 
analysis, in getting that market analysis? Very briefly, 
because I have about the same amount of time as the chairman.
    Mr. Chu. Very briefly, the largest issue of why that 
happened is, the price of solar panels dropped precipitously. 
And by ``precipitously'' I mean in a single year it dropped by 
40 percent.
    Ms. DeGette. And was that primarily because of China's 
infusion of capital, or were there other market reasons for 
that as well?
    Mr. Chu. There were two factors. First, there was a large 
production ramping up, namely in China. And, secondly, there 
was a softening of the market in Europe.
    Ms. DeGette. OK.
    Mr. Chu. A lot of subsidies were being--they were 
decreasing, and the demand was softening.
    Ms. DeGette. Now, at some point, there was a decision, 
then, to restructure the loan, correct?
    Mr. Chu. Yes.
    Ms. DeGette. And why didn't the Department just walk away 
from the loan? Why was this decision made to restructure?
    Mr. Chu. By that time, the Department knew that because of 
the very competitive nature of solar--I said 40 percent in 1 
year; 70 percent over a 3-year period of time, which was 
unheard of--we had a half-completed factory. And it was a 
difficult decision. We had two choices: We either had to stop 
the loan, which would make Solyndra go into immediate 
bankruptcy, with a half-empty factory--half-completed factory; 
or we could say, we can continue on the contract of the loan, 
which was to build this factory. Once the factory was complete, 
Solyndra would have a fighting chance of continuing or it could 
offer that factory sale as a whole unit.
    Ms. DeGette. So there was some hope that you could recoup 
the taxpayers' money?
    Mr. Chu. Yes. And we----
    Ms. DeGette. Now, one last question. Why was the decision 
made to subordinate the government's interest to the private 
investors in the restructuring?
    Mr. Chu. At the time, the investors--in the time where we 
were disbursing the loans, again, it was a contractual 
arrangement with the Department of Energy, the investors were 
putting in more equity. And as the rapidly changing market 
conditions dictated, the investors said, if you want us to put 
in another--first $75 million, followed by another $75 million, 
this first $75 million should come ahead of the Department of 
Energy.
    And, again, we faced--after discussing the legality of 
that--and, again, our general counsel advised me that it was 
legal--then we faced this difficult decision. Do you stop 
giving them the money that was agreed upon and force them into 
bankruptcy, or do you go forward?
    And so, this whole--it was a difficult decision, and we 
were always, always focused on that path that could get as much 
taxpayer recovery as possible.
    Ms. DeGette. Thank you, Mr. Chairman.
    Mr. Stearns. I thank my colleague.
    I recognize the full chairman, Mr. Upton, the gentleman 
from Michigan, for 5 minutes.
    Mr. Upton. Thank you, Mr. Chairman.
    I am going to follow the Dingell model of asking yes-and-no 
questions, if I can.
    Were you aware, Mr. Secretary, that DOE staff was concerned 
throughout 2009 that the company did have a liquidity problem?
    Mr. Chu. I am aware now--well, yes. I was aware----
    Mr. Upton. Were you aware then?
    Mr. Chu [continuing]. There was a liquidity problem in--it 
wasn't a liquidity--it was a temporarily liquidity problem in 
the project, which was what we were funding, namely the 
construction of Fab 2, but it was only a 1-month. And 
afterwards----
    Mr. Upton. All right.
    Mr. Chu [continuing]. It was not an issue.
    Mr. Upton. That goes back to the question that Mr. Stearns 
asked, but I am looking at a--on October 8th, 2010, Solyndra 
executives informed DOE that the company's situation--this is a 
quote now--``situation has changed quote dramatically,'' end 
quote. Bill Stover, the CEO, informed DOE that it would not be 
able to raise capital by the end of the year, as it originally 
had planned to do so, and, quote, ``Without access to FFB loans 
in October, November, and December for work that has been 
completed, Solyndra would run out of cash in November,'' end 
quote.
    So that is there, in addition to the email that was sent in 
2009 which said that they would run out of cash by the end of 
August of 2011, which, of course, was true.
    So were you aware of either one of those two emails to DOE?
    Mr. Chu. Again, I want to not conflate the issue. The issue 
of the first instance I believe was----
    Mr. Upton. It shows to me that there was a pattern, that 
they announced that they were going to run out of cash.
    Mr. Chu. There was one instance when, in the construction 
of the Fab 2 project, where--which is, I believe, the first one 
you were referring to. And that, as you said--if you then go to 
the next month, it goes into the black and it was a modeling 
issue. In fact, history shows that that fab was constructed on 
time, on budget.
    Mr. Upton. But in the email from nearly a year ago, they 
indicated, again, that they were going to run--without access 
to funds, they would run out of cash in November of last year. 
There was another email--are you aware of that email?
    Mr. Chu. I believe those emails are still about the 
construction of Fab 2.
    Mr. Upton. All right. Were you aware of the company's 
problem containing costs, that it had a cash burn rate of 
almost $10 million a week, yes or no?
    Mr. Chu. We knew that they had--in fact, their business 
model--and this is true of many companies, especially 
manufacturing companies. You have a cash burn rate, you build 
up your factory, you build up your sales, you begin to sell 
your product, and there was a business plan that they were 
going to--which, again, nearly $1 billion of equity investments 
by savvy people knew of this plan.
    Mr. Upton. Were you aware in 2010 that both OMB and 
Treasury were concerned that DOE was not monitoring the loan 
and did not have a grip on Solyndra's financial condition?
    Mr. Chu. We were, in fact, monitoring the loan. In fact, 
about that time--first, we started by monitoring the loan, and 
then we set up, later, a different entity. So a person that was 
not part of the loan origination by that time was beginning to 
monitor the loan. We set up----
    Mr. Upton. Yes.
    Mr. Chu. We further set up another organization within the 
loan program to monitor the loan. And now what we have done is 
set up organizations outside the loan program but who have 
expertise----
    Mr. Upton. It is our understanding that you weren't 
monitoring very closely until after it was restructured.
    Do you stand by the restructuring even though the 
arrangement put Solyndra's interest and investors ahead of the 
taxpayers?
    Mr. Chu. As I said, this was a difficult choice. There was 
a lengthy discussion----
    Mr. Upton? So you do.
    Mr. Chu [continuing]. About that. And it was a difficult 
choice for us to make. And, at that time, we felt that the 
first $75 million--the company would not put in--the investors 
would not put in an additional $75 million in order to continue 
this project. And so it was a choice of either facing immediate 
bankruptcy, as I said before----
    Mr. Upton. So, because of that decision, how much money do 
you think the Federal Government will be able to recover?
    Mr. Chu. Well, that remains to be seen, but I----
    Mr. Upton. Well, what is your----
    Mr. Chu [continuing]. Am anticipating not very much. But we 
would not have, had we said no, stopped disbursement of funds, 
stopped the completion of the factory and have it a half-
complete factory. We felt that we weren't going to recover much 
of anything at all, at that point, as well.
    Mr. Upton. Documents produced to the committee show that 
negotiations between Solyndra, its investors, and DOE came to a 
head this last August, August 26th, over whether DOE should 
advance yet another almost $5.5 million to the company. The 
decision was made when OMB, DOE, Treasury--the decision was 
collectively no; it was stopped. And 2 days later, they 
declared bankruptcy.
    What was DOE's position among those three? Were they in 
favor of this additional money in August?
    Mr. Chu. No. In fact, during that time, there were some 
phone calls. I wanted to--we got another outside, independent--
Lazard, another outside firm, to give us their estimate----
    Mr. Upton. So your----
    Mr. Chu [continuing]. Of the condition of Solyndra.
    Mr. Upton. So, was it a decision that you were afraid to 
send more good money after bad?
    Mr. Chu. From their analysis and from----
    Mr. Upton. The writing was on the wall?
    Mr. Chu. At that time, in August of 2011--or July of 2011?
    Mr. Upton. Last question. I know my time has expired. Based 
on what you know and what has happened, who is to apologize for 
the half a billion dollars that is out the door?
    Mr. Chu. Well, it is----
    Mr. Upton. DOE?
    Mr. Chu. It is extremely unfortunate what has happened to 
Solyndra. But if you go back and look at the time decisions 
were being made, was there incompetence? Was there any 
influence of a political nature? And I would have to say no.
    Mr. Upton. So no apology?
    Mr. Chu. Well, it is extremely unfortunate what has 
happened to Solyndra. And I think you and I both feel the same.
    But when the bottom of a market falls out and the price of 
solar decreases by 70 percent in 2-1/2 years, that was totally 
unexpected, not only by us, but if you look at the range of 
predictions that were being made by financial analysts from the 
last quarter of 2008, 2009, the average--there are some 
outliers, but the average of those were not expecting these 
prices to plummet. And so, fundamentally, this company and 
several others got caught in a very bad tsunami, if you will.
    Mr. Stearns. The gentleman's time has expired.
    The gentleman from California, Mr. Waxman, is recognized 
for 5 minutes.
    Mr. Waxman. Thank you, Mr. Chairman. I hope you will be as 
generous to me in the time allotted to me as you have to our 
other colleagues. I will try to stay within the 5 minutes, but 
I might go a little bit over it, as the others have as well.
    Secretary Chu, you are a scientist, and I want to ask you a 
science question. Many House Republicans, including many 
Republicans on this committee, deny that climate change is 
occurring. Are they right? Is climate change a hoax, or is it 
real?
    Mr. Chu. No, the climate is changing, and there is much 
compelling evidence to suggest that a large part of it is due 
to human activity.
    Mr. Waxman. And that is because most of our world's energy 
comes from fossil fuels, like coal and oil, that emit 
quantities of carbon pollution; is that right?
    Mr. Chu. That is correct, that it is due to greenhouse gas 
emissions, carbon dioxide being the biggest.
    Mr. Waxman. Does our future economic prosperity depend on 
building new energy industries?
    Mr. Chu. Yes.
    Mr. Waxman. And that is for our economic wellbeing, but it 
is also for stopping the climate change, if that is possible; 
isn't that correct?
    Mr. Chu. That is absolutely true. I think because of these 
two factors that we will need clean energy. But there is 
another very important factor, that if you look at the market 
and you look at what the price is going to be for solar and 
wind, the expectation is that wind--wind, right now, according 
to Bloomberg New Energy Finance, costs, levelized cost, 7 cents 
a kilowatt hour. This is getting in the range of the cost of 
any new form of energy.
    Mr. Waxman. Well, you mentioned in your comments, your 
opening statement, China and Germany. Are we in a race with 
China and other countries to make the solar panels and wind 
turbines that will be the cornerstone of the clean energy 
economy for the future?
    Mr. Chu. Yes, we are.
    Mr. Waxman. I ask you these questions because they are the 
lens in which we need to understand Solyndra. Investing in 
Solyndra involved risk, but it was a risk that you thought was 
worth taking because of the importance of clean energy to our 
economic future; is that right?
    Mr. Chu. That is correct.
    Mr. Waxman. Members on this committee say they are 
shocked--shocked--that you would invest in a company as risky 
as Solyndra. But, in March 2009, before Solyndra received its 
conditional commitment, you said publicly that you were going 
to set aside some loan guarantees for higher-risk projects, 
which you said were projects that had a default rate as high as 
10 to 30 percent.
    I want to show you on the monitor what you said. Quote, 
``We should be making some higher-risk loans. These would be 
much more innovative, might be more likely to fail, but could 
create bigger changes in the long run,'' end quote. You said 
this in March 2009 before the Energy Department gave Solyndra a 
loan.
    When DOE awarded Solyndra the loan guarantee, were you 
aware there was a risk that the project could fail?
    Mr. Chu. I think, not only was I aware of it, all of 
Congress, in passing the bill, as they said, they appropriated 
$10 billion to cover for loan losses. That appropriation is 
very valuable; it could have been appropriated for other worthy 
causes. And so Congress knew of the risks.
    Mr. Waxman. Secretary Chu, your reputation for integrity is 
unimpeachable. You have just told us that you gave Solyndra a 
loan guarantee that you knew was risky because we are in a race 
with China and other nations to develop a clean energy economy 
for the future. Republicans on this committee paint a very 
different picture. They say you gave Solyndra a loan guarantee 
as a political favor to a campaign contributor to President 
Obama.
    Can you tell us unequivocally that the decision to give 
Solyndra a loan guarantee was made on the merits?
    Mr. Chu. Absolutely, it was made only on the merits.
    Mr. Waxman. And can you tell us unequivocally that campaign 
contributions played no role in that decision?
    Mr. Chu. Yes. They played no role.
    Mr. Waxman. It's pretty obvious what's going on in this 
hearing room. House Republicans and their coal and oil industry 
allies are manufacturing a scandal, trying to discredit you, 
President Obama, the clean energy companies. That's a great 
deal if you're an oil company or a coal executive, but it's 
unfair to you and a disservice to the American people. This was 
a decision made on the merits because of the urgent need to 
build a clean energy economy. There is no evidence in the 
voluminous records before the committee to support the 
allegations of political favoritism.
    The Republicans on this committee have said over and over 
again, they haven't been able to get the information they've 
requested. Your Department has already turned over to this 
committee 186,000 pages of documents. Is there anything you are 
holding back?
    Mr. Chu. No. In fact, we--I've instructed my staff to be as 
cooperative as possible with this committee.
    Mr. Waxman. And there have been 13,000 pages of documents 
from the Office of Management and Budget, and over a thousand 
pages of documents from the White House, which the White House 
was willing to give this committee, but the committee rushed to 
a subpoena to force it, and there are nearly 200 pages of 
documents from the Treasury.
    With all of these documents in before this committee, I 
don't think the Republicans have been able to sustain the 
accusations that they've tried to make, mainly on innuendo, 
that this was a loan guarantee that should not have been made 
or that should not have been continued when the loan was 
restructured. I thank you for your cooperation in today's 
hearing.
    Mr. Stearns. The gentleman's time has expired.
    Recognize the gentleman from Texas, Mr. Barton, for 5 
minutes.
    Mr. Barton. Thank you, and Mr. Secretary, I, too, will 
stipulate that I think you're a man of integrity, so I do share 
that sentiment with Chairman Waxman.
    He and Ms. DeGette have just made a big deal of asking you 
about political influence, and you have stated under oath that 
there was no political influence and that you are not aware of 
any, and I believe that you believe that.
    Having said that, who at the White House or the Department 
of Energy, since there was no political influence, asked 
Solyndra to delay the announcement of plant closures and 
layoffs until after the election in November of 2010, since 
there was no political influence on this? Who made that 
request?
    Mr. Chu. Sir, I don't know. I just learned about that. I 
think----
    Mr. Barton. You do know that it was made, though, don't 
you?
    Mr. Chu. I just learned about it very recently.
    Mr. Barton. So you all don't operate in a total vacuum. I 
mean, you know, you know who George Kaiser is, I'm sure?
    Mr. Chu. Yes, I know now.
    Mr. Barton. You knew that he was a major investor in a 
venture capital firm that had a major stake in Solyndra; you 
knew that?
    Mr. Chu. Not at the time of the evaluation of the loan, not 
at the time of the restructuring. I know now what his 
connection--what his role has been. He was one of the equity 
investors.
    Mr. Barton. I believe that you're being truthful when you 
state that he never asked you about this particular loan 
program. I absolutely believe that, but it's the elephant in 
the room. Everybody and their dog at DOE knew who he was and 
knew what he was involved in, and we have on the record that he 
was in and around the White House at least 16 times in the time 
period that the Solyndra loan program was being reviewed after 
the Bush administration has said that it wasn't ready.
    I'm going to ask you a series of questions here, and I hope 
that you can answer them with a yes or no answer.
    Could we put up on the screen the Energy Policy Act, 
Section 1702?
    Mr. Secretary, I'm sure that you've read Section 1702 of 
the Energy Policy Act, conditions, part D, subsection 3, 
regarding subordination, and it reads, item No. 3, the 
obligation shall be subject to the condition that the 
obligation is not subordinate to any other financing. You've 
read that, right?
    Mr. Chu. Yes.
    Mr. Barton. OK. Do you understand what the word ``shall'' 
means?
    Mr. Chu. Yes.
    Mr. Barton. OK. I believe that the Solyndra loan 
restructuring program was in violation of this law because--and 
your department did not follow the plain language of the law--
because the obligation shall not be subordinate to other 
financing. In fact, since you made the opposite decision, who 
did you consult with before you made that decision?
    Mr. Chu. The general counsel of the Department of Energy.
    Mr. Barton. The general counsel.
    Mr. Chu. And I believe that that was about the origination 
of the loan, and under the conditions of the origination of the 
loan, we shall not subordinate to any other----
    Mr. Barton. So the general counsel would be Susan 
Richardson?
    Mr. Chu. No, this would be Scott Harris.
    Mr. Barton. Who is Susan Richardson?
    Mr. Chu. She works--she's a counsel who works in the loan 
program, and she----
    Mr. Barton. She works, OK. I understand that she is the 
chief counsel of the loan program. Is that your understanding 
also?
    Mr. Chu. That is my understanding.
    Mr. Barton. OK. Did she consult directly with you about the 
language of the law that we've just read?
    Mr. Chu. She consulted extensively with the General 
Counsel's Office, with Scott Harris and others. There was an 
extensive discussion about that issue, and it was again when it 
was finally brought to me by the general counsel, Scott Harris, 
it was their opinion that this did not violate the terms of the 
law.
    Mr. Barton. When did Mr. Harris bring that to you?
    Mr. Chu. This was in a discussion as we were discussing 
whether we should subordinate or not, and it had to do with 
restructuring, and so before we could even think of 
restructuring in a subordination, we had to make sure that it 
was legal.
    Mr. Barton. What date was that?
    Mr. Chu. I can't----
    Mr. Barton. Well, my--the reason----
    Mr. Chu. I don't remember the exact date, but it was----
    Mr. Barton. I don't want to cut you off, Mr. Secretary, but 
the reason the dates is important is that my understanding is 
the decision was made to subordinate before the memo accepting 
subordination was prepared. So there was a decision, and then 
after the decision made--at least I'm told this--the decision 
was made to subordinate, but the action memo which authorized 
it wasn't signed until after the decision had been implemented. 
Is that true to your knowledge?
    Mr. Chu. No, I don't--I would not know that, but it 
certainly would not be the way we do things in business, the 
way we do things in the Department of Energy. One has to first 
decide whether what are the legal bounds----
    Mr. Barton. My time is just about to expire. Does the name 
the law firm Morrison & Foerster mean anything to you?
    Mr. Chu. Yes.
    Mr. Barton. What are they?
    Mr. Chu. They're a law firm in California in the Bay Area.
    Mr. Barton. All right. And they're also a consultant for 
your Department of Energy. Are you aware that they prepared a 
memo saying that this subordination was illegal and shouldn't 
be allowed? Are you aware of that?
    Mr. Chu. No, I'm not aware of that.
    Mr. Barton. Even though you said you welcome outside ears 
and eyes, and they were asked to prepare a draft memo, but once 
they prepared it and your general counsel saw what was in the 
draft memo, they basically said, we don't want to hear that. 
Are you aware of that?
    Mr. Chu. I'm not aware of that. I'm aware of the fact that 
there was a lot of discussion with Morrison & Foerster with our 
General Counsel's Office.
    Mr. Barton. OK, my time has expired, Mr. Chairman, but 
we're going to do more than one round; is that not correct?
    Mr. Stearns. That's correct.
    Mr. Barton. Thank you, Mr. Secretary.
    Mr. Stearns. Recognize the distinguished gentleman from 
Michigan, Mr. Dingell, for 5 minutes.
    Mr. Dingell. Mr. Chairman, thank you.
    Mr. Secretary, these questions are yes or no. Did DOE hire 
experienced people in loan programs to do the analysis on loan 
applications?
    Mr. Chu. Yes, we did.
    Mr. Dingell. Did DOE hire experienced outside consultants 
to help in analyzing industries, markets, and other areas of 
concern to the Loan Programs Office?
    Mr. Chu. Yes.
    Mr. Dingell. Did the Loan Programs Office share information 
with OMB and Treasury during due diligence process?
    Mr. Chu. Yes.
    Mr. Dingell. Was that process open and transparent?
    Mr. Chu. We shared a lot of information with OMB and 
Treasury.
    Mr. Dingell. So it was open?
    Mr. Chu. I mean, I don't know what you mean----
    Mr. Dingell. Yes or no.
    Mr. Chu. It was open between OMB and Treasury and us.
    Mr. Dingell. Thank you.
    Now, you mentioned in your opening statement that Members 
of Congress submitted letters for projects in their districts. 
I happen to know I did. As a matter of fact, I did with my good 
friend Mr. Upton, we submitted it together for a project in 
Michigan, which, curiously enough, happens to be in trouble 
because of a similar market collapse.
    Now, did DOE or the Loan Programs Office take these letters 
into account when examining loan applications?
    Mr. Chu. Yes.
    Mr. Dingell. So it's correct that DOE or the Loan Programs 
Office only examined the merits of loan applications and did 
not consider any influence from the Congress or the White 
House, yes or no?
    Mr. Chu. We did not consider any influence.
    Mr. Dingell. All right.
    Now, let me look at this. We've heard all these complaints 
about the fact that the Federal guarantee was subordinated to 
private loans. It was superior to earlier private loans, was it 
not?
    Mr. Chu. Yes.
    Mr. Dingell. OK.
    Mr. Chu. Well----
    Mr. Dingell. It was not superior to and it was subordinated 
to subsequent private loans; is that right?
    Mr. Chu. Yes. The first $75 million of the initial funds.
    Mr. Dingell. Now let me keep going.
    Without that step, you would not have been able to get any 
private money to assist the Federal guarantee in saving 
Solyndra; is that right?
    Mr. Chu. That is correct.
    Mr. Dingell. OK.
    Now, I'm sure you're aware this committee has issued 
subpoenas for documents to OMB and to the White House, and we 
have not done so for DOE, your agency, and for your department 
because you've provided us over 186--pieces of documents 
related to this issue. Are you aware of any of the 186,000 
documents included in communications between the DOE and the 
White House?
    Mr. Chu. Are you asking am I aware of all 186,000 pages?
    Mr. Dingell. Well, the question is, are you aware of any of 
these documents that were communications between DOE and the 
White House?
    Mr. Chu. I'm not sure what communications there were 
between DOE and the White House, but certainly we did not 
communicate with the White House on whether we should approve a 
loan and especially the Solyndra loan. That was our 
responsibility.
    Mr. Dingell. OK. So did you have any personal 
communications with President Obama, with the Vice President, 
or campaign donors or others who had financial interests in 
Solyndra?
    Mr. Chu. No, I did not.
    Mr. Dingell. Now, based on the information you have 
received and have reviewed regarding the due diligence done by 
DOE during the Bush and Obama administrations, do you believe 
that the Solyndra loan was awarded based on the merits of the 
application? Yes or no.
    Mr. Chu. Yes, I believe it was awarded on the merits of the 
application.
    Mr. Dingell. So here--do you agree with this statement: I 
believe that, first of all, you had a law which said that you 
should make these guarantees.
    Second of all, you have got a situation where the Chinese 
are eating our lunch. They're producing batteries and solar 
panels and all kinds of things because, as you have observed, 
their government, through the China Development Bank, has 
offered more than $34 billion in credit lines to China solar 
companies alone. Other countries are doing the same thing, 
Japan, Korea, and probably other South Asian countries.
    Now, having said this--and of course, Germany and Canada 
are doing exactly the same thing. So you found yourself in a 
position where you had a law that says you've got to do 
something. You had a depression on your hands. And you were 
trying to produce jobs. And you had an industry that you were 
trying to develop in the United States so that we're going to 
be able to compete instead of the Chinese dominating the 
market, as they seem now to be proceeding to do. Is that a fair 
statement?
    Mr. Chu. They certainly want to dominate the market, and we 
were executing the laws as passed by Congress on the loan 
program.
    Mr. Dingell. This is one of the things that motivated you 
to try to get Solyndra into the business, isn't that so?
    Mr. Chu. That is true. I mean, this is a worldwide 
competition, as I said before.
    Mr. Dingell. Now, what caused the big problem as near as I 
can gather is that the market collapsed; is that right?
    Mr. Chu. Well, the price of solar modules plummeted, that 
is correct.
    Mr. Dingell. That's what I'm saying. I yield back the 
balance of my time.
    Thank you, Mr. Secretary.
    Mr. Stearns. Thank the gentleman.
    The gentleman from Nebraska, Mr. Terry, is recognized for 5 
minutes.
    Mr. Terry. Thank you.
    And, you know, the ultimate question before this 
subcommittee is really, was it a meritorious loan? Is it 
something that should not have been finalized and spent? That's 
why you're here, so we can ask the questions and get the 
feelings.
    So, first of all, the Solyndra loan was finalized in 
September 2009, is that your understanding?
    Mr. Chu. That's my understanding.
    Mr. Terry. All right. So you were one of the--I mean, you 
have a premier resum, one of the most respected people in the 
Cabinet, and you were sworn in. You were confirmed easily. And 
what was the first day you took office?
    Mr. Chu. I think it was January 22nd.
    Mr. Terry. And when were you first briefed by DOE staff on 
the Solyndra application?
    Mr. Chu. Actually, I don't know about the Solyndra 
application, quite candidly. Certainly early on, once I became 
Secretary, there was--I was focused on trying to get the loan 
program going. As I said before, in my confirmation hearings, 
that was a central theme among many Members of Congress.
    Mr. Terry. So you don't--you can't identify when you were 
first briefed on this loan?
    Mr. Chu. On Solyndra? No, I--I think early on, it was----
    Mr. Terry. Certainly you knew about it before September 
2009?
    Mr. Chu. Yes.
    Mr. Terry. OK. Then you testified earlier that you were 
aware of the January 9th credit committee voted against 
offering a conditional commitment to Solyndra, noting, quote, 
number of issues unresolved makes a recommendation for approval 
premature at this time.
    Were you aware of that January 9th decision----
    Mr. Chu. I'm aware----
    Mr. Terry. [continuing]. Prior to the loan being finalized 
in September of 2009?
    Mr. Chu. I'm aware of it now, but was I aware of it when 
the loan was being finalized? I think it's safe to say that it 
was just remanded back for additional information, and so, 
quite often, when the loan program tells me about the loan, 
what it is, whether we should be funding it----
    Mr. Terry. All right. So you didn't know that there was a 
decision that it was premature at the time, direct quote, until 
later on?
    Mr. Chu. There are many instances, sir, when----
    Mr. Terry. Let me ask you----
    Mr. Chu [continuing]. Applications are incomplete or there 
is not enough----
    Mr. Terry. I appreciate that.
    Did you know that the credit committee also noted that it 
had, quote, questions regarding the nature and strength of the 
parent guarantee for the completion of the project and 
Solyndra's ability to scale up the production, also stated in 
that January 9th document? Were you aware of that before the 
loan was finalized January--I'm sorry, September 2009?
    Mr. Chu. I was aware, as it was briefed to me at the time, 
this was before March, and the conditional commitment at that 
time----
    Mr. Terry. So you received a briefing in March?
    Mr. Chu. I received a briefing.
    I'm not exactly sure when I received the first briefing, 
but certainly since Solyndra was at the head of the line, based 
on the work of--during the previous administration, then it was 
the one that----
    Mr. Terry. Did you----
    Mr. Chu [continuing]. Came up.
    Mr. Terry. February 12, 2009, DOE stimulus adviser stated, 
quote, litmus test for the loan guarantee program's ability to 
fund good projects--that Solyndra, I'm sorry. That Solyndra is 
the, quote, litmus test for the loan guarantee program ability 
to fund good projects quickly. Were you aware of his quote?
    Mr. Chu. I'm aware of it now.
    Mr. Terry. Before September?
    Mr. Chu. But I think what we were--this was Matt Rogers, 
and both Matt Rogers and I felt very focused to make the loan 
program, and from time of application of a complete application 
to the time of approval, something akin to about a year of due 
diligence.
    Mr. Terry. All right, but he stated that on February 12, 
2009.
    Mr. Chu. Right.
    Mr. Terry. Did you have a discussion in around February 12, 
2009, that Solyndra is the litmus test?
    Mr. Chu. I believe by ``litmus test,'' what he meant was 
that this was going to----
    Mr. Terry. No, I'm sorry, I didn't ask you for your 
interpretation of his statement.
    Mr. Chu. Right.
    Mr. Terry. But he said Solyndra is a litmus test. Were you 
aware of that statement?
    Mr. Chu. You know, I don't recall that, but if he went and 
said that, I'm sure we----
    Mr. Terry. All right. And you had a conversation with 
Matt--what was his last name?----
    Mr. Chu. Rogers.
    Mr. Terry [continuing]. Rogers around middle of February of 
2009 about this Solyndra application?
    Mr. Chu. Right, because Solyndra was first on the line----
    Mr. Terry. Did you hire Matt Rogers?
    Mr. Chu. I did.
    Mr. Terry. Pardon me?
    Mr. Chu. I did.
    Mr. Terry. You hired him, OK. Was he recommended by the 
White House?
    Mr. Chu. No.
    Mr. Terry. You just out of the blue said I need a stimulus 
adviser?
    Mr. Chu. Actually, yes. What I wanted, because the--at the 
time, the U.S. economy was in free fall; we were losing 
hundreds of thousands of jobs a year, and I wanted someone that 
could manage this huge portfolio to spend the money wisely but 
also to spend it quickly to put Americans back to work.
    Mr. Terry. All right, thank you.
    Mr. Chu. Mr. Chairman, could I----
    Ms. DeGette. The witness would like to add something.
    Mr. Chu. Yes. Mr. Chairman, could I----
    Mr. Stearns. Yes, go ahead.
    Mr. Chu. Could I just interrupt just briefly. I just wanted 
to correct the record. My staff told me Morrison & Foerster, 
the legal firm in the Bay Area, had specifically reviewed the 
Susan Richardson memo and approved her analysis, at least 
that's what my staff tell me. They approved it.
    Mr. Stearns. Your counsel approved the memo?
    Mr. Chu. The outside counsel Morrison & Foerster.
    Mr. Stearns. Outside counsel, OK. Do we have a copy of 
that?
    Mr. Chu. We'll be glad to give it to you.
    Mr. Stearns. If not, I think we would like a copy. That 
would be good.
    Dr. Christensen is what we show on our records.
    Dr. Christensen, you're recognized for 5 minutes.
    Mrs. Christensen. Thank you, Mr. Chairman.
    And welcome, Secretary Chu. We really thank you for your 
willingness to come and help us to better understand what's 
happening.
    I think everyone agrees that we need to understand what 
went wrong with the Solyndra loan guarantee and how the loan 
guarantee programs can be improved going forward. We all also 
should be supporting innovative technologies, while, of course, 
as we have been doing, watching out for the taxpayer, but we 
also need to understand the big picture.
    The loan guarantee program doesn't just support solar, 
wind, and other renewable energy projects. A substantial 
portion of the incentives are also available for nuclear 
projects. In fact, Congress has authorized $18.5 billion in 
loan guarantees for nuclear plant construction costs. An 
additional $4 billion in loan guarantees is available for 
uranium enrichment facilities. The Vogtle nuclear plant project 
has already received a conditional commitment. The loan 
guarantee would be worth over $8 billion. That's 16 times the 
size of the Solyndra loan. A $2 billion conditional commitment 
has also been provided to Areva for a uranium enrichment 
facility in Idaho.
    So my first question, Secretary Chu, I think it's important 
to have a balanced program. If we're going to provide billions 
of dollars in loan guarantees for new nuclear power plants, we 
should also support innovative solar, wind, and geothermal 
energy projects. What do you think?
    Mr. Chu. I agree.
    Mrs. Christensen. You agree.
    Unlike the nuclear industry, the renewable energy industry 
is still in the early stages of development. Some of the 
technologies supported by the loan guarantee program have never 
before been built at utility scale. So Secretary Chu, what role 
do you think the loan guarantee program should play in 
encouraging the development of emerging technologies?
    Mr. Chu. Well, according to the bill passed by Congress, 
and I agree with their sentiment, precisely that we should be 
investing in innovative technologies. We should be investing in 
first-of-a-kind or first large-scale deployment of some of 
these innovative technologies, and by doing so, we create a 
marketplace within the United States. And also we, as we invest 
in innovative manufacturing technologies, we are in the race of 
a high technology race that is in a sweet spot of the United 
States.
    The United States invented the modern solar photovoltaic 
technologies, not only silicon but also the thin film 
technologies, and I believe we can compete and compete 
successfully in those technologies for what will be a hundreds-
of-billion-dollars-a-year market.
    Mrs. Christensen. I agree. And we just can't afford to sit 
on the sidelines and allow other countries like China to 
dominate the market. We need those jobs and investments.
    When we try to help U.S. companies compete against heavily 
subsidized Chinese competitors, not every project is going to 
succeed, but we cannot just let Solyndra's failure be an excuse 
to throw up our hands and give up on this huge market.
    Secretary Chu, can you share your thoughts about why we 
need to compete for this clean energy market, whether 
American--well, I guess you've really answered that we need to 
compete. American companies can be successful. As you said, we 
invented the photovoltaic solar machinery.
    Mr. Chu. Right. Well, let me add again----
    Mrs. Christensen. But also what policies should we put in 
place to help make this happen beyond what we've already done?
    Mr. Chu. Well, first, let me tell you about the size of the 
market. As I said in my opening remarks, it's something of a 
$235 billion renewable energy market. According to some recent 
analysis by Bloomberg New Energy Finance, by 2020, that's 
expected to be close to $400 billion a year. By 2030, that's 
expected to be roughly $460 billion a year renewable energy, 
most of it, 80 percent of it roughly, in wind and solar 
technologies. By 2030--2020 or even less than 2020, wind is 
expected to reach parity with any form, new form of energy. 
Solar, there's a debate whether it becomes as inexpensive as, 
let's say, gas, by 2020 or 2030 or 2025, but there's a heavy 
expectation in the business world that these technologies will 
become competitive without subsidy in a short period, 
relatively short period of time.
    And so the whole issue, and this is why it's so important 
to the United States, is that in this hundreds-of-billion-
dollars-a-year market, do we want to be buyers or sellers? And 
we have the intellectual capacity to be the sellers.
    Mrs. Christensen. And with all of that investment comes 
jobs, correct?
    Mr. Chu. Yes.
    Mrs. Christensen. Lots of jobs?
    Mr. Chu. Lots of jobs, lots of wealth creation in the 
United States.
    Mrs. Christensen. Thank you.
    Mr. Chu. And there's a world market out there.
    Mrs. Christensen. Thank you.
    Mr. Stearns. Ms. Myrick is recognized for 5 minutes.
    Mrs. Myrick. Thank you, Mr. Chairman.
    Mr. Secretary, were you aware that Solyndra sent the 
committee a letter on July 13th of 2011, describing the 
financial condition of the company?
    Mr. Chu. I can't say to the exact date, but around that 
time, the company was in trouble.
    Mrs. Myrick. Well, Mr. Harris wrote the committee at that 
time with the purpose of providing us with the most accurate 
and up-to-date information regarding Solyndra and our 
performance in the market, and that's a quote. And he also 
wrote the following fact, and I quote, Solyndra's revenues grew 
from $6 million in 2008 to $100 million in 2009 to $140 million 
in 2010, and for 2011, revenues are projected to nearly double 
again. PriceWaterhouseCoopers audited the financial statements 
that were completed on June 30th in 2010, and they 
substantially agreed with that, but there were several points 
that they didn't mention, and I would like to state those.
    They didn't mention that the 2010 revenue amount was 
exactly half of the $284 million they had originally projected 
in their loan application. And they did not mention that 
audited cost of revenue was $162 million in 2009 and $284 
million in 2010 for a gross loss of 61 percent and 100 percent 
of revenue respectively. Additionally, audited operating 
expenses showed a loss from operations, and Solyndra did not 
mention that audited net loss was a staggering $172 million in 
2009 and another $329 million in 2010. They didn't mention that 
cash flows from operations showed a massive outflow of net cash 
used of $170 million in 2009 and $194 million in 2010. This, to 
me, is a large red flag as cash flow from operations is usually 
a source of cash, not a use, and cash flow showed cash 
depleting at a rapid rate, from $82 million in 2008, $52 
million in 2009 to $32 million in 2010. So when did you become 
aware of this what I think is misleading information that 
Solyndra submitted to Congress? And, you know, if you did, when 
you became aware of it, what did you do, if anything?
    Mr. Chu. Well, certainly, I became aware that the company 
was in financial stress at the time of restructuring, as we 
were discussing what to do, and as time progressed, became 
increasingly aware that the projections of the company were not 
being met, and so certainly by 2011, by the spring of 2011, I 
knew that this company was in deep trouble.
    Mrs. Myrick. Well, Mr. Silver, when he testified at the 
committee in September, said he's doing the best job we know 
how to do and the company was meeting projections.
    Also, were you made aware of the fact that based on this 
data, the auditors issued a going concern qualification in 
March of 2010 that raised substantial doubt about the company's 
ability to continue in business?
    Mr. Chu. I'm aware of it now. I believe that was the 
PriceWaterhouseCoopers audit.
    Mrs. Myrick. Correct.
    Mr. Chu. And I think in that instance that they were asked 
to assist and give an audit as to whether Solyndra could have 
an initial public offering, and due to the circumstances of 
Solyndra and due to the market in a terrible recession, they 
said no, this was not the time to have an IPO.
    Mrs. Myrick. Did anyone in DOE review that financial 
information then and raise the concerns?
    Mr. Chu. I'm sure they did, but I don't know personal 
knowledge of to what extent they reviewed the 
PriceWaterhouseCoopers analysis.
    Mrs. Myrick. Did Solyndra say how the sales were going to 
cover its selling and general administrative costs?
    Mr. Chu. I believe that Solyndra had expectations of sales 
that, as you pointed out, did not come to pass.
    Mrs. Myrick. And also they, their manufacturing cost was up 
to twice sales revenue for a gross loss, that was part of it as 
well?
    Mr. Chu. I certainly knew they had--that they were--their 
sales were not up, that they had to be selling at a discount 
because, again, all companies had to sell their product at a 
discount. Solar panels, although very high tech, are a 
commodity, and when prices go down by 70 percent in 2.5 years, 
you're knuckling down. All the companies are knuckling down; 
they're trying to ride out this storm.
    Mrs. Myrick. Did that auditors' growing concern question--
raise concern within the department? Was that expressed and 
talked about at all?
    Mr. Chu. Certainly, first, the growing concern, that is 
kind of a standard language. In a start-up company, there is a 
question as to whether, as you start this company, as you start 
up the manufacturing, the business plans, are you going to have 
negative cash flows, and at sometime those cash flows turn 
positive. The investors, the very savvy investors who invested 
nearly a billion dollars, the part of their business plan was 
that it would be sometime in 2011 before they would actually go 
in the black, and that turned out to be incorrect, and then 
more recent projections pushed that back several quarters.
    Mrs. Myrick. Thank you.
    Mr. Stearns. The gentlelady's time has expired.
    The gentleman from Massachusetts, Mr. Markey, is recognized 
for 5 minutes.
    Mr. Markey. Today Americans are focused on the oversized 
influence of the oil companies and others through the Occupy 
Wall Street movement, yet Republicans are pushing their own 
pre-occupy movement in the hopes that Americans will be too 
preoccupied with this one loan to a clean energy company that 
they won't see the tens of billions of dollars in government 
subsidies given to the oil, coal, and nuclear industries, the 
Republican favorites. The result, we're getting a distorted 
picture of the real market conditions that threaten our 
economic future.
    Who we should really be talking about are not the 
bureaucrats at DOE, but the bureaucrats in China, who have made 
a strategic decision to drive foreign competitors out of the 
solar market. They did it with the rare earth minerals industry 
in the 1990s, and they are doing it right now with the solar 
industry.
    Secretary Chu, many of my colleagues on this committee 
think renewable energy is the stuff of the Jetsons. They think 
solar panels are just like flying cars or life-sized robots 
that do housework, maybe some day way in the future. They're 
completely oblivious to the revolution that is going on.
    Mr. Secretary, last year globally 194,000 megawatts of new 
electrical generating capacity was installed on the planet. 
What percentage of that new electrical generation power came 
from renewable sources? One-half of it in 2010. Half. And solar 
is by far the fastest growing energy industry in the world. 
Over the last 5 years global solar installments have increased 
1,000 percent to 17,400 megawatts in 2010. For every new 
nuclear power plant globally that went online last year, four 
times as much new solar capacity was deployed. In the U.S., 
there are now 85,000 employees in the coal industry; 85,000 
employees in the wind industry; and 100,000 employees in the 
solar industry. That's the story here. Solar has big coal and 
big nuclear and the established energy sector scared stiff, and 
they've enlisted the Republican party to do something about it. 
That's the real story here.
    The Republicans have now essentially eliminated loan 
guarantees for renewable energy this year, and they have left 
$30 billion for nuclear and coal as loan guarantees. They 
passed legislation to cut the solar research budget for next 
year by 64 percent, but they've increased the budget for 
nuclear and fossil energy. In their budget, they promised to 
cut clean energy investments by 90 percent over the next 3 
years.
    Historically, just as there has been a Moore's law for 
computer chips, there also has been a Moore's law for solar. 
For every doubling of solar deployments worldwide, the price 
declines by 18 percent. At least that was the case until this 
year. Through the first 8 months of this year, the price of 
solar panels has fallen 42 percent, a 42 percent drop in just 8 
months. So the irony here is that the Republicans attack 
renewable energy because they claim it's too expensive, but 
Solyndra failed because solar is getting too cheap. The price 
of solar and wind and other clean energy is dropping while coal 
and oil prices have risen. And the Republicans and the fossil 
fuel industry can't let clean energy win.
    And why has this happened? Why has there been a 42 percent 
drop? I will tell you why. Our country is in a race right now. 
There's a global race to become the leading maker of solar 
technology, and we have some fierce competitors. Last year 
alone, China gave five solar companies $31 billion in financing 
assistance. That's on top of free land, extensive tax breaks. 
That's on top of a domestic currency that is substantially 
undervalued and allegations of dumping by Chinese state-
sponsored solar companies into the U.S. market by our solar 
industry.
    Secretary Chu, do you agree that this massive intervention 
into the market by China has fundamentally altered the market 
for solar panels and in fact made it very difficult for solar, 
for Evergreen, for Energy Conversion Devices in Michigan to 
survive, that the prices have plummeted and just like pets.com 
and the dot-com bubble, there are individual companies that are 
going to fail inside of a larger success story for solar and 
renewables?
    Mr. Chu. Yes, I agree with that. Certainly, as I've 
indicated before, China has targeted all renewable energies as 
on their critical path for their future prosperity, not only 
for their domestic use, and they're going to be the leading 
user of renewable energies, but also they see a huge export 
market.
    Mr. Markey. So when the price of silicon dropped 
dramatically, 90 percent, that hurt the technology of Solyndra 
because it was something that they were depending upon to have 
a much higher price point.
    Mr. Chu. Right.
    Mr. Markey. And that price point collapsed for them?
    Mr. Chu. That is correct. Silicon and solar modules in 
general dropped, you said 42 percent in 8 or 9 months and 70 
percent in a couple years. That's unheard of. It was violating 
the learning curve, the Moore's law that you spoke about, it 
was----
    Mr. Markey. That's what happened with cell phone prices 
because of action in this, is that the price dropped 90 percent 
for cell phones after we passed three bills out of this 
committee. We don't mourn the old brick size of phones. We all 
decided to put those phones at under 10 cents a minute in our 
pocket. That's what's happening in the solar market.
    Mr. Stearns. The gentleman's time has expired, and 
recognize Mr. Sullivan for 5 minutes.
    Mr. Sullivan. Thank you, Mr. Chairman.
    Thank you, Secretary, for being here today, and I hear my 
good friend from Massachusetts talking about all these jobs 
that have been created, and you've talked about all these jobs 
that have been created in renewable energy and solar and wind, 
and looking at your Web site, it says you've created 60,000 
American jobs. Is that true?
    Mr. Chu. I believe that to be correct.
    Mr. Sullivan. And, you know, these jobs seem pretty 
expensive to me, you know. You talk about the low cost, you 
know. At least in the coal and gas and oil industry, we're not 
paying for these jobs. These are private sector jobs that 
aren't helped by the government. And on your Web site, we took 
the 60,000 in Section 1703, you obligated $10,647,000,000 for 
those jobs. Sir, that's $1,625,000 per job. On Section 1705, 
05, you obligated $16,128,500,000 for those jobs. That cost 
$963,585 per job. The ATV program you obligated $9,129,000,000, 
that's a cost of $221,557 per job. I mean, that's a lot. How do 
you justify paying that much? I mean, sir, I want to have jobs; 
14 million people out of work and unemployment at 9 percent, I 
want jobs, but I think paying for them like this is a really 
bad idea. What do you have to say about that?
    Mr. Chu. Well, let's start with, for example, the nuclear 
loan. I believe that was something like an $8 billion loan. The 
Federal funds, the company, the applicant that applied for the 
loan had to pay the credit subsidy for that loan. I think it 
was 3 or 4 percent; I'm not exactly sure how much. So the 
amount of government taxpayer dollars that went into that $8 
billion or $9 billion loan was essentially zero, and so because 
the company itself paid for that.
    Mr. Sullivan. Do you stand by paying this much for these 
jobs?
    Mr. Chu. I'm trying to explain, sir, that when you have a 
1703 program where the company, the applicant pays for the 
credit subsidy, they are actually--that's not taxpayer dollars. 
That's coming from the company.
    Mr. Sullivan. Back to the Solyndra loan, would you do that 
loan again, knowing what you know today?
    Mr. Chu. Would I do Solyndra knowing----
    Mr. Sullivan. Knowing what you know today, would you 
approve that loan?
    Mr. Chu. Certainly knowing what I know now, we would say 
no, but you don't make decisions, you fast forward 2 years in 
the future and then go back. I wish I could do that.
    Mr. Sullivan. How closely were you involved in the loan 
process there?
    Mr. Chu. In the loan process, I was--I have to approve all 
the loans, and I have to be briefed on all the loans, and I ask 
questions about the loans as they come up.
    Mr. Sullivan. But, Mr. Secretary, with respect to the 
Solyndra loan application, were you aware that Solyndra 
reported zero sales in 2005 and 2007? You talked about that 
model being acceptable earlier.
    Mr. Chu. 2005, I'm not even sure they actually had a fab 
plant up in that time, in the early days, when it was first 
formed as a company. You first have to build a factory, you 
have to build product, and then you sell.
    Mr. Sullivan. Well, in 2010, you were Secretary at that 
time; is that correct?
    Mr. Chu. Yes.
    Mr. Sullivan. And Solyndra at that time, did you notice--
you said earlier you noticed they were having some difficulty, 
and they expressed that to you, right?
    Mr. Chu. Certainly by the end--certainly by 2011, we knew 
that there were--Solyndra was in trouble.
    Mr. Sullivan. Did you know that from then, in 2010, did 
they discuss with you that they potentially would have to lay 
people off and do some downsizing?
    Mr. Chu. They did not discuss that with me.
    Mr. Sullivan. They never discussed anything like that with 
you?
    Mr. Chu. They might----
    Mr. Sullivan. Did they discuss it with anyone at the 
Department of Energy?
    Mr. Chu. They may have discussed it with people in the loan 
program.
    Mr. Sullivan. OK. So they discussed it with people in the 
loan program, so they were aware that Solyndra was having some 
difficulty in 2010. Would you say that, yes or no, is that 
correct, that that was expressed to someone in the loan 
department?
    Mr. Chu. I would say that people in the loan department 
would know about it.
    Mr. Sullivan. Why--who put the pressure on you or them to 
delay divulging that knowledge until after the elections?
    Mr. Chu. There was no pressure. I was not part of that 
decision, and I certainly would not have been in favor of that 
decision.
    Mr. Sullivan. And I believe you to be truthful in that 
statement, but someone put pressure on them to not--delay that 
divulging of that information on Solyndra until after the 
elections in 2010, and that's very political. I think it was 
done for political reasons. Do you think that's a proper way to 
do business?
    Mr. Chu. No, I don't think it's a proper way to do 
business.
    Mr. Sullivan. Thank you.
    Now, who at the White House put pressure on you to get 
these loans done so quickly without doing the proper due 
diligence?
    Mr. Chu. First, no one in the White House. We never cut 
corners in doing the proper due diligence. As I said before, if 
you look at the average time of due diligence from the time of 
formal application of the loans, it's something like 300----
    Mr. Sullivan. Would you say proper due diligence by you 
would be no information on projected sales, general 
administrative expenses or estimated net profits, is that 
proper due diligence, and then get the loan out before getting 
that kind of information?
    Mr. Chu. The business plan of Solyndra and of any start-up 
company is that as you're building the factory and building 
sales, you expect to be taking losses. The business plan was 
they actually expected to be in the red until sometime around 
2011, and with that business plan, remember, there's a lot of 
savvy investors who spent nearly, invested nearly a billion 
dollars before the U.S. Government looked at them.
    Mr. Sullivan. Thank you, Mr. Secretary.
    Mr. Stearns. The gentleman's time has expired.
    Recognize the gentleman from Texas, Mr. Green, for 5 
minutes.
    Mr. Green. Thank you, Mr. Chairman.
    Thank you, Secretary Chu, for appearing before the 
subcommittee. The events surrounding Solyndra are of great 
concern to me because--and a number of us were on this 
committee in 2005 when we put the loan program into effect and 
authorized it. It was a program that championed by both 
Democrats and Republicans in 2005, first passed by a Republican 
House and then signed by President Bush.
    When I voted for the 2005 energy bill, I never intended 
that taxpayer money would be made a lesser priority for 
repayment than other outside investors, and I know we saw the 
section of 1701(d)(3) on the board a few minutes ago, and I've 
read the opinion from an outside counsel that went into the 
decision of saying that that's really not true, but, you know, 
the black letter law typically is the one that we all look at. 
I understand that the taxpayer money was subordinated for those 
outside investments as part of the restructuring and not the 
original loan.
    Can you explain how the department came to that conclusion 
that you would be living up to your fiduciary relationship as 
Secretary of Energy, just like we have a fiduciary relationship 
to the taxpayers, and responsibility for that subordination? 
And like I said, I did read the section and the opinion. I 
obviously disagree with the opinion of the outside counsel 
that, all of a sudden, you could subordinate that loan. Was it 
based on that outside counsel opinion to the Department of 
Energy?
    Mr. Chu. As I said, we went through a very rigorous 
process, starting with Susan Richardson and the General 
Counsel's Office in the Department of Energy, also outside 
counsel, as pointed out in the opening statements of 
Congresswoman DeGette. The previous general counsel, a previous 
general counsel of the Department of Energy also concurs that 
that was a decision that was within the bounds of the law. So 
this was a decision that was heavily vetted through our system. 
And I'm not a lawyer, but in discussing with them, the first 
one was in the instance of the loan, would it be subordinated? 
No, that was very clear. But as the record stands for itself on 
the decision both by the memo that was communicated to me 
through Scott Harris and also outside counsel and also, 
finally, a previous general counsel of the Department of Energy 
had no bone to pick in no way one way or the other, so we have 
a number of people saying that this is commensurate with the 
law.
    Mr. Green. OK. Well, has the Department of Energy or, if 
you know of, any Federal agency ever subordinated a Federal 
loan to an outside investor?
    Mr. Chu. In the case of when a loan is in trouble and in 
the case of a restructuring, I do know, as I said, I've been 
told that, you know, in very rare instances to be sure that Ex-
Im or OPEC, I forget which one, has done this. Usually what 
happens in a restructuring is either the government takes an 
equity position or a subordination, and so when you do do a 
restructuring, if there's not additional money, what we were 
facing was the imminent bankruptcy of a company, and we looked 
at both cases, of whether it goes bankrupt now or it goes 
bankrupt later, or when you have a complete factor, if it goes 
bankrupt, what would be the chance of recovery?
    Mr. Green. Well, I guess I have some concern about it 
because, except for OPEC--and I would appreciate any 
information on that because we tried to receive that from the 
Department of Energy--and we couldn't, I cannot, couldn't find 
any example of where we subordinated the United States interest 
to someone else, but I appreciate if you could get that to us.
    And I understand if you went with lawyers and outside 
lawyers, previous counsel. But, as you know, sometimes like 10 
economists, you'll get 11 different opinions. If you hire 10 
lawyers, you may get 11 different opinions on it, but those of 
us who are on the committee and actually helped draft that law 
and support that program didn't ever intend that, and 
hopefully, for the record, that in the future, that will be the 
case, and if we have to, we'll change the language to what this 
outside opinion says, but the language is pretty clear, that 
subordination shall be subject to a condition that the 
obligation is not subordinate to other financing. I don't know 
how else you can read that except, you know, maybe getting 
around it saying, this is a second, we're trying to refinance 
the loan, but it seems like the refinancing should have been 
under the same rules as the original loan application because I 
couldn't find any time in history--I know all of us, if we 
have, if we owe the Federal Government and I owe Bank of 
America or Chase, believe me, the Federal Government gets our 
payment first, and so that's why I think it's unusual. But you 
may have had--counsel may have not been correct. Did you talk 
with the Department of Justice at all? I know you talked with 
in-house counsel at the Department of Energy. Was there ever 
any effort to talk with the Department of Justice for an 
interpretation on that?
    Mr. Chu. No. We talked--I talked with our in-house counsel, 
and as I noted, the Department of Energy people also sought 
opinion of Morrison & Foerster.
    Mr. Green. You know, it seemed like subordination is not 
the common practice. Was there any concern at all except for 
getting opinions of, like you said, previous counsel to the 
Department of Energy or outside counsel, that you were making 
precedent here or breaking precedent?
    Mr. Chu. There was a discussion, and you're quite right, in 
the time of origination of the loan, we could not subordinate 
to any other equity partners or things of that nature, and so 
there is another clause in that act that said above all, we 
have to look out after the taxpayer interests and maximize 
recovery, and that also is part of that act.
    Mr. Green. Was it ever offered that we would take, the 
taxpayers would take an equity portion of Solyndra in exchange 
for our secondary----
    Mr. Chu. There's a discussion about equity position. Again, 
this is a new loan program, and I'm not even sure whether this 
loan program can actually--I was just referring to a practice 
of Ex-Im and OPEC.
    Mr. Stearns. The gentleman's time has expired.
    Mr. Green. Well, Mr. Chairman, I would like to make sure, 
though, if we need to change the law because I don't think our 
committee made that----
    Mr. Stearns. I think you made that clear. In fact, you were 
on the conference committee when you made that law.
    Mr. Green. Well, I wasn't on the conference committee; I 
was on this committee. But having supported that loan guarantee 
program, because I support both the solar, the wind, the 
nuclear, you name it. In fact, I've been disappointed we 
weren't able to do a more aggressive program in alternative 
energy, but we need to change that law because I don't think we 
ever ought to let the taxpayers be subordinate to a new 
investor even under a----
    Mr. Stearns. Well, I understand that.
    Mr. Green [continuing]. Restructuring.
    Mr. Stearns. But I think you made a very excellent point 
that that's--how Mr. Chu used the law was not how it was 
intended, and I think you made a good point on that.
    Ms. DeGette. Well, now, wait a minute.
    Mr. Stearns. I mean, that's my interpretation as the 
chairman.
    Mr. Waxman. Well, Mr. Chairman, that's your interpretation, 
but the lawyers said otherwise----
    Mr. Stearns. Well, I appreciate that.
    Mr. Waxman [continuing]. And that has to weigh on the 
Secretary far more than your opinion or Mr. Green's opinion.
    Mr. Stearns. Well, I certainly think----
    Mr. Waxman. The rest of us are not willing to go along in 
changing the law.
    Mr. Stearns. Well, Mr. Green's opinion is what I'm agreeing 
with, not yours.
    Let me recognize the gentleman from Pennsylvania, Mr. 
Murphy.
    Mr. Murphy. Thank you, Mr. Chairman.
    Secretary Chu, at the Solyndra ground breaking on September 
4, 2009, you said your agency, ``moved aggressively to get 
stimulus money out the door.'' Were you aware that 4 days 
earlier, August 31st, the staff of OMB wrote to your agency and 
said, quote, I would prefer that this announcement be 
postponed, this is the first loan guarantee, and we should have 
full review with all hands on deck to make sure we get it 
right. Were you aware of that?
    Mr. Chu. I'm aware of it now.
    Mr. Murphy. All right and not before that. Were you aware 
that the following day, on September 1st, 2009, OMB downgraded 
Solyndra's credit rating because of the, quote, weakening world 
market prices for solar generally?
    Mr. Chu. What--another way of saying that, yes, is that 
the----
    Mr. Murphy. OK.
    Mr. Chu [continuing]. Credit subsidy score went up 
slightly.
    Mr. Murphy. There's also an email--I appreciate that. I'm 
just trying to move, sir. There's an email between Steven 
Mitchell, managing director at Kaiser's venture capital firm, 
Argonaut Private Equity, and George Kaiser on March 5th, 2010, 
where Mitchell writes that, ``Chu is apparently staying 
involved in Solyndra's application and continues to talk up the 
company as a success story.'' That's on tab 23. Now, is that a 
fair characterization, to say that you were personally 
interested and personally involved in Solyndra's effort to get 
Federal financing? Is that a yes or no?
    Mr. Chu. As I said, Solyndra was the first company, the 
head of the line by the loan program, and so what we were doing 
is in order to get the loans out, we said, all right, who are 
at the head of the lines, who are the most promising, what are 
the most promising loans? Again----
    Mr. Murphy. The most promising, you said, sir?
    Mr. Chu. The most promising in the opinion----
    Mr. Murphy. Let's hang on to that word. Let me just--
because I have to ask you some questions because most promising 
is important. So were you aware then on March 16, 2010, in 
Solyndra's IPO filing with the SEC, PriceWaterhouseCoopers said 
it had, ``substantial doubt about Solyndra's ability to 
continue as a growing concern''? Were you aware of that?
    Mr. Chu. I am aware of it now.
    Mr. Murphy. That doesn't sound most promising. Were you 
aware that in the following month, OMB staff began expressing 
concern about your agency's monitoring of the loan?
    Mr. Chu. Sorry, say that again?
    Mr. Murphy. Were you aware that in the following month, 
that's April of 2010, that OMB staff began expressing concern 
about your agency's monitoring of the loan?
    Let me help you with that. What they said in April was that 
when evaluating the riskiness of Solyndra, they said, ``DOE 
seems to separate the parent from the project, but I think the 
deal is structured in a way that does not support that view.'' 
So at that time were you worried that your agency's calculation 
of the project's risk was completely different from the OMB 
model?
    Mr. Chu. I think there's lots of robust conversations that 
go on between OMB and Department of Energy, and in the end, I 
think OMB did not object to----
    Mr. Murphy. Can you just--I've got to----
    Mr. Chu [continuing]. The restructuring.
    Mr. Murphy. So were you aware then, in May of 2010, 2 days 
before the President's visit to Solyndra, the White House 
Adviser, Valerie Jarrett, and Vice President Biden's chief of 
staff, Ron Klain, contacted your chief of staff to express 
their worries about the ``growing concern'' letter from Price 
Waterhouse, were you aware of that conversation?
    Mr. Chu. No.
    Mr. Murphy. At any point in the spring of 2010, did you 
discuss with the White House the, quote, growing concern letter 
or the disagreements between OMB and DOE on Solyndra's 
financial strength?
    Mr. Chu. As time progressed, there was certainly----
    Mr. Murphy. At that point?
    Mr. Chu. I can't say exactly at that point.
    Mr. Murphy. OK.
    Mr. Chu. But certainly as time progressed.
    Mr. Murphy. So were you aware--let me just try and get 
these in. Were you aware that in June, after Solyndra cancelled 
its IPO, an Office of Management and Budget staffer have 
suggested this would be a good moment to, quote, insist that 
DOE ramp up its monitoring function immediately? I mean was 
your agency monitoring or not monitoring up to that point?
    Mr. Chu. I was told that by that time, we were monitoring 
the loans, but we had--I'm not really sure of the exact timing, 
but we had one--Solyndra was our first loan, and we then 
established a loan monitoring program, which has consistently 
been made more robust as time progressed.
    Mr. Murphy. So the following, month you had a meeting with 
OMB director Peter Orszag about policy issues; is that correct? 
Do you recall that meeting?
    Mr. Chu. Yes.
    Mr. Murphy. OK. Now, the day before the meeting, OMB and 
Treasury both sent your agency a list of information needed 
about Solyndra's finances. Did you discuss Solyndra with Mr. 
Orszag?
    Mr. Chu. No, we were discussing much higher policy issues 
than a particular loan, I believe, at that time.
    Mr. Murphy. So he didn't ask you for any critical 
information about Solyndra's finances, including financial 
statements, actual performance information, market price 
reduction?
    Mr. Chu. Well, my recollection at the time was that we were 
discussing loans, for example, about whether if you took the 
loan plus 1603 plus production factors, other things, State 
subsidies, that some of the loans might be getting, there's a 
policy issue about----
    Mr. Murphy. Well, let me ask you this, then: Were you aware 
that prior to your meeting with Mr. Orszag, OMB staffers said 
on June 22nd, quote, if DOE does not stay on top of the 
project, it risks becoming embarrassing, given the high profile 
S1 POTUS and VPOTUS events over the past year. So I have to 
ask, you said it was promising, we have lots of other agencies 
saying and PriceWaterhouseCoopers and OMB and Treasury people 
saying this was not going to work out. So my question is, will 
you admit that there were problems in monitoring this loan and 
getting you the information or you having the information 
reviewed to draw a conclusion that this was promising?
    Mr. Chu. By the word ``promising,'' what I mean is that 
that loan was the head of the line; it was the people in the 
loan program that were from the previous, who were there in the 
previous administration.
    Mr. Murphy. Well, I didn't ask you where they were in the 
line, I asked if you there were problems you were aware of that 
you were monitoring or not in spite of it being promising----
    Mr. Chu. Well, at the time of the origination of the loan 
after OMB's assigned credit subsidy score was something like 
7.8 percent. What that means effectively is that there is a 
very low probability at the time in the OMB estimation that one 
would enter into default.
    Mr. Murphy. And that was when?
    Mr. Chu. This was at the time of the--when the loan----
    Mr. Murphy. But it was restructured later on, sir.
    Mr. Chu. No, after restructuring, certainly, then you 
reevaluate, and our loan program does this all the time.
    Mr. Murphy. Well, can you just tell me then finally, were 
you aware or not of the problems of monitoring this loan?
    Mr. Stearns. The gentleman's time has expired.
    Mr. Chu. We are making the loan monitoring more robust. We 
have a separate office, and we continue to make it more robust.
    Mr. Murphy. I'm asking you, were you aware, do you admit 
there were problems with monitoring this loan by your agency?
    Mr. Chu. At the beginning, when we had one loan, we began 
to set up a loan monitoring office. It was roughly at about the 
same time when OMB said we want you to set up a monitoring 
office, we did set it up, and so within certainly weeks----
    Mr. Stearns. The gentleman's time has expired.
    Mr. Murphy. Thank you.
    Mr. Stearns. Ms. Schakowsky is recognized for 5 minutes, 
the gentlelady.
    Ms. Schakowsky. Thank you.
    Secretary Chu, as you can see, the Solyndra bankruptcy has 
generated a political controversy, as you might expect when 
taxpayers take this big a hit. And the debate is not a bad 
thing if we use it to learn lessons about the most effective 
means of government support for clean energy, the amount of 
risk we are willing to accept to create jobs and help our 
country lead the energy industries of the future.
    Unfortunately, I don't feel like that is the direction the 
majority has taken in this investigation. In fact, what we have 
seen are misstatements of fact and the use of selective 
documents out of context.
    I want to ask you some questions to see if we can get the 
record straight regarding the history of the Solyndra loan 
guarantees. Solyndra applied for a DOE loan during the Bush 
administration; is that correct?
    Mr. Chu. That is correct.
    Ms. Schakowsky. When you received early briefings on the 
loan program's project pipeline, was Solyndra presented as an 
ongoing application that had undergone due diligence and was 
nearly ready to proceed, or was it presented as an application 
that had been rejected by the previous administration?
    Mr. Chu. It was presented as an application that the 
various processes recommended that we go forward with this 
loan.
    Ms. Schakowsky. I would like to address one specific 
refrain from our Republican colleagues, the assertion that the 
Bush administration rejected--that is a quote--Solyndra's 
application, only to have it revived by the Obama 
administration.
    There is a document, tab 73 in your binder, that was sent 
to the director of the Loan Programs Office during the final 
months of the Bush administration. It lists Solyndra as one of 
the three highest priorities through January 15th--it says 
2008, but given the time of the email, it is obvious that means 
2009, because the email was December of 2008.
    Mr. Chairman, I would like to have this document made part 
of the record.
    Mr. Terry [presiding]. Not hearing an objection, so 
ordered.
    [The information appears at the conclusion of the hearing.]
    Ms. Schakowsky. In early January 2009, Solyndra's 
application was reviewed by the credit committee at DOE. They 
raised some specific questions about the loan and remanded it 
for further consideration, quote, ``without prejudice.'' The 
committee staff interviewed David Frantz, who has served as the 
director of the Loan Programs Office since 2007. The committee 
also interviewed Steve Isa--Isakow----
    Mr. Chu. Isakowitz.
    Ms. Schakowsky. Thank you--Isakowitz, who was appointed by 
President Bush to serve as CFO of the Department. Mr. Isakow--
Isakowitz--I don't know----
    Mr. Chu. Isakowitz.
    Ms. Schakowsky. Yes. I should talk, ``Schakowsky.'' 
Anyway--who was appointed by President--he continued to serve 
as CFO until July of 2011 and was Mr. Frantz's supervisor as 
Solyndra's application was reviewed.
    Do you have any reason to doubt the credibility of these 
individuals?
    Mr. Chu. No.
    Ms. Schakowsky. Both ``Mr. I.'' and Mr. Frantz made it 
clear that Solyndra's application was not in any way rejected 
by the Bush administration. They stated that the career DOE 
team in the Loan Programs Office continue to gather more 
information and negotiate a better equity split for the 
taxpayers after the first credit committee.
    Both of these officials confirmed that consideration of the 
Solyndra application went on unabated as the Bush 
administration left office and the Obama administration came 
into office. Is that your understanding, as well?
    Mr. Chu. That is my understanding.
    Ms. Schakowsky. Was it ever your understanding that the 
Solyndra application had been rejected during the previous 
administration or that the application was somehow on the 
shelf, only to be, quote, ``revived by the Obama 
administration''?
    Mr. Chu. No, not--quite the contrary. The career folk in 
the Department of Energy in both administrations felt that this 
loan was at the head of the line of the ones that we should be 
looking at. And it was progressing according to the procedures.
    Ms. Schakowsky. Well, I thank you, Mr. Secretary, because I 
think it is very important to clarify the record regarding the 
history of the loan guarantee and to put to rest some of the 
statements that were made that contradict that record.
    And I am happy that we have the email and the documents 
that I think clearly show that this was something that was 
proceeding forward and was recommended to proceed forward when 
the Bush administration left and handed this over, with these 
career people that--Dr. Frantz was still there, as I understand 
it.
    Mr. Chu. Yes.
    Ms. Schakowsky. And I yield back my time. Thank you.
    Mr. Terry. All right. The gentleman from Texas, Mr. 
Burgess, you are recognized for 5 minutes.
    Mr. Burgess. I thank the chairman for the recognition.
    Secretary, thank you for being here today, and thank you 
for your generous time that you are spending with the 
committee.
    I just want to say at the outset, I think solar energy has 
a place in the future of this Nation's armamentarium of energy 
sources. But I must say, what has happened with Solyndra--and 
the hearing we are having today kind of underscores it--I think 
it has set back the prospect for perhaps some time.
    Let me ask you a question. You said earlier it is 
regrettable what happened and that some of these were going to 
fail. And, in fact, the first two out of three, between 
Solyndra and Beacon, the first two out of the three projects 
that you approved have failed. The President has said it could 
be as high as a 50 percent failure rate.
    So what is an acceptable failure risk for this type of 
project?
    Mr. Chu. I would say that, given the credit--the total 
credit subsidy that was appropriated and set aside, the $10 
billion, which included $2.4 billion for the 1705 program, 
certainly if we approached something on that number, that would 
be very bad. I, personally, don't think we are going to get 
anywhere close.
    And if you take the loan program in its total, not only 
1705 but the ATVM Loan Program, it would----
    Mr. Burgess. Yes, let me stop you there for a second, 
because my time is going to be very limited. They won't let me 
go over like others. You watch.
    Mr. Terry. Thank you for recognizing that.
    Mr. Burgess. But here is the deal. I mean, the confluence 
of the loan guarantees, coupled with the rapid injection of 
dollars from the stimulus bill, has really led, in my opinion, 
to some touchy decisions being made. And it has led you, as the 
Secretary of the Department of Energy, to behave like a venture 
capitalist.
    But you are the Secretary of Energy. You hold the Nation's 
nuclear secrets. You maintain the Nation's nuclear arsenal. You 
are not supposed to be a venture capitalist who takes risk. Is 
that correct?
    Mr. Chu. First, the loan program is not a venture capital--
it is actually for something beyond the initial stages of 
investment. And the loan program, as set up by Congress, said, 
here is the money, here is appropriate funds to cover for 
losses, but we need----
    Mr. Burgess. Yes, but the bottom line is, with all due 
respect, you are--I mean, look, I was in private business. I 
understand what it is like to take a risk. I understand what it 
is like to fail. But you are the Secretary of Energy. You earn 
almost $200,000 a year. If you approve a program that fails, at 
the end of the day you go home and you are still earning 
$200,000 a year. None of your assets are attached, nothing of 
yours personally is put at risk, because these are taxpayer 
dollars that were put on the line.
    Do you understand how people are uncomfortable with this 
concept of the Department of Energy behaving as a venture 
capitalist?
    Mr. Chu. Well, as I said before, this loan program was set 
up by Congress, and Congress appropriated in the 1705 program 
$2.4 billion to account for the losses.
    Mr. Burgess. As someone who was sitting in this committee 
in 2005 when the loan guarantee program was approved, I don't 
think any of us could have foreseen what was around the corner 
with, again, the rapid injection of cash from the stimulus 
bill. Most of us on this side of the dais oppose that.
    Let me ask you some questions about subordination, because 
my colleague from Texas, Mr. Green, asked some. You said it was 
a difficult choice to make, about the subordination, correct?
    Mr. Chu. It was difficult because, by that time, we knew 
that the company was in trouble, and we, again, were trying to 
maximize taxpayer recovery. And so, all our actions were 
focused on maximizing taxpayer recovery.
    Mr. Burgess. Yes. And, you know, this almost seems like a 
tortured legal opinion that have we come to. But do you see how 
some people could look at this and say, this was a violation of 
the law, 1702, that has been much talked about this morning, 
where taxpayer obligations were not allowed to be subordinated? 
And I realize there was, again, what I would describe as a 
tortured legal opinion. But do you understand that the average 
person looking at this says, that is not right, that shouldn't 
have happened?
    Mr. Chu. Again, we had--I had the opinion of general 
counsel I trusted, I had the opinion of many others, it went 
through a rigorous review process within the Department of 
Energy----
    Mr. Burgess. Correct, and I don't dispute that. I will 
stipulate to that. But, with all due respect, do you see how 
regular people would look at this and say, I don't think that 
is right?
    Now, I will be the first to admit that in the Energy Policy 
Act of 2005--perhaps just an oversight, certainly could be 
regarded as a mistake--there is no penalty, civil or criminal, 
no penalty for violation of that.
    But do you feel--and, again, at the end of the day, you are 
still earning your salary whether things work out or not. But 
do you feel that you owe people an apology for having 
subordinated the taxpayer dollar to what now turns out to be a 
very risky venture?
    Mr. Chu. I think, certainly, it was very regrettable what 
happened to Solyndra. But I go back and say that when the 
market was falling out, the prices were falling out, we were 
focused on trying to recover as much of the taxpayer dollars as 
possible under those conditions.
    Mr. Burgess. One last thing. Again, in my mind, this was 
technically a violation of the law, although there is no 
penalty. Have you discussed with your boss whether or not you 
should continue in your position, having violated the spirit of 
the Energy Policy Act of 2005?
    Mr. Chu. Have I discussed with my boss that? No.
    Mr. Burgess. Is he comfortable, do you think, with you 
continuing your position----
    Mr. Chu. I believe so.
    Mr. Burgess. [continuing]. When there was a violation of 
law, even though there is no penalty?
    Mr. Chu. We believe there was no violation of the law.
    Mr. Burgess. Again, that is a fairly tortured legal 
explanation that has been provided to this committee. I think 
the language is straightforward. Mr. Green, a Democrat, was 
very uncomfortable about the subordination aspect. I remain 
very uncomfortable. And I have to tell you, I haven't seen a 
poll done on this, but I think, broadly, across the country, 
people understand that this was not right.
    Mr. Terry. Let the record show we let you go 1 minute over 
like everybody else.
    The gentleman from Arkansas is recognized for 5 minutes.
    Mr. Ross. Thank you, Mr. Chairman.
    And, Mr. Secretary, I believe it is important to Members on 
both sides of the aisle to understand exactly why Solyndra went 
bankrupt and to make sure the Department of Energy is doing 
enough to protect the taxpayers. There has been a lot of 
partisan and political rhetoric associated with this 
investigation. I want to try to take it beyond that and remove 
the partisan and the political nature of it and try to get to 
the facts.
    And, as I understand it, the Department of Energy was not 
the only entity that believed in Solyndra. Private equity 
investors made significant investments. In March of 2010, the 
Wall Street Journal ranked Solyndra number 5 in a list of the 
top 50 venture-backed companies. In that same year, MIT's 
Technology Review named Solyndra one of the world's 50 most 
innovative companies.
    Mr. Chairman, hindsight is 20/20, and predicting the future 
of innovative technologies is particularly difficult. In the 
case of Solyndra, none of us like the end result, just as any 
banker does not like to make a loan that ends up defaulting. 
But it is clear that the Department of Energy wasn't the only 
entity convinced that the company had a good shot at success. 
Smart investors, smart market analysts, smart technology 
experts from Wall Street to MIT, and other outside observers 
also got this one wrong.
    So how do we learn from this, and how do we move forward 
while continuing to advance alternative and renewable forms of 
energy, something I feel very strongly about? We are shipping 
about $300 billion a year overseas to buy energy. That is a 
$300 billion annual payroll we could have right here at home in 
America if we could learn how to grow and make more of our own 
energy.
    So I want to ask you some questions until I run out of time 
on the type of due diligence done on the Solyndra application. 
Given your scientific background, I would also like to get your 
views on why the Department of Energy and major private 
investors decided to bet on the company's technology.
    In 2007, the Department of Energy submitted Solyndra's 
application to the National Renewable Energy Lab in Golden, 
Colorado, for review, and the National Renewable Energy Lab 
gave Solyndra the highest technical merit score of any 
application DOE has ever received. And I might add, that was in 
the previous administration when all that happened.
    So, Secretary Chu, you are a Nobel Prize-winning physicist, 
and, during your academic career, you ran a national laboratory 
that did work on renewable energy. So what can you tell us 
about the National Renewable Energy Lab process that really 
helped us to get to where we are today?
    Mr. Chu. Well, the NREL, National Renewable Energy Lab, is 
one of our national laboratories. They have great expertise in 
solar technologies. And, in fact, I should say that out of the 
NREL grew another thin-film technology called cad telluride 
that is--that patent has now been licensed to General Electric. 
And General Electric today is investing in--$400 million 
investment in cad telluride that grew out of NREL. And this 
is--I just spoke with Jeff Immelt, the CEO of GE, and he said, 
no, we think that this is going to be a very competitive 
technology; we think we can compete head-to-head with the 
Chinese.
    And, going back, this is work that came out of Department 
of Energy laboratories, but in addition to dropping new 
technologies, they are also experts in assessing technologies.
    Mr. Ross. After the Department of Energy's own 
technological review, Solyndra was invited to submit a full 
application to the Department of Energy. And during this 
process, it underwent multiple third-party reviews. The 
consultant CH2M HILL submitted a technology and manufacturing 
review for Solyndra. Solyndra's business plan relied on studies 
by PHOTON Consulting, Navigant Consulting, and New Energy 
Finance. DOE relied on outside marketing reviews of Solyndra by 
a host of experts on energy markets, creditworthiness, and 
engineering, including Dun & Bradstreet, R.W. Beck, Black & 
Veatch, Fitch, and Navigant Consulting.
    So, Secretary Chu, given all of this internal and external 
analysis, dating back to 2007, as it relates to Solyndra, do 
you feel confident that the DOE did its due diligence on the 
Solyndra loan? And, if not, what could we have done differently 
to ensure that we wouldn't be here today?
    Mr. Chu. As you recounted, I mean, there is extraordinary 
due diligence not only in the Solyndra loan but every loan. And 
that is why it took, on a rough scale, even with the processes, 
a year or 2 years to actually do the due diligence on these 
loans.
    And so, it was this combination of events, the most 
striking being the rapid drop in prices that affected and is 
stressing companies all around the world, not only in the 
United States but in Asia, as well as in Europe.
    Mr. Ross. Mr. Secretary, I would encourage you to try to 
figure out what went wrong, keep this from ever happening 
again, while continuing to advance alternative renewable 
American-made energies here at home.
    Mr. Chu. We, in fact, have--if the chairman will allow me--
we, in fact, based on the Solyndra experience, not only have 
now a separate team within our loan office to monitor the loans 
and the disbursements, but we are also bringing in others. For 
example, in the Department of Energy, Renewable Energy, there 
is a group that is expert in solar; it is called our SunShot 
team. It is headed by someone we recruited, a member of the 
National Academy of Engineering, understands the business very 
well. And they provide yet another set of independent eyes to 
monitor the loans and disbursements.
    So what we are doing, as these loans go forward, is we are 
going to be watching like a hawk, especially given the rapid 
changing market conditions.
    Mr. Terry. The gentlelady from Tennessee is recognized for 
5 minutes.
    Mrs. Blackburn. Thank you, Mr. Chairman.
    And, Mr. Secretary, thank you for being with us today.
    I feel almost the need to sit here and remind all of us in 
this room, this hearing today is not about solar power. The 
hearing today is about the possible abuse of Executive power 
and of the taxpayers' money. And we desperately want to get, 
and we are being diligent in trying to get, to exactly what 
happened with this process and where it ran so far afield.
    Now, we have been through a series of red flags that 
existed and seem to have been transparent prior to the loan 
being approved, but I want to pick up right there. After that 
loan closed in September 2009, at that point did DOE require 
Solyndra to provide DOE with financial information or other 
additional data? After that loan was approved, did you go back 
to them and say, we need to find some additional data?
    Mr. Chu. After a loan is approved and as we go through 
disbursements, we are in constant communication with the 
company. Otherwise--because these disbursements--we have a 
contractual agreement, and as they build the fab plant, they 
have to be building it as they said they would build it, and 
then we disburse the funds after they have spent it to build 
it. So we are in constant communication the whole----
    Mrs. Blackburn. You are in constant contact. But the 
question is really a yes-or-no: Did you or did you not require 
additional financial information from Solyndra?
    Mr. Chu. Yes.
    Mrs. Blackburn. Yes. OK.
    Were you aware that DOE staff repeatedly raised the issue 
of Solyndra's parents' financial health and the lack of working 
capital as a cause for concern?
    Mr. Chu. Now, there are two parts of this. One part was the 
working capital in order to complete the project. And, as I 
said, there was a model which--that there would be an 
interruption of cash flow, but in actual fact, upon re-
examining this, it was not an issue, and in actual fact the 
plant was built on budget, on time.
    Mrs. Blackburn. OK. So, given that you were aware there was 
a possibility of an interruption of cash flow, why wouldn't you 
have gotten additional financial information on their cash flow 
and on the cash burn rate?
    Mr. Chu. I believe during this time there was communication 
with the company on this cash-flow issue. And, again, it was 
relayed to me that this was a particular model that said this. 
In 1 month, it would come to a point, but then the following 
months that they would be just fine in the building out of that 
plant.
    Mrs. Blackburn. Looking at lessons learned, does the DOE 
now require financial information about the parent companies of 
its project financial deals?
    Mr. Chu. Well, we always do. And, as I said before on 
lessons learned, when there is a rapidly changing situation, 
rapidly changing market, we have additional sets of eyes, not 
only within the loan program but also outside the loan program.
    Mrs. Blackburn. OK. And the Loan Programs Office has 
engaged in the kind of enhanced monitoring that you are saying 
you have put on Solyndra in these type situations. Are you 
doing these with the other companies, the 28 other----
    Mr. Chu. We are now monitoring----
    Mrs. Blackburn [continuing]. Companies that are in the loan 
program?
    Mr. Chu. Of course. We are monitoring all the loans on a 
minimum of a monthly basis because----
    Mrs. Blackburn. What about weekly cash flows?
    Mr. Chu. Actually, in some instances, weekly, absolutely.
    Mrs. Blackburn. What about a board observer seat?
    Mr. Chu. As you know, we did have a board observer seat in 
Solyndra after the restructuring. And in that board observer 
seat, as with the equity investors, again, it was a rapidly 
changing dynamic, and the equity investors were as surprised as 
we were.
    Mrs. Blackburn. OK. Let's go back to the cash burn rate 
issues because you have talked about the savvy investors that 
were there for Solyndra. They had a billion dollars in cash. 
But we keep hearing about that cash burn rate.
    In your opinion, was DOE and were you aware of those cash 
burn rate issues before or after that loan was closed in 
September 2009?
    Mr. Chu. I believe that they were aware of what would be 
happening, the business plan. And with any manufacturing plant, 
a new manufacturing plant, as you manufacture, as you build up 
the----
    Mrs. Blackburn. Were you personally aware, or was----
    Mr. Chu. I was aware----
    Mrs. Blackburn [continuing]. It just the analysts?
    Mr. Chu. In general, as I said, I certainly have enough 
experience with looking at startup companies to know that that 
is very----
    Mrs. Blackburn. Did anyone brief you specifically on 
Solyndra's cash burn rate issues?
    Mr. Chu. As the loan progressed, yes, they did.
    Mrs. Blackburn. But not before the loan closed?
    Mr. Chu. Not before the loan closed, not that I recall. But 
I can't be sure.
    Mrs. Blackburn. What did you know about the financial 
health of Solyndra before you approved that deal?
    Mr. Chu. It was believed to be a healthy company at the 
time of closing. I think the bond rating was something like a 
B-plus at the time of closing----
    Mrs. Blackburn. OK.
    Mr. Chu [continuing]. As dictated by, actually, the OMB.
    Mrs. Blackburn. Let me ask you this. Why did you allow that 
company to continue to pull down millions of taxpayer dollars 
after you discovered the financial problems in that company?
    Mr. Chu. OK. That is an excellent question.
    So, as we began to know that the company had--the parent 
company had cash-flow problems, not the project, we faced a 
decision. You are building--the loan was to build a factory. 
The factory was half-built, roughly speaking, or two-thirds 
built. And if we had pulled the plug then, we were certain that 
Solyndra would go into bankruptcy.
    And then we did two analyses. If you completed the factory 
and sold the factory and give them a fighting chance to survive 
as an ongoing company, what was the probability. So we faced 
this difficult choice. And we felt, in the taxpayers' interest, 
the highest probability of recovering as much as possible of 
taxpayer dollars was to disburse the funds.
    Mrs. Blackburn. Was it in the taxpayer interest or in the 
desire for green energy jobs that you made that decision?
    Mr. Chu. When we make a loan, we have a very green eye-
shaded approach to this loan. It is a business transaction. And 
so, when we make this loan, we said--we have to, by statute of 
the law, say that there is a reasonable prospect of this loan 
being paid back.
    Now, having said that, we have also been mandated to make 
innovative loans. And, again, the loan loss reserve was 
designed and appropriated by Congress in order to take care of 
unfortunate instances such as the one in Solyndra.
    Mrs. Blackburn. I yield back.
    Mr. Stearns. [presiding.] The gentlelady's time has 
expired.
    And the gentleman from California, Mr. Bilbray, is 
recognized for 5 minutes.
    Mr. Bilbray. Thank you very much for being here today, Mr. 
Secretary.
    Mr. Secretary, I had the pleasure of listening to your 
testimony back on March 3rd of 2010. And, at that time, you 
stated quite distinctly that you believe that nuclear energy 
remains a safe and secure and economical source of clean 
energy. Do you still believe that today?
    Mr. Chu. Well, if you are asking--yes, I believe nuclear 
energy can be safe and secure. We----
    Mr. Bilbray. That is all I needed to know. I just wanted to 
make sure that----
    Mr. Chu. All right.
    Mr. Bilbray. You are a high energy physicist. You are 
somebody who knows that. Probably of anybody who has ever been 
sitting in your chair, you probably understand the realities of 
that technology better than most, if not all, of your 
predecessors.
    You are also well versed in not just nuclear technology, 
but you have been on a steep learning curve when it comes to 
photovoltaic technology, too, right?
    Mr. Chu. Well, the learning curve started perhaps 10 years 
ago.
    Mr. Bilbray. OK. My question is this. You distinctly 
understand the difference, the advantages and disadvantages, of 
poly, mono, and amorphous or thin-film technologies, right?
    Mr. Chu. I do know the advantages and disadvantages, yes.
    Mr. Bilbray. Now, do you personally own a solar array, a 
photovoltaic of any configuration?
    Mr. Chu. No. Oh, well, little flashlights, solar ones, but 
not on my roof.
    Mr. Bilbray. Yes, a little flashlight solar would be thin 
film.
    Mr. Chu. Yes.
    Mr. Bilbray. With what you know today and if you were 
buying something today you were going to put on your roof and 
you had the choice of the three different divisions, which 
technology would you choose?
    Mr. Chu. It would really depend on the price, the 
guarantee, the warranty, how long the panels would last. So it 
would be an economic decision.
    Mr. Bilbray. Knowing what you know with those three 
categories, with the same square-footage array, same price, 
wouldn't you agree that a reasonable consumer at this time 
would be choosing either mono or poly crystal if you were going 
to use it on your own residence at this time?
    Mr. Chu. No, I--it is not clear, because the thin-film 
technology is actually a very, very good technology, and this 
is why U.S. companies are investing, in part, in thin-film 
technology.
    Mr. Bilbray. Are you saying the production of thin film is 
equal to the other two technologies?
    Mr. Chu. Well, there are companies like General Electric 
placing big bets, saying that it is going to be superior.
    Mr. Bilbray. Big bets for the future.
    Mr. Chu. Well, they are investing today.
    Mr. Bilbray. And the existing technology today doesn't 
reflect that.
    Mr. Chu. No, sir. I would disagree with that. I think----
    Mr. Bilbray. OK. I appreciate that. And I am very surprised 
that you are disagreeing with that. But when we make reference 
to China and China's investment, are you aware that the 
overwhelming majority of China's investment is in poly and mono 
and not in amorphous technology?
    Mr. Chu. I am aware of that.
    Mr. Bilbray. OK. Was that, the fact that the Chinese were 
betting on the traditional, proven technology, was that in your 
understanding or was that sold as being a reason to move into a 
new, pretty radical concept of how to produce solar panels 
using the amorphous technology, was there a conscious effort 
that you were going to be able to then sort of jump over and 
beat the Chinese at the game by using a new type of approach 
that they were not willing to invest in?
    Mr. Chu. Well, what the Chinese do, typically, is they take 
an existing technology and they bring it to a very, very large 
scale and they get economy of scale. And that is, in fact----
    Mr. Bilbray. But was that a decision, that you knew that 
the Chinese weren't really placing bets on amorphous and, thus, 
there was a market--there could be a market opportunity to move 
and beat them to it?
    Mr. Chu. Well, the Chinese actually--this is thin film. The 
Chinese actually were investing in amorphous silicon, but that 
turned out to be a bad bet for the Chinese. What was 
happening----
    Mr. Bilbray. Mr. Secretary, I must interrupt you. It seems 
like it was a bad bet for us, too, on this one, too. So I am 
just saying, and I think you will reflect, that the false 
starts in photovoltaics--the worst problem we have had with the 
failed projects have been in amorphous, that the Chinese have 
run into?
    Mr. Chu. Well, I think you mean thin film.
    Mr. Bilbray. Thin film.
    Mr. Chu. No, I think--first of all, this is not at 
Department of Energy. We have loan applicants--there are other 
companies investing in thin film.
    The reason they are investing in thin-film technology is 
because, first of all, since we invented both the silicon 
technology, the cad telluride, the CIGS technology, there is 
more technological headroom in thin film. It is much cheaper to 
manufacture. The quantum efficiency--efficiency of the thin 
film is coming up much more rapidly. And so, this is why----
    Mr. Bilbray. But, historically, it has also had a much 
bigger problem--historically, it has had a problem with 
durability and production, except for in very low-light 
applications.
    Mr. Chu. No, I think----
    Mr. Bilbray. You think the durability of thin film 
traditionally has been equal?
    Mr. Chu. You again may be mixing up, conflating amorphous 
silicon with cad telluride.
    Mr. Bilbray. OK. Cad telluride is hopefully the new 
breakthrough that we will see coming in the future?
    Mr. Chu. Well, this cad telluride, again, it was developed 
in a national laboratory, licensed to other companies. And it 
is very competitive with----
    Mr. Bilbray. Was Solyndra proposing to use that?
    Mr. Chu. No. Solyndra was using another technology called 
CIGS. This is----
    Mr. Bilbray. Which does not have the same capabilities as 
cad telluride.
    Mr. Chu. No, it has the same capabilities as cad telluride 
in terms of the overall theoretical efficiency. At the time, 
they were in the same place in terms of the production 
efficiency, and they were making improvements.
    Mr. Bilbray. Thank you, Mr. Chairman. I think the big issue 
was----
    Mr. Stearns. The gentleman's time has expired.
    Mr. Bilbray [continuing]. ``Theoretical'' was the big word 
there. Thank you.
    Mr. Stearns. The gentleman from Georgia is recognized for 5 
minutes.
    Mr. Gingrey. Mr. Chairman, I thank you.
    Dr. Chu, I hate to start off with a sports analogy, but in 
regard to the restructuring of the Solyndra loan, I think I 
will give you a little sports analogy.
    This Sunday, the Atlanta Falcons were playing the world-
champion New Orleans Saints in Atlanta, and they went to 
overtime tied. And the Falcons coach made a decision deep in 
his own territory, 4th and 1, to go for the first down, knowing 
that if he punted the ball back to the New Orleans Saints and 
their great quarterback Drew Brees that they would be unlikely 
to stop them. So he goes for a first down, and he misses it. 
And two plays later, the New Orleans Saints have a chip-shot 
field goal, and they win the game.
    So he takes a chance, makes, I think, a ridiculous 
decision, but it wasn't against the law. It was not against the 
law.
    Now, in this situation of restructuring the Solyndra loan, 
I think what was done by the Department of Energy, despite what 
the counsel has said, is breaking the law under the Energy 
Policy Act.
    And I would just like to know from you, Mr. Secretary, when 
the folks at Treasury, the people that actually made the loan--
because this wasn't a $535 million loan guarantee; it was a 
loan coming straight out of the Federal Financing Bank. And 
they said in a letter or an email to your folks at the 
Department of Energy, ``Before you do this restructuring, I 
think you better get an opinion from the Justice Department.'' 
Now, the Department of Energy ignored that and went ahead and 
got their own letter from in-house counsel and came up with 
some, in my opinion cockamamie, idea of why it was OK to do 
this. And the law was broken.
    You have explained to us here today that, you know, your 
feeling about all of that was, well, if you didn't do it, the 
taxpayer was very likely almost immediately to see a bankruptcy 
of the company and a total loss of the loan, the $535 million, 
and that if you restructured and allowed them to come in with 
$75 million more of private equity, that that that might save 
the day.
    And so, it was a tough decision, and you approved and went 
ahead with this restructuring of the loan--clearly breaking the 
law. I mean, the language--and you have seen the slide 
earlier--the language is pretty clear. And the result, of 
course, was the same, not unlike what happened in Atlanta this 
past Sunday when Coach Smith made that fateful decision. My 
colleague here from Louisiana says it was a good decision. But 
everybody says that this decision that you made was a bad 
decision.
    And I just don't understand why you didn't go ahead and 
submit this to the Justice Department and ask one of their 
high-powered lawyers, assistant attorney generals or whatnot, 
to give you a legal opinion on that. Why not?
    Mr. Chu. It is my understanding that one goes to Justice if 
there is a change in the conditions of the loan, if you, for 
example, decrease the amount that would be paid back or a 
decrease in the interest rate--things of that issue. And, 
again, it was not only the opinion of the counsel within the 
Department of Energy, with Susan Richardson, in a very vigorous 
review process----
    Mr. Gingrey. Well, Mr. Secretary, I apologize for 
interrupting you, but I don't think the folks within the 
Department of Energy in that loan program were the experts in 
this case. The bankers of the Federal Financing Bank in the 
Treasury Department, clearly, they are the experts, who--all of 
a sudden, they are worried about the loan.
    Let me move on to another subject, and I want to ask you if 
you are familiar with a recent Washington Post article--I 
believe this is November 15th, so just a couple of days ago--by 
Carol Leonnig and Joe Stephens. And the title of this, Mr. 
Secretary, ``Solyndra: Energy Department Pushed Firm to Keep 
Layoffs Quiet Until After Midterm Elections.''
    Now, this article--and, Mr. Chairman, I would like to ask 
unanimous consent to submit this for the record.
    Mr. Stearns. So ordered.
    [The article follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Gingrey. In this article, basically, they are saying 
the Solyndra people were trying to make sure that the bank, the 
Federal Financing Bank, would continue to advance them loan 
proceeds, maybe even a little in advance of when they were due. 
And, basically, the Department of Energy, according to this 
article, said, ``Well, look, we know you all are going to have 
some layoffs coming up. It has been leaked to the press. And we 
would prefer that you not make those layoffs, at least the 
announcement of it, until November 3rd, 1 day after the midterm 
elections.'' And then, of course, they got their advancement of 
the loan. A little bit suspicious.
    Do you have any comments on that at all, the timing of 
that?
    Mr. Chu. Yes. First, I was not aware of any communications 
with our loan office with the Solyndra people until that 
article came out. It is not the way that I do business. We 
don't--I am looking at the loan, the process of repayment, 
looking after the taxpayer interest, and those factors are not 
part of our consideration. Something like that was not 
discussed with me, and I would have not approved it----
    Mr. Gingrey. Mr. Secretary, I believe you. I believe you. 
But this looks highly political.
    Mr. Chairman, I yield back.
    Mr. Stearns. I thank the gentleman.
    And the gentleman from Louisiana, Mr. Scalise, is 
recognized for 5 minutes.
    Mr. Scalise. Thank you, Mr Chairman. I appreciate you 
having this hearing.
    Mr. Secretary, thank you for coming before our committee.
    I want to express similar sentiments as Dr. Burgess and 
others expressed. I strongly support an all-of-the-above energy 
policy. I think, frankly, in our country, we are sadly lacking 
a real energy policy that allows us to utilize the natural 
resources we have in this country. We have to use all the 
things we have, including wind and solar. But, clearly, as we 
can see, those technologies still haven't advanced to the level 
that they need to.
    And what is at heart here is this question of this Solyndra 
loan, the $535 million of taxpayer money that have been lost, 
and how did we get to this point.
    I think one of the big issues that I have struggled with, 
and others, is when we get to this question of subordination, 
as the loan was restructured, you know, we go back and we look 
at the law--this is the law of the United States--and it seems 
clear to those of us who have looked at the law that you cannot 
subrogate the taxpayer, meaning you can't put the taxpayer in 
the back of the line when you come to this decision of whether 
or not you are going restructure.
    And so, this is--first, this is the document, this is the 
actual restructuring that we got from your agency. This is the 
document that initiated the restructuring of the loan, 
including the subordination of the taxpayer. And I notice that 
on the last page, is this your signature on this page? Did you 
sign off on this document? This is noted as tab 59.
    Mr. Chu. Fifty-nine?
    Mr. Scalise. Department of Energy--and this actually deals 
with the restructuring of the loan guarantee to Solyndra, 
including the restructuring. Did you sign off on this? I think 
you have said----
    Mr. Chu. Yes, I did.
    Mr. Scalise [continuing]. In some public statements I have 
seen. I just want to verify----
    Mr. Chu. Yes, I did.
    Mr. Scalise [continuing]. This is your signature on this 
document?
    Mr. Chu. That is my signature.
    Mr. Scalise. And so, clearly, when you go back and look at 
the law--and I would hope--did you look at the law, yourself, 
before you signed off on this document?
    Mr. Chu. Yes.
    Mr. Scalise. And this is not a long law. It is not 50 
pages. It is not even a paragraph.
    Mr. Chu. That is right. In----
    Mr. Scalise. You looked at this law, you looked at this one 
paragraph, and you said, even though it says, ``The obligation 
shall be subject to the condition that the obligation is not 
subordinate to other financing,'' you can tell me you read this 
and you can still determine that it is OK for you to 
subordinate the taxpayer even though the law says it is not?
    Mr. Chu. We did not subordinate the taxpayer under the 
terms of the original loan, and we followed the law.
    Mr. Scalise. Does the taxpayer have first dibs on the $535 
million----
    Mr. Chu. At the time of the----
    Mr. Scalise. [continuing]. When the first dollar comes in 
from Solyndra, if one even does?
    Mr. Chu. At the time of the original----
    Mr. Scalise. That is a yes-or-no question.
    Mr. Chu. Right now, after the----
    Mr. Scalise. Yes or no, Mr. Secretary? Does the taxpayer 
have first dibs, or is some other company going to get first 
dibs on the first dollar that comes in or the first $75 
million?
    Mr. Chu. After restructuring----
    Mr. Scalise. Yes or no----
    Mr. Chu [continuing]. No.
    Mr. Scalise [continuing]. The American taxpayer?
    Mr. Chu. No.
    Mr. Scalise. What was your answer?
    Mr. Chu. After restructuring, no.
    Mr. Scalise. No. OK, so, you did that.
    Now, let's go back to your legal counsel. Your legal 
counsel did look at this. Not only did your legal counsel look 
at this and their determination--and I will go to page 5 of the 
legal opinion; that is tab 67. Their legal opinion says that 
``this reading of the provision is reinforced by the use of the 
word 'is.''' So here we go again with it is going to come down 
to the definition of the word ``is,'' if that is really how you 
are going to hang your hat.
    But let's go beyond your department's attorneys. We have an 
email--and we discussed this in a previous hearing in our 
committee. I would hope you have seen this. Gary Burner over at 
the Treasury said, ``The statute rests with the Department of 
Justice the authority to accept the compromise of a claim to 
the U.S. Government in those instances.''
    They recommended that you all go to the Department of 
Justice. Did you do that?
    Mr. Chu. We did not because we----
    Mr. Scalise. Why would you not go to the Department of 
Justice? If you are getting--this isn't within, this isn't 
somebody on our side. This is the Obama administration, the 
Treasury Department, saying, you ought to go to the Department 
of Justice because we don't think it is legal to put the 
taxpayer in the back of the line on a $535 million loan.
    Why didn't you at least do that due diligence?
    Mr. Chu. Because when you--within the covenant of the loan 
and within the boundaries of the original loan, if you are 
acting within those original agreements, you need not go to the 
Justice Department. My understanding----
    Mr. Scalise. Then I guess that is your opinion. I think it 
is wrong, and I think it is going to come out that you did 
violate the law in that regard. And it is a shame for the 
taxpayer.
    I want to know who all the people were in the decision-
making process. Was anyone at the White House involved in the 
decision to restructure the loan, not just to subordinate the 
taxpayer but to restructure? Did you get any pressure?
    Because we have emails showing there was pressure coming 
from the White House. That is one of the reasons why we are 
still trying to get documents from the White House. We haven't 
been able to get that. We had to subpoena it, and we still 
haven't gotten it all.
    Who in the White House was talking to you about 
restructuring the loan?
    Mr. Chu. To the best of my knowledge, I have no knowledge 
of anyone saying, ``You need to restructure this loan.'' This 
was something that they repeatedly----
    Mr. Scalise. And if you get any information on that, we are 
still going to try to get the facts here. We are trying to get 
to the bottom of the loss of $535 million.
    I have heard a lot of talk about politics. I have seen a 
lot of emails from within the administration about politics. As 
we have seen, The Washington Post had the front-page story 
talking about emails from within your department, Department of 
Energy, pressing Solyndra. They are not concerned about the 
layoffs; they are not concerned that people are going to lose 
their jobs. They are just concerned about the timing, the 
politics. ``Wait until after the election.'' This is 
disgusting.
    And I would hope that you are going to go, in your 
department--it happened under your nose. You testified here, 
under oath, you knew nothing about it. It happened in your 
agency. I hope you will go back in your agency and have some 
heads roll. People need to be held accountable. Because 
political decisions were being made in your department. They 
were being made in the White House above you; they were being 
made below you. And, hopefully, maybe you weren't making any of 
those. But it sure is strange that they are being made all 
around you.
    And I hope that somebody is going to be held accountable, 
because we are going to fight to hold people accountable 
because $535 million in taxpayer money was lost. I don't see 
any chain of emails looking out for the taxpayer money. I see a 
whole lot of emails in the administration that are concerned 
about the politics. That is what stinks the most about this.
    And so, I know we are going have another round. I look 
forward----
    Mr. Stearns. The gentleman's time has expired.
    Mr. Scalise. I yield back.
    Mr. Stearns. Just to follow up, you still don't know who at 
the White House, and you have no interest in finding out, based 
upon this Washington----
    Mr. Chu. We----
    Mr. Stearns. Excuse me--in your department, you don't have 
any--you don't know who in your department was involved with 
this and you----
    Mr. Chu. We----
    Mr. Stearns [continuing]. Have no interest in finding out?
    Mr. Chu. No, we do have interest in finding out. And we----
    Mr. Stearns. When are you going to do it?
    Mr. Chu. Well, certainly, our general counsel's office will 
look at who was doing these things.
    Mr. Stearns. The gentleman from Virginia is recognized for 
5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman.
    Take a deep breath. It has been a long day.
    I am going in a slightly different direction. 1702(d)(3) is 
the subordination section, and I will be getting back to that. 
But, first, I would draw your attention to 1702(g)(4)(A). It is 
a slightly different--it is the same question with a slightly 
different legal basis for it. And that would be--the language 
of that is, ``If the borrower defaults on an obligation, the 
Secretary shall notify the Attorney General of the default.''
    I point out to you a December 13, 2010, letter to Solyndra 
from Mr. Silver, Jonathan Silver, who is the head of the 
program, and that is not in your book.
    Mr. Chairman, may that document be admitted to the record, 
by unanimous consent?
    Mr. Stearns. So ordered.
    Mr. Griffith. And if we could get a copy to----
    Ms. DeGette. Reserving the right to object.
    Mr. Griffith. Here are a couple copies.
    It is a letter from Mr. Silver, who testified previously, 
the executive director of loan programs, to Solyndra Fab 2 and 
to Solyndra, Inc. In that letter, he notices them that they are 
in default. This is December 13, 2010.
    Mr. Stearns. The gentleman will suspend.
    Without objection, the document is part of the record.
    [The letter follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Stearns. Thank you.
    Mr. Griffith. Thank you.
    In that document, he notices the Solyndra folks that they 
are in default and then goes through the reasonings why that is 
in default and says that the Department is not going to waive 
any--if it doesn't take action immediately, it is not waiving 
any of its rights under the contract.
    Further, I would point you to what is document 67, which is 
the memorandum from Susan Richardson authorizing the 
subordination. And in that, she indicates in paragraph 3, first 
sentence, ``A default relating to a financial requirement has 
occurred under the loan agreement. When that default occurred 
on December 1st, 2010, $95 million of the guaranteed loan 
commitment remains to be advanced.''
    And, further, in an email from--tab 59--in February, Silver 
further acknowledges that there was a default in December by 
Solyndra.
    That being said, Mr. Secretary, did your office, in 
compliance with the code 1702(g)(4)(A), the section that 
requires if a borrower defaults the Secretary shall notify the 
Attorney General of the default, did you do that?
    Mr. Chu. First, I have to look back at this code of the 
Justice Department.
    Now, this particular letter is about----
    Mr. Griffith. I am just asking you if you notified the--
when there was a default, in December, did you notify the 
Attorney General, as required by the code? I am not asking for 
your interpretation of the letters. I have laid those out; 
everybody can look at those later. I only have a certain amount 
of time. I want to know if you notified the Attorney General, 
in accordance with the law.
    Mr. Chu. That, I will get back to you on that. But this was 
a deposit in an----
    Mr. Griffith. So you don't recall--I understand. But you 
don't--the bottom line is your people said it was a default and 
it looks like a default. And on a default, you are supposed to 
notify the Attorney General. I am just asking you, did you do 
it? Do you have any recollection of doing it?
    Mr. Chu. I don't have--I can get back to you on that.
    Mr. Griffith. Thank you. I appreciate that.
    Let me ask you this. Do you know what the value of the 
patents and other IP, intellectual properties, of Solyndra are? 
Do you know what those values are?
    Mr. Chu. No.
    Mr. Griffith. Do you believe that they have value?
    Mr. Chu. They should have some value, yes.
    Mr. Griffith. And do you believe it will be greater than or 
less than $75 million?
    Mr. Chu. The IP? I couldn't have any way of assigning that.
    Mr. Griffith. OK.
    And I would draw your attention to tab 68 in your book. We 
are now talking about that it appears from that particular 
tab--do you have that in front of you?
    Mr. Chu. Sixty-eight? Yes, I do.
    Mr. Griffith. OK. It appears that there is something going 
on--it is during the time period that they were beginning to 
discuss the subordination, and a lot of it is redacted. Do you 
have any idea who that was from and who it was to? It looks 
like it might have been from Susan Richardson.
    Mr. Chu. No, I don't.
    Mr. Griffith. And do you know why all of that information 
was redacted?
    Mr. Chu. No, I don't.
    Mr. Griffith. Can you find out for me as to what the 
purpose--I mean, I understand there may be some reason, but can 
you find out why all that information was redacted?
    Mr. Chu. We can get that back to you.
    Mr. Griffith. And were you aware that there were numerous 
discussions about Solyndra's default and the problems they were 
having and subordination came up fairly early in December of 
2010? Were you aware of that?
    Mr. Chu. I am now, that they were thinking of 
subordination. But, again, one can't move forward until one 
understands the law.
    Mr. Griffith. But do you understand that Solyndra was 
looking at bankruptcy at that point, and without some 
understanding that there would be a new $75 million they would 
have had to file bankruptcy pretty quickly?
    Mr. Chu. That is my understanding. About that time scale, 
they had this cash flow issue, and they needed funds to 
continue. And that is why one restructures.
    Mr. Griffith. I understand that, but don't the records 
reflect that there was already an understanding within the 
Department of Energy with Francis Nwachuku that there was going 
to be a subordination, even before the lawyers had had an 
opportunity to determine whether or not they could?
    Mr. Chu. We do not do anything until--I mean, is it OK to 
look at things in parallel? Yes. But before our lawyers----
    Mr. Griffith. OK.
    Mr. Chu [continuing]. Determined whether it was legal or 
not----
    Mr. Griffith. I understand you couldn't do anything.
    Mr. Chu [continuing]. We could not move forward.
    Mr. Griffith. But do you understand that, based on the 
documents that have been provided, it is pretty clear from the 
record that Solyndra would have had to have filed bankruptcy, 
that the investors were not willing to put the $75 million in, 
unless DOE subordinated? And, therefore, when writing the legal 
memorandum, everybody in your department knew that, unless they 
could figure out a way to subordinate, Solyndra was going down.
    Mr. Chu. Sir----
    Mr. Griffith. Isn't that true?
    Mr. Chu. No. I--no. That is not correct. Our counsel's 
office, general counsel's office, and Susan Richardson's 
responsibility, as lawyers, to protect the Department of 
Energy, to make sure we act under the law, that always comes 
first.
    Mr. Griffith. You know, it is interesting, I just 
questioned why you didn't--and I go back to some of the other 
questions--why you didn't get opinions, when you had OMB and 
Treasury saying that they didn't think it was legal, why you 
didn't go to Justice. Were you afraid of getting an answer that 
you didn't like?
    Mr. Chu. First----
    Mr. Stearns. The gentleman's time has expired.
    Mr. Griffith. I yield back.
    Ms. DeGette. I think you should let him answer.
    Mr. Stearns. Oh, no, I want to let you answer. Go ahead.
    Mr. Chu. OK, certainly.
    We are required to go to Justice because if there was a--in 
a revision of the loan that meant we were not going to get paid 
back as much, things of that nature, we went to Justice. We 
did, as you know, go to outside counsel and sought other 
opinions. And, as noted earlier, there was a previous general 
counsel of the Department of Energy, upon looking at the 
decision, who also concurred with that decision.
    Mr. Stearns. The gentleman's time had expired.
    The gentleman from Kansas is recognized for 5 minutes.
    Mr. Griffith. Mr. Chairman, if I might?
    Mr. Stearns. Sure.
    Mr. Griffith. Because I haven't seen it, I have only seen 
the draft that flags that you can't do the subordination, if we 
could get that outside counsel's opinion, I would greatly 
appreciate it.
    Mr. Stearns. Mr. Secretary, can we get that opinion?
    Mr. Chu. Yes.
    Mr. Stearns. Is that possible to get it today? Do you have 
access to that?
    Mr. Chu. I don't know about today. But we have an opinion 
of the previous general counsel of the Department of Energy.
    Mr. Stearns. But I think the gentleman is asking----
    Mr. Griffith. I am asking for what you had at the time the 
decision was made, not a Monday-morning-quarterbacking coverup.
    Mr. Chu. We could certainly make those records available.
    Mr. Stearns. We need the final, is what the gentleman is 
asking for.
    Mr. Griffith. That is correct.
    Mr. Stearns. OK. Correct.
    The gentleman from Kansas is recognized for 5 minutes.
    Mr. Pompeo. Great. Thank you, Mr. Chairman.
    Thank you, Secretary Chu, for being with us this morning.
    You know, you have been asked a couple times if there is 
anybody who ought to apologize. So far, as far as we have been 
able to get you is to say ``unfortunate'' and ``regrettable.'' 
I have a different view. I would use ``reckless'' and ``grossly 
mismanaged'' as a program.
    And you have talked about some of the changes you have made 
to try and strengthen that oversight, and I appreciate that. I 
want to test that just a little bit.
    When the loan was originally applied for, it was applied 
for under Section 1703; is that correct?
    Mr. Chu. The Solyndra loan? Yes.
    Mr. Pompeo. And then it became--then when Section 1705 
Obama stimulus money became available, it changed to a Section 
1705 program; is that correct?
    Mr. Chu. That is correct.
    Mr. Pompeo. Did you approve the decision to change it from 
a 1703 loan to a 1705 loan?
    Mr. Chu. Did I approve? I think this is an action of the 
company and the loan program.
    Mr. Pompeo. Got it. So you weren't involved in that 
process, the decision to allow it to be moved from 1703 to 
1705?
    Mr. Chu. No.
    Mr. Pompeo. Great.
    And, you know, the difference in those two programs is that 
in 1703 the company has skin in the game and has an incentive 
to make their company successful and make the loan less risky, 
but in Section 1705 it is very different. Is that correct, Mr. 
Chu?
    Mr. Chu. No, that is not correct. As I said, the company 
had a billion dollars' skin in the game.
    Mr. Pompeo. Right. But in Section 1705, this credit subsidy 
that you have referred to several times doesn't get paid by the 
company. Under Section 1705, the American taxpayer provides the 
credit subsidy.
    Mr. Chu. Yes, the American taxpayer provides the credit 
subsidy, but, in addition to that, going forward, there is a 
minimum of 20 percent additional that the equity people would 
have to put in.
    Mr. Pompeo. Right. But that is very different. You would 
agree. I mean, this legislation that has the credit subsidy, 
the Federal Credit Reform Act, had a reason that they wanted 
these credit subsidies paid for by the company, correct? 
Because it caused the company to have a greater interest in 
success. There was a reason that the private entities were 
designed to be the ones that paid the credit subsidy. So it is 
a change in risk, would you agree?
    Mr. Chu. There was a--the 1705 bill that was passed by 
Congress was passed because they acknowledged that many of the 
renewable companies would not be able to afford the credit 
subsidy. And, therefore, they said that tax dollars would be 
used to pay for that credit.
    Mr. Pompeo. So these were such bad investments that the 
company couldn't even afford that minimal amount to pay of that 
credit subsidy.
    Mr. Chu. No. I was going back to the way that bill was 
designed by Congress.
    Mr. Pompeo. Let me ask a question. The credit subsidy that 
was calculated, do you know what it was under the Section 1775 
program? Do you know what the calculation said?
    Mr. Chu. I believe it was something like 7.8 percent.
    Mr. Pompeo. Right. So on a $535 million loan, we are 
talking about $40 million, $50 million, right? Ten percent of 
535 is 53. You are talking $40 million, $50 million that the 
company couldn't afford to pay.
    Mr. Chu. The credit subsidy score, again, it is something--
and the credit subsidy as appropriated by Congress was there 
for a reason.
    Mr. Pompeo. Right. The company couldn't afford to pay it, 
so the government stepped in to take care of that little 
incremental 40 million bucks. Is that correct? That is what 
happened.
    Mr. Chu. Well----
    Mr. Pompeo. Yes or no? That is what happened, correct?
    Mr. Chu. That is what happened.
    Mr. Pompeo. Great.
    I want to ask you something. In light of the bankruptcy, 
has the DOE changed that credit subsidy score, the calculation?
    Mr. Chu. Of course.
    Mr. Pompeo. What is it now for the Section 1705 program?
    Mr. Chu. It is presumably quite high, because we--when we 
constantly re-evaluate loans, as the marketplace changes, as 
the health of the company changes, we are constantly updating 
what the risk is. That is reflected, in part, by the credit 
subsidy score.
    Mr. Pompeo. So how does that--what is the change? It went 
from, you said, roughly 7 percent to----?
    Mr. Chu. I would guess it would probably be--just sort of a 
raw guess--probably in the 80s.
    Mr. Pompeo. Wow.
    Mr. Barton. Would the gentlemen yield?
    Mr. Chu. That is because when you change it, you know that 
the company is now in deep financial trouble, and that reflects 
the risk to the taxpayer.
    Mr. Pompeo. Have you changed the credit subsidy scores for 
the other loans in the portfolio, as well, to reflect this 
increased risk?
    Mr. Chu. We--well, in some instances, the credit subsidy 
decreases, as, for example, our loan, a $5.9 billion loan, to 
Ford Motor Company. That credit subsidy score is greatly 
decreased because we feel that Ford is an ongoing, stable 
company, and that loan did what it was supposed to do.
    Mr. Barton. Would the gentlemen yield briefly?
    Mr. Pompeo. Yes.
    Mr. Barton. Just to point out on this point, since the 
Secretary put this $10 billion on the table, nowhere in the 
law, nowhere in the definitions does it say that that program 
is to subsidize the loss of principle.
    Mr. Pompeo. Thank you. Appreciate that.
    Mr. Barton. The gentleman from Kansas was absolutely 
correct that it is designed for subsidized interest rates, 
longer maturities, deferral of interest, but it is not designed 
to cover the loss of principle. So your opening statement, Mr. 
Secretary, is incorrect in asserting that it is.
    And I yield back.
    Mr. Pompeo. Thank you, Mr. Barton.
    I would agree. I want to talk about that $10 billion 
number, as well. That is for the entire program, not just for 
Section 1705. That $10 billion that was appropriated was for 
the entire portfolio of loans, correct?
    Mr. Chu. Pardon?
    Mr. Pompeo. I am trying to make sure--in your opening 
statement, you said there was $10 billion to cover potential 
losses, which I think Mr. Barton and I both agree is not what 
that $10 billion was designed for. It wasn't designed to cover 
losses; it was designed to cover interest rates and subsidies. 
But even the $10 billion overstates what was appropriated for 
the Section 1705 program.
    Mr. Chu. It was designed to cover losses in the loans if 
the company could not--my understanding of what a credit 
subsidy--what the credit subsidy and what the appropriated 
funds were for was for in the event that, as we invest in 
innovative companies, that some of those companies might have 
difficulty paying back their loans.
    Mr. Pompeo. We have a different view of that. Section 1705 
number was $2.5 billion; that's the amount of money 
appropriated for the Section 1705 loans.
    Mr. Chu. That's right, the $10 billion, as I said before, 
was 1705 plus a little bit of 1703 and ATVM.
    Mr. Pompeo. I have one more question. You talked about all 
the other cross subsidies. We have production tax credits. We 
have mandates in States. When you provide your credit subsidy 
score, what is the assumption about the continuation of those 
other subsidies; that is, when you're calculating the risk, do 
you assume that these programs, these other enormous subsidies 
will be renewed or do you assume that they will expire as the 
law directs that they will expire?
    Mr. Chu. The major part that goes into the credit subsidy 
is the financial health of the company, the assets of the 
company, and most of the loans are on projects, whether it's a 
new fabrication plant or a project that installs solar, wind or 
something like that. And the credit subsidy score goes to the 
fact that in the event of a problem with the company or the 
parent company or the project, how much can the U.S. Government 
get repaid back? And it reflects that uncertainty and the 
evaluation of ultimately the OMB as to whether, what's the 
probability of default on the loan?
    Mr. Pompeo. Well, I yield back my time.
    Mr. Chu. In rough----
    Mr. Stearns. The gentleman's time has expired.
    Mr. Pompeo. I yield back my time. I did not get an answer 
to that question.
    Mr. Stearns. Mr. Secretary, we're going to do a second 
round, and it appears mostly Republicans, I don't know how many 
are going to do a second round, but I would, out of deference, 
would you like a break of about 15 minutes for any reason, or 
would you like us to continue on?
    Mr. Chu. I'll take a break.
    Mr. Stearns. OK, all right.
    So, Mr. Secretary, we're going to reconvene here at 1:15.
    Mr. Chu. All right, thank you.
    Mr. Stearns. Yes, thank you.
    [Recess.]
    Mr. Stearns. The subcommittee will reconvene. The ranking 
member is on her way, and I will open with a second round of 
questions.
    And my questions will start, you know, obviously with 
Solyndra going bankrupt, you go back and look what the 
President said in his press conference about Solyndra, he said 
it was the true engine of economic growth and there will always 
be companies like Solyndra to make it possible for this growth.
    Then when Beacon Power went bankrupt, we were also 
concerned about that, and of course, we found out that a quote 
from the administration on that company that went bankrupt was 
100 percent--100 Recovery Act projects that are changing 
America, Beacon Power being one of them.
    And so the question is, when you have two of the first 
three loans out of the 1705 program go bankrupt, the question 
for you is, how many loan guarantees that you are involved with 
and covering and monitoring are going to fail, in your opinion?
    Mr. Chu. Well, it's very hard to predict, but if I look at 
the portfolio----
    Mr. Stearns. You've indicated that these kinds of things go 
bankrupt, and it is sort of an anomaly, and it's what happens 
in life. Are you also saying there is going to be more 
bankruptcies in the loan guarantee? Yes or no.
    Mr. Chu. I could not say one way or the other, but I could 
say that the majority of our loans were not--they were loans, 
for example, to establish wind farms or solar farms where there 
were power----
    Mr. Stearns. OK. Are any of your loans in trouble today? 
Can you categorically say that none of your loans are in 
trouble today or are they in trouble?
    Mr. Chu. Like I was--as I was saying, that if you look at 
the portfolio of loans, many of the loans, the majority of the 
loans are loans where you establish a wind farm, a solar farm, 
something of that ilk, and there is a power----
    Mr. Stearns. Wasn't Beacon Power similar to your definition 
of what you're talking about?
    Mr. Chu. No, not----
    Mr. Stearns. Was Solyndra similar to what you're talking 
about?
    Mr. Chu. No, these----
    Mr. Stearns. So the question is, are any of these loans 
guarantee in financial trouble, yes or no?
    Mr. Chu. As I said, it's very hard to predict what will 
happen.
    Mr. Stearns. Just say no.
    Mr. Chu. But I would say----
    Mr. Stearns. Well, let me ask you this, let's help you out 
a bit. Are any of them in high risk?
    Mr. Chu. There are different varies----
    Mr. Stearns. You're not answering the question, Mr. 
Secretary.
    Mr. Chu. There are high risk----
    Mr. Stearns. I mean, you know, this Mr. Ellison is going to 
come back and tell us which ones are in high risk and which 
ones possibly could go under. You're the Secretary of Energy. 
Tell me today are any of these loans going to go bankrupt, yes 
or no, your opinion? This is all your opinion.
    Mr. Chu. Sir, this is like saying do I believe that the 
nuclear reactors in the United States are safe.
    Mr. Stearns. Well, OK, let's back up then. Are any of them 
in financial trouble? You certainly should be able to tell that 
as Secretary of the Energy. You're monitoring this. You're 
trying to convince us that you're on top of the situation.
    Mr. Chu. Right, right.
    Mr. Stearns. Are any of them in financial risk, yes or no?
    Mr. Chu. There are always risks, and then----
    Mr. Stearns. So all of them are in financial risk?
    Mr. Chu. No, there are always risks regarding the loan, and 
that's when we are tasked to invest in----
    Mr. Stearns. It doesn't sound like you're answering the 
question. I'm just asking you, yes or no, are any of them in 
financial risk?
    Mr. Chu. There are varying degrees of risk.
    Mr. Stearns. So some of them are?
    Mr. Chu. Well, whenever you invest in high risk, innovative 
companies----
    Mr. Stearns. I'll accept your statement, yes, some of them 
are in financial risk. I want to go back to what a lot of 
people are saying, that who could predict these problems with 
the Chinese market. During an interview with committee staff, 
your committee staff, the former Department of Energy chief 
financial officer, Isokowitz, said that the department should 
have validated assumptions about the Chinese market before they 
went ahead with these loans. Were you aware of his remarks on 
this?
    Mr. Chu. No, I'm not aware of those remarks, but certainly 
we were validating what the Chinese were doing. That's why we 
had extensive, both inside and outside, and what the market----
    Mr. Stearns. He distinctly said your office did not 
validate any of the market's assumptions about the Chinese 
market. That's what he said. He's the Department of Energy 
chief financial officer. That's his opinion. Do you disagree 
with what he's saying?
    Mr. Chu. Well, I would have to look at what his statement 
was in the full context, and so I can't really comment.
    Mr. Stearns. Well, in full context, he basically said that 
you guys did not, your office did not look and validate any 
assumptions about the Chinese market.
    Mr. Chu. He could have been talking, for example, about the 
ability to sell in China. I don't really know. Again, I would 
have to look at the full context of that----
    Mr. Stearns. OK.
    Mr. Chu [continuing]. That remark.
    Mr. Stearns. He also cautioned that, he went on to caution 
that he felt when you deal with a commodity, you should have--
that should have sent up red flags immediately because 
commodity prices have a tendency to fluctuate, which you would 
agree. For example, the Department of Energy had a terrible 
experience in 1980s with the Synthetic Fuels Corporation, which 
was undercut by a flawed assumption about the continued rise in 
oil prices. Given the concerns cited by this CFO and the 
Department of Energy's experience with the Synthetic Fuels 
Corporation, didn't the department err in failing to validate 
assumptions about the conditions of the Chinese market before 
it approved this Solyndra?
    Mr. Chu. If you look back at the history of how solar 
prices were developing and fluctuating, there was a constant 
decrease in the price over----
    Mr. Stearns. No, I understand what your opinion is, but the 
point I'm making is, I don't see the Department of Energy doing 
what Mr. Isokowitz said, and he validates you did not do it, so 
that's my--now let me just close here before my time runs out.
    You've been here this morning and this afternoon; lots of 
times you've said you were unaware or you were aware, but sort 
of anytime anything came up, you had sort of an ambivalent 
statement. We talked about the August 2009 email predicting 
Solyndra would go, be out of cash in September 2011; you knew 
about that, but you didn't seem to know about that. The 
PriceWaterhouseCoopers concerns about Solyndra, you didn't seem 
to be real concerned or weren't aware of it. The White House 
emailing your chief of staff regarding their concerns with the 
PriceWaterhouseCoopers report, you didn't seem to know too much 
about your chief of staff's awareness of that. Request to hold 
off announcement of the DOE loan and request by your agency to 
Solyndra to hold off announcing layoffs until after the midterm 
election, you don't have any recollection of this.
    So what I'm saying is throughout all of this, you seem to 
have an unawareness, which goes to what I think my last 
question is, we have an email from February 2010 from Dan 
Carol, who is a former chief energy adviser to the President in 
his campaign. Are you aware of his email?
    Mr. Chu. I became aware of it.
    Mr. Stearns. So you weren't--you became aware of it when it 
hit the press. He stated you should be replaced because of 
incompetence. He felt, based upon what I just told you, you 
didn't seem to have an awareness of any of these very major 
issues here which we're bringing up, and that's why Dan Carol 
said you should be replaced, so I guess my comment is, what 
would you say to Dan Carol today?
    Mr. Chu. First, let me go back to your previous statements. 
I tried to explain to you, I'll try to explain again, about the 
cash flow issue and the building up of the Fab 2 plant. I was 
aware of it, and what was happening is that there was 1 month 
in a particular model, there would be an issue, but subsequent 
months, it would go into the black, and as I stated previously, 
experience has borne out that in fact there was no issue in 
building the Fab 2 plant, and so I never said I was unaware in 
terms of what that issue was because it was being sometimes 
conflated with the cash flow problems later on with the parent 
company.
    Mr. Stearns. My time has expired.
    The gentlelady from Colorado.
    Ms. DeGette. Thank you, Mr. Chairman.
    Now, obviously, Mr. Secretary, we're all concerned about 
the failure of this Solyndra situation because the taxpayers 
are out almost half a billion dollars, and I heard what you had 
said about the initial loan. I mean, it sounds to me like the 
DOE was trying to administer this correctly in that originally 
the loan application was made under the Bush administration, 
the committee came back and said they needed more market data. 
That data was obtained, the guarantee was made. Then, because 
of market conditions, the company was about to go into 
bankruptcy before the factory was built, and a decision was 
made to restructure the loan and to subordinate the 
government's interests. That's pretty much of a summary, 
correct?
    Mr. Chu. That's correct.
    Ms. DeGette. And a lot of us are very unhappy with the idea 
that the taxpayers were subordinated to the private investors. 
In your opinion, was there anything else that could have been 
done, or did the department explore any alternatives to 
subordinating that interest to the private investors' interest?
    Mr. Chu. Yes. It was the opinion of our loan specialist 
that certainly the private investors were not willing to put in 
added equity unless they had certain conditions met, and so it 
was, as described to me and during our discussions in making 
this decision, it was clear if we said, all right, if we don't 
allow this, then the company would go bankrupt, and again, the 
discussion after clearing the legal hurdle and being told by my 
general counsel that it was permissible and legal, then the 
discussion focused on what would be in the best taxpayer 
interests to get the most recovery from----
    Ms. DeGette. Right, so I got that. So you were involved in 
those conversations----
    Mr. Chu. Yes.
    Ms. DeGette [continuing]. About should the taxpayers take a 
secondary position or not, right?
    Mr. Chu. I was certainly----
    Ms. DeGette. And you were pretty well convinced that if you 
didn't make that concession, then Solyndra would go into 
bankruptcy and the chances of recovering that money would be 
greatly lessened or zero, right?
    Mr. Chu. That's right.
    Ms. DeGette. OK. Now, so, I mean, we can argue about 
whether we agree or disagree with that decision, but that was 
the rationale. It seemed like it was a prudent rationale at the 
time, correct?
    Mr. Chu. Correct.
    Ms. DeGette. So here's my question. The DOE has the Loan 
Programs Office, you're administering three different loan 
programs, and we've been talking about them, the Section 1703, 
the 1705, and then the technology vehicles manufacturing 
program.
    So my question is, it follows a little bit on what the 
chairman was saying, are any of the loans that are currently 
out there in those three programs in a situation where it looks 
like they are about to fail and someone's coming in and asking 
for restructuring right now?
    Mr. Chu. Right now, no.
    Ms. DeGette. OK. Do you expect that----
    Mr. Chu. I mean, there's Solyndra, and there's the 
flywheel.
    Ms. DeGette. Right, right, yes, and those are the two. And 
that's out of how many loans?
    Mr. Chu. Something like 38 loans.
    Ms. DeGette. Thirty-eight loans. And of those 38--so of the 
36----
    Mr. Chu. And 28, yes--It's 1705, 28; ATVM, 5; and 5 in 
1703.
    Ms. DeGette. OK, about 38 loans.
    Mr. Chu. 33 loans----
    Ms. DeGette. So, of the rest of the loans besides, those 
two, the Solyndra and the other, do you foresee market--and I 
should say, does your staff who report to you foresee market 
conditions changing so those loans are going to go into a 
default type of a situation?
    Mr. Chu. Well, again, the majority of our loans were loans 
where you install something like a wind farm or a solar farm; 
you have a power purchase agreement. That means the utility 
company has a contract, we will buy your power at a certain 
price.
    Ms. DeGette. OK.
    Mr. Chu. And those loans, we feel, are going to be very 
safe.
    Ms. DeGette. Solid, those are solid.
    Mr. Chu. Those are solid loans.
    Ms. DeGette. Now of those loans, how many jobs have been 
created by those companies?
    Mr. Chu. Well, so far there is something like 44,000 jobs 
created by our loans, and we expect--and these are direct jobs, 
these are construction jobs; they're manufacturing jobs, and 
discounting some of the supply chain, so 44,000. We expect it 
to go over 60,000.
    Ms. DeGette. And, you know, you've had a lot of time now 
over the last recent months after the failure of Solyndra to 
reflect on this as Secretary of Energy, and this is something 
we're trying to reflect on, on this committee, and even my 
friend from Texas I see down at the end has said he supports 
solar energy, and he supports supporting solar energy. What can 
we do and what can you do to improve the administration and the 
approval of these loans to maximize our stewardship of the 
taxpayer money while at the same time promoting the idea of 
development of alternative energy?
    Mr. Chu. Well, actually, there are several people, not only 
Mr. Barton, but several people on both sides of the aisle view 
the support of the solar industry in the United States as 
important and the renewable industry as important, and so I----
    Ms. DeGette. So what can we do to better our stewardship--
--
    Mr. Chu. Right, right.
    Ms. DeGette [continuing]. Of the taxpayers' money while 
furthering----
    Mr. Chu. Well, certainly we have done many of these things, 
and we're going to go into a heightened part. Of the loans we 
have now given out but where they have not been disbursed, we 
will have to watch very closely change in market conditions and 
the conditions of the company, and so we have already begun to 
undertake that.
    Again, it's very important that decisions going forward on 
how to disburse the loans be made not only by the people who 
originated the loans but by people independent of them because 
it's a very natural thing if you give birth to a loan, you 
might have predisposed to want it to succeed, and so we have 
already done that. We've set up an independent office within 
the loan program to monitor. We have experts as we--experts in 
the Department of Energy outside the loan program, but experts 
in a particular field, whether it be solar or wind, to actually 
assist in understanding the market conditions and what--where 
this company's business plan sits within the competitive 
fields.
    Ms. DeGette. Mr. Chairman--Mr. Secretary, I would ask if 
you would supplement your testimony today within 30 days and 
provide this committee with a summary of the changes----
    Mr. Chu. I would be delighted.
    Ms. DeGette [continuing]. That you've done internally to 
improve your oversight and administration.
    Mr. Chu. I would be delighted.
    Ms. DeGette. Thank you very much.
    Mr. Stearns. Thank you. The gentlelady's time has expired.
    The gentleman from Nebraska, Mr. Terry, is recognized for--
--
    Mr. Terry. Mr. Barton.
    Mr. Stearns. Oh, I'm sorry, Mr. Barton. I'm sorry.
    Mr. Barton is recognized for 5 minutes.
    Mr. Barton. Thank you, and thank you, Secretary Chu, for 
again agreeing to testify voluntarily. That's not something you 
absolutely had to do.
    I want to state before I ask my questions, I've been asked 
half a dozen times today whether I think you should resign, and 
I said every time that I don't think you should resign. I do 
think you're a man of integrity. I think you're trying to do 
your job as the best that you can.
    I also happen to believe that it's possible you're being 
set up to be the fall guy. There's some memos and some emails 
that have been leaked that you may have to go, and I'm sure 
you're aware of that.
    I do think, though, that you're culpable for the 
subordination decision, and I want to focus on that in this 
round.
    I have a timeline that's been prepared by majority staff, 
and we will share it with the minority, and we'll put it in the 
record. I'm going to go through this very quickly. If there's 
anything on this timeline that you fundamentally think is 
wrong, I wish you would flag it for me. This deals with the 
issue of subordination. The reason subordination is key is 
because, one, we have the law that says you can't subordinate. 
If you don't subordinate this loan guarantee and Solyndra goes 
bankrupt, the taxpayers are first in line to be repaid if 
there's anything that they can be repaid with, and Solyndra is 
in bankruptcy, but they do have assets.
    Mr. Stearns. Will the gentleman suspend for one thing? 
Would you like to see a chronology of what he's talking about?
    Mr. Chu. Sure.
    Mr. Stearns. Is that possible, Mr. Barton?
    Mr. Barton. Yes, if we can make a copy. Do you have a copy, 
and can we get a copy?
    Could we suspend the clock while we're doing this? I don't 
want my time to be----
    Mr. Stearns. We've suspended it, Mr. Barton.
    Mr. Barton. All right.
    Mr. Stearns. Make a copy and then give it to the ranking 
member and myself so we'll be able to follow this as closely as 
possible.
    Mr. Barton. OK. So I won't say anything while we're in 
suspense here.
    Mr. Stearns. Well, just so everybody's on the same page 
here.
    Ms. DeGette. It's OK, I won't----
    Mr. Barton. I don't want to play unfairly.
    Mr. Stearns. Well, does the ranking member want us to 
continue to go on?
    Mr. Barton. This won't take but 2 or 3 minutes.
    Mr. Stearns. Continue, we'll put you back on the clock.
    Mr. Barton. All right. Well, the subordination is important 
because if there is no subordination and a company goes 
bankrupt, which Solyndra did, then the taxpayers get repaid 
first, and there is some value in Solyndra, even though it's in 
bankruptcy.
    If you subordinate the loan guarantee, then the taxpayers 
go to the end of the line, and it's very unlikely once you pay 
the private sector creditors, that there's going to be money 
left to pay Solyndra.
    On December the 6th and December the 7th, and this is the 
memo that we just prepared, that we presented you with, DOE and 
Solyndra negotiated a restructuring agreement. On December the 
7th, and this is 2010, the subordination of the loan is put on 
the table. On December the 8th, there is an email from Susan 
Richardson, the chief counsel of the loan program at DOE, 
requesting a meeting as soon as possible to brief Scott Harris, 
who is the DOE general counsel, on a serious problem with 
Solyndra. This is about the subordination which DOE has now 
offered to do.
    On December the 10th, the DOE lead negotiator circulates a 
DOE summary to the DOE staff that includes subordination, OK? 
That's in December. December the 22nd, OMB asks for DOE's 
written analysis of subordination.
    On January the 3rd, OMB again asks for a written legal 
analysis of subordination. On January the 3rd, the outside 
counsel for Department of Energy, Morrison & Foerster, sends 
two draft documents to DOE on the legal analysis of 
subordination in which they say, state that it cannot be done. 
On January the 6th, OMB again asks for DOE's written legal 
analysis of subordination. On January the 13th, Susan 
Richardson, the chief counsel of the Loan Programs Office, 
begins to draft her own legal memo on subordination, which she 
ultimately gives to you. On January the 20th, Susan Richardson 
sends a copy of her draft legal memo to OMB.
    On February the 10th, the Treasury Department emails Susan 
Richardson at DOE to discuss subordination, and the Treasury 
Department is of the--it doesn't say this here, but the 
Treasury Department is of the opinion that you cannot 
subordinate the loan. And finally, Mr. Secretary, on February 
the 22nd, you signed the action memo modifying restructuring 
the loan that does allow for subordination.
    So, instead of you making a decision and then they 
negotiate subordination, your staff at DOE agrees to 
subordination, and then draft a convoluted legal opinion that 
they get you to sign that basically covers their rear.
    Now, do you have any disagreement with anything in this 
timeline?
    Mr. Chu. Well, sir, your characterization--let me make a 
few statements. First, we were not going--the first $75 million 
of new money invested by the equity holders was ahead of us, 
but then after that, we were sharing in the pay back of the 
loan, so we were not, quote, going to the back of the line.
    The OMB, when it saw what was being prepared and the legal 
opinions within the Department of Energy, did not object to 
this position, and believe me, the OMB is not shy to objecting 
if they disagree with anything we or any other agency does.
    Finally, Treasury was not offering a legal opinion. They 
were suggesting that we could check with Department of Justice, 
but under the guise of the--under the statute, you check with 
the Department of Justice if the terms of the loan change, 
especially if they are decreased, and the taxpayers--the terms 
of the agreement are changed. And so our general counsel and 
the counsel of the loan program said that this was within the 
confines of the original agreement. Therefore, we need not go 
to the Department of Justice.
    Mr. Barton. Well, my time has expired, but last question. 
Knowing what you know now, if you were presented a document to 
subordinate the Solyndra loan, would you still agree to 
subordinate?
    Mr. Chu. Well, I think what we would need to do--let's take 
a step back, and if----
    Mr. Stearns. Mr. Secretary, I think that's a yes or no 
question.
    Mr. Barton. I'll let him answer it however he wants, but 
it's a straight-up Texas question.
    Mr. Chu. Well, we stand by--I think we still agree from the 
General Counsel's Office and the loan program office that it 
was within the bounds of this. This would be a last ditch 
thing. Again, if should there be a loan that goes in trouble in 
the future, one wants to recover as much of the taxpayer money 
as possible. If you do pull the plug and if should there be a 
distress situation and you do pull the plug, then you have to 
make the decision: If you go into bankruptcy, what assets can 
be recovered; if you go forward what--with new capital in order 
to weather the storm, should there be a situation like that.
    Mr. Barton. But the law clearly states you can't 
subordinate?
    Mr. Stearns. Well, I think that's what Mr. Barton is 
saying.
    Mr. Chu. I think the law----
    Mr. Barton. Yes. I want to put into the record officially 
the timeline that I just gave the Secretary.
    Mr. Stearns. OK. So ordered. Is that--if there's no 
objection?
    Ms. DeGette. No.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Chu. But the law clearly states that we cannot 
subordinate at the time of origination of the loan.
    Mr. Stearns. The time of the gentleman has expired, but out 
of courtesy to the gentleman, you've indicated that the 
Secretary is culpable, do you think, in your opinion, that the 
law is broken?
    Mr. Barton. If you're asking me the question, yes, sir, I 
think he broke the law.
    Mr. Stearns. OK. I think that's what I want to make clear 
that with your line of questioning, I think that's what you're 
saying, the law is broken, and it's an illegal act is what 
you're saying.
    Mr. Barton. That's what I'm--that's my opinion.
    Mr. Stearns. Well, that's what I want to hear.
    All right, the gentleman from Nebraska, you're recognized 
for 5 minutes.
    Mr. Terry. Thank you, and I understand that the--sorry, 
I'm--can we break for a second?
    Ms. DeGette. I want to see what this says.
    Mr. Stearns. We'll put you back to 5.
    Mr. Terry. I was distracted.
    Mr. Stearns. Mr. Terry, I have the capability of giving you 
another 5 seconds.
    Mr. Terry. What's that?
    Mr. Stearns. I have the capability of giving you another 5 
seconds.
    Mr. Terry. Oh, 5 seconds. Well, I felt like I was 
stammering a lot longer.
    Dr. Chu, on January 13, 2009, before you were confirmed and 
sworn in or undertook your duties, there was a memo that from 
the credit committee--well, it wasn't a memo. It was an email 
stating, quote, after canvassing the committee, it was the 
unanimous decision not to engage further discussions with 
Solyndra at that time. Are you aware of that email?
    Mr. Chu. Yes, I am aware of it now.
    Mr. Terry. A couple things that I want to clear up just 
from my--because I'm confused.
    Mr. Chu. Sir, could I interrupt just a second? The decision 
not to engage with Solyndra, that there was no more information 
they could give us, and we were doing--so we disengaged in 
order to do further due diligence further to understand what 
the market was and get independent eyes on the program and what 
the loan was about.
    Mr. Terry. OK. Well, then we can go--you're diverting me 
from where I'm going, but I'll just state for the record, then, 
on January 26th, that DOE staff sent another email saying that 
we're approaching the beginning of the approval process for 
Solyndra. It seems interesting that in 13 days, you've got the 
credit committee saying we're shutting this file down with a 
not to engage in further discussions, and then 13 days later, 
it seems like it's full steam ahead.
    But I'm concerned about the Dow Jones news wires on 
December 11, 2009. You were quoted, we've been told that it's 
imminent that they're--Solyndra--going to announce this, and 
that the loan is theirs as long as they get the additional 
capital that's required by statute. Then following, or on that 
date, a DOE employee from the loan program emailed, quote, no 
idea where Dr. Chu's info on the equity raise is coming from, 
but the conclusion that, quote, the loan is theirs, end quote, 
doesn't help our negotiation.
    So the question here is, where did you get the information 
that the equity loan or the equity is imminent and that the 
loan is theirs? Those are two separate questions.
    Mr. Chu. First, I would--I was being informed about the 
progress of the loan through Matt Rogers, who was a special 
assistant reported to me on the Recovery Act. The issue there, 
I believe, was that the career employee--what the Department of 
Energy tries to do is to get as favorable a bargain or an 
agreement that protects the assets of the----
    Mr. Terry. Where did you get the information, that was what 
the employee----
    Mr. Chu. From Matt Rogers.
    Mr. Terry. From Matt Rogers. Does Matt Rogers report and 
communicate to the White House during this time period?
    Mr. Chu. No, he reports to me.
    Mr. Terry. So where would Matt Rogers get the information 
that the equity is forthcoming and that they will get the loan?
    Mr. Chu. My understanding, since he was in charge of 
assisting in the Recovery Act in the Department of Energy, that 
was his role in the Department of Energy, as a special 
assistant to me, he was certainly in communication with the 
loan people.
    Mr. Terry. So his understanding that the loan, that they 
will get the loan, came from you?
    Mr. Chu. No, no.
    Mr. Terry. To Matt Rogers.
    Mr. Chu. It goes the opposite.
    Mr. Terry. This seems to be a little circular. He's the one 
supposed to be telling you, but I can't figure out who's 
telling Matt Rogers----
    Mr. Chu. Exactly.
    Mr. Terry [continuing]. That they're going to get the loan 
and that they have the equity?
    Mr. Chu. No, no, excuse me. Matt Rogers is overseeing the 
Recovery Act, which included the loan program. I was not 
communicating directly with the people in the loan program. I 
communicated with Matt Rogers, who then talks to people in the 
loan program.
    Mr. Terry. So that it was the people in the loan program 
that told Matt Rogers that the equity is coming and they will 
get the loan?
    Mr. Chu. Well, I'm not--it's the people in the loan 
program--I think my--again, what is happening is this person in 
the loan, who is--the career folk in the loan program are 
always trying to get the best position possible for the Federal 
Government.
    Mr. Terry. I'm not sure that answers the question, but my 
time is up.
    Mr. Stearns. The gentleman's time has expired.
    The gentleman from Pennsylvania, Mr. Murphy, is recognized 
for 5 minutes.
    Mr. Murphy. Thank you, Mr. Chairman.
    Mr. Secretary, on June 27th of this year, you were briefed 
in advance of your meeting with President Obama by advisers on 
Solyndra. Were you specifically briefed about the company's 
financial health and were you told the company was on a path to 
bankruptcy at that time?
    Mr. Chu. When was the date again?
    Mr. Murphy. June 27, 2001, before you met with----
    Mr. Chu. 2011?
    Mr. Murphy. Of 2011, yes, before you met with the 
President, sir, were you briefed about the financial problems 
of the company on a path to bankruptcy?
    Mr. Chu. I certain--by around that time, I was certainly 
aware of the fact that----
    Mr. Murphy. They were going to go bankrupt?
    Mr. Chu. That they were--well, that they were in deep 
trouble.
    Mr. Murphy. Did you speak with the President about that 
time about the status of Solyndra's financial problems.
    Mr. Chu. No, I didn't. When you meet with the President, 
it's not about a particular transaction. It was actually a much 
higher level discussion about----
    Mr. Murphy. I appreciate that. Let me ask a little bit 
more, then.
    Mr. Secretary, when Solyndra came to DOE in the fall of 
2010 and explained it was running out of cash, did DOE consider 
at anytime just letting the company go bankrupt?
    Mr. Chu. I think this is always something that we consider 
if it looks that----
    Mr. Murphy. So that was an option? That was an option?
    Mr. Chu. It is--every time we're disbursing funds, if a 
company, if any company looks like it has a high probability of 
going into bankruptcy, you--one goes into another mode where 
you say, what will be the best pay for----
    Mr. Murphy. Right. As the law said, the original 2005 bill 
said that you shouldn't be giving loans to companies that 
appear they can't pay back the principal and interest, you're 
aware of that, that part?
    Mr. Chu. Absolutely.
    Mr. Murphy. OK. Now, yet you made a decision, even though 
you're aware that's an option, just let them go bankrupt, you 
made a decision to move forward anyway?
    Mr. Chu. Sorry----
    Mr. Murphy. Was there a specific wording in any law that 
says you don't have to follow the law that says you can't give 
the money if they can't make it?
    Mr. Chu. If you're talking about in the original loan, we 
made a decision to fund Solyndra. The credit subsidy score 
would reflect the probability of the loan.
    Mr. Murphy. I understand, but you can't give the money if 
they're not going to pay it back.
    Mr. Chu. Pardon?
    Mr. Murphy. Yes, but the law says you can't give them money 
if they're not going to pay it back, and I'm asking is there 
some law you're citing that gave you permission to override the 
law that says you don't have to----
    Mr. Chu. We're not--we weren't going against the law. The 
law said----
    Mr. Murphy. Well, I hope--sir, I'm asking if you can cite 
something for me and get back to us to show us where in the law 
it says you don't have to pay attention to the law? That's what 
I want to know. Sir, let me ask you this.
    Mr. Chu. We paid very close attention to the law. The law 
says that we can only make a loan where there's a likelihood of 
being paid back.
    Mr. Murphy. I understand, but it sounds like you're saying 
a subjective decision was here----
    Mr. Chu. No.
    Mr. Murphy. Based upon things you're citing about China and 
solar power, et cetera. But let me ask about this.
    So you testified, quote, I approved restructuring of the 
loan guaranteed to give taxpayers the best chance of recovery; 
you just made a decision here. Did you weigh in with Jonathan 
Silver and tell him to restructure the loan?
    Mr. Chu. No.
    Mr. Murphy. Now, on September 14th, I asked Mr. Silver 
during our hearing about the decision to restructure. I said, 
and I quote, did the Secretary of Energy have anything to do 
with this decision? And he said, not to my knowledge. So my 
question is, Silver says you were not, you say you were 
involved with the decision, who's telling the truth here?
    Mr. Chu. Sorry, the decision to restructure was something 
the loan program developed and brought to me for approval, and 
so that's the precise nature of what was going on.
    Going back to making a loan and thinking that there is a 
high chance of recovery or a reasonable prospect of recovery, 
which is what the law states, I have to say that given the 
credit subsidy risk, the loan loss reserve for this particular 
loan was 7.8 percent. That's roughly speaking, it gives us 7.8 
percent probability that the loan will get into trouble.
    Mr. Murphy. 7.8 percent.
    Mr. Chu. 7.8 percent, so that's a high likelihood----
    Mr. Murphy. We have Treasury, OMB, people from Solyndra, 
and people from the White House who said the government is a 
crappy venture capitalist, so that sounds like a number of 
people are sending information on to you, but we have 
established in my previous question of you, I'm not sure that 
even your chief of staff has told you about meetings that were 
taking place.
    Now, sir, you're a scientist and I'm also trained in 
science, and one of the things that we are trained in is do not 
avoid, in fact seek out information which may contradict your 
paradigms and your premises, that's important, that's how 
science moves forward in this. But here you're aware now the 
Treasury Department suggests that DOE get a legal opinion on 
the restructuring of this loan, and you're aware that other 
Federal agencies are recommending this, but now what puzzles 
me, sir, is it sounds like you've acknowledged that this is a 
subjective decision for other reasons, even though the law says 
you can't give money if they can't pay it back, and with this 
subjective decision and with your background in science, and 
even though staff around you knew this, you're saying that you 
didn't have this information or you didn't seek out this 
information to make that decision? I don't understand what goes 
into subjective decision then.
    Mr. Chu. First let me go back to the determination if the 
OMB, which is very independent of us, makes a credit subsidy 
determination and comes up with 7.8 percent, that's effectively 
saying----
    Mr. Murphy. But I'm saying the Treasury said you should 
have consulted----
    Mr. Chu. Oh, you're----
    Mr. Murphy. Get a legal opinion on the subordination.
    Mr. Chu [continuing]. Citing two issues, one is when we 
make the loan in the first place, and we would not make a loan 
if there was not a reasonable chance of being paid back.
    Mr. Murphy. Sir, but other people are telling you that 
there's a strong chance you won't get paid back, even a memo 
that says this company is going to go bankrupt, the liquidity 
is gone by September 2011, and that's when they did. That's 
more than a 7.8 percent chance. My concern is that with this, 
you had a lot of information coming at you. Even though the law 
says you cannot give money if they're not going to pay it back, 
but you made a subjective decision which I think runs against 
the law.
    I yield back.
    Mr. Stearns. The gentleman's time has expired. Just caution 
all members, I think votes are coming up. I would like to get 
through the second round, and so I'm going to have to hold all 
of you to your 5 minutes.
    Mr. Waxman.
    OK, I'll take the next one. Mr. Waxman will take it later.
    Dr. Burgess is recognized for 5 minutes.
    Mr. Burgess. I thank the chairman.
    Mr. Secretary, again, thank you for your indulgence today. 
I'm going to ask you a series of questions that pertain to tabs 
32, 34, and 35 in your binder, those are a series of emails, 
and I'm just telling you that for reference. I'll give you the 
background information.
    First off, there was the inability to proceed with the IPO 
from Solyndra, and Chris Gronet, former CEO of Solyndra, 
suggested that they go to the Bank of Washington. I guess that 
means the Federal Government.
    Mr. Chu. Excuse me, I've lost my train of thought because I 
was looking for tabs 32, 34, and 35. I don't seem to have them.
    Mr. Burgess. We'll get them to you. The tabs themselves--
I'll give you the information. But so Bob Peck was contacted by 
Secretary Silver, Bob Peck being the commissioner of public 
buildings of the GSA, connecting him with the CEO, former CEO 
of Solyndra, Chris Gronet, asking him to meet with Solyndra, 
Silver, Secretary Silver said he would personally appreciate 
it. Now, did you approve of that exchange?
    Ms. DeGette. Mr. Chairman, I would ask that the Secretary 
be given these documents----
    Mr. Burgess. The Secretary has the documents.
    Ms. DeGette [continuing]. Before he's expected to answer.
    Mr. Stearns. The tab was pointed out to the Secretary, the 
staff has shown it, so----
    Mr. Chu. OK.
    Mr. Stearns. Continue Dr. Burgess.
    Mr. Chu. It turns out to be tab A, so let me catch up. And 
it was not 32, 34, and 35.
    Mr. Stearns. All right, I understand.
    Mr. Chu. So now, sir, can you continue with the question?
    Mr. Burgess. Here's the deal. Secretary Silver connected 
Chris Gronet from former CEO of Solyndra with Bob Peck, the 
commissioner of public buildings of the General Services 
Administration. They've lost the ability to do the IPO. They 
want to come to the Bank of Washington. So was it appropriate 
for Secretary Silver to connect those two entities, the CEO of 
Solyndra and the head of the General Services Administration 
public buildings?
    Mr. Chu. Well, this is the first time I've been made aware 
of this--I've seen this email, and so----
    Mr. Burgess. Well, I was going to ask you, did you speak 
with anyone at General Services Administration or Department of 
Defense----
    Mr. Chu. No.
    Mr. Burgess [continuing]. About purchasing Solyndra panels.
    Mr. Chu. Did I? No.
    Mr. Burgess. And did you speak to anyone at the White House 
about this?
    Mr. Chu. No.
    Mr. Burgess. OK. Then, following, on August 10th, Tom 
Baruch, the former member of one of the venture capitalists and 
an investor in Solyndra, emailed one of his colleagues, quote, 
getting business from Uncle Sam is a principal element of 
Solyndra's energy strategy. When President Obama visited 
Solyndra, Chris Gronet spoke very openly to the President about 
the need for installation of Solyndra's rooftop solar on U.S. 
Government buildings. I heard the President actually promise 
Chris that he would look into it when he returned to 
Washington.
    Do you know about these conversations and do you know of 
any follow-up conversation that was then contained within that?
    Mr. Chu. No, I didn't know about that conversation, and 
certainly the President----
    Mr. Burgess. Can you see why the committee would be 
interested in the follow--if that conversation occurred and the 
follow-up?
    Mr. Chu. Well, certainly, first, the President didn't talk 
to me about Solyndra regarding government installations, things 
of that nature, and I was not aware of the then CEO of the 
company Solyndra talking to the President regarding he felt the 
need to have government buildings install his panels. I was not 
aware of that.
    Mr. Burgess. OK, so there was--you were aware, then, that 
the----
    Mr. Chu. I was not aware of that conversation.
    Mr. Burgess. But you were aware that there was at least a 
business model to pursue the funding from the Bank of 
Washington and getting a government purchase of these panels?
    Mr. Chu. No. These details of these 38 loan transactions 
are--I am not aware of. What I view my job is to do is to set 
in the Department of Energy those measures that guarantee that 
we make the best judgments possible when we decide that we make 
a loan and that it has a probability of being paid back.
    Mr. Burgess. I appreciate that. I'll stipulate that you had 
the best of intentions. I just want to follow up on what Mr. 
Barton ended his questioning. I mean, it was his opinion that 
the part of the Energy Policy Act that prevented subordination 
was, in fact, violated, and that is my opinion as well, and I 
rather suspect that's a fairly broadly held opinion across from 
sea to shining sea today. So given that fact, do you feel you 
owe it to your boss a discussion with him in light of the fact 
that it appears I may have broken the law?
    Mr. Chu. No, I----
    Mr. Burgess. That you should not continue in your 
employment?
    Mr. Chu. Respectfully, our legal staff, our General 
Counsel's Office, Susan Richardson, others, the OMB looked at 
what our decision, our pending decision would be, did not 
object to it, and so I would say I would rather take the 
opposite opinion, that when you have independent people looking 
at this loan outside the Department of Energy as well as a very 
thorough discussion within the Department of Energy, it is 
not----
    Mr. Burgess. But if you had the opportunity to make the 
same decision again today, say, with Beacon, you wouldn't make 
it, would you?
    Mr. Chu. Well, what--let me step back and say that, again, 
should----
    Mr. Stearns. The gentleman's time has expired, but you can 
complete your answer.
    Mr. Chu. OK, thank you. The issue is, should there be a 
stress in a loan going forward. We--I would love to work with 
this committee and with Congress in how to guarantee that we 
can recover as much as possible.
    Mr. Stearns. OK.
    The gentleman from California, Mr. Waxman, is recognized 
for 5 minutes.
    Mr. Waxman. Thank you, Mr. Chairman.
    Well, on that last point, if you don't have the flexibility 
to deal with a loan that you want repaid, you're just going to 
pull the rug out, and then the money's lost for sure. So 
sometimes allowing the subordination will hopefully save the 
situation. There ought to be that flexibility.
    Mr. Chu. You need some flexibility once a loan has become 
stressed, and I agree absolutely with you, and this happens all 
the time in the private sector, and to protect the taxpayer 
interests, you need some flexibility to guarantee as much pay 
back as possible.
    Mr. Waxman. Well, the Republicans have accused you of 
acting illegally in subordinating the loan, but I just don't 
think that's a case they can sustain. Your general counsel 
signed off on the subordination, and when we asked a former 
general counsel of her opinion, general counsel at the 
Department of Energy, her opinion, she agreed it was lawful.
    One of my colleagues earlier said, well we ought to change 
the law, that's what we thought we were doing. That's a good 
lesson for Members of Congress to take heart. If you think you 
know what you're doing, you better be sure you've done it 
because that isn't what the law provides.
    The Republicans accused you of granting the Solyndra loan 
to benefit a campaign donor, George Kaiser, but the record 
before this committee shows you acted on the merits. Steve 
Iskowitz, a Bush appointee, who was your chief financial 
officer, said the process was never compromised. David Frantz, 
who was a career official, who was also the director of the 
loan office, told us he did not even know who Mr. Kaiser was. 
Matt Rogers, who was your senior adviser on these loans, told 
us he had no idea Mr. Kaiser had given any political 
contributions and his name never came up. You told us today 
that you also did not know Mr. Kaiser had contributed to 
President Obama until you read about it in the newspapers after 
the fact.
    So that should put to rest that allegation, that you were 
influenced by political considerations.
    The only other allegation that remains is that someone may 
have asked Solyndra to delay announcing a plant closure for a 
few days until after the 2010 election. Now, I don't condone 
this action if it's true, but let's keep this in perspective: 
Asking Solyndra to delay its announcement did not put any 
taxpayer dollars at risk. It didn't change Solyndra's business 
decisions. It had nothing to do with any of the loan guarantee 
decisions. It's all that our committee has found after 
reviewing hundreds of thousands of pages of documents and 
interviewing countless witnesses, and it's really small 
potatoes.
    Now, you've been here this whole day, and you've been very 
forthright in answering a lot of questions, and there's been a 
lot of posturing by the Republicans who think this is a 
scandal. We have lost the money, it's unfortunate, but there's 
no scandal there, there's nothing there.
    I want to put this in perspective, Dr. Chu. You've been 
trying to move our Nation to a clean energy economy, and that's 
essential to protect American families from fires and droughts 
and floods and other extreme weather that climate change will 
bring, and it's essential to our future economic growth. As 
you've repeatedly said, we want to be selling the clean energy 
technologies of the future, not buying them from the Chinese.
    Now, on the other side, my Republican colleagues on this 
committee have been trying to block these efforts every step of 
the way. Republicans in Congress and their allies in the coal 
and oil industry oppose efforts to put a price on carbon 
pollution. They oppose funding research into new clean energy 
technologies. They oppose investments in clean energy 
companies, which, like Solyndra, would produce new power, but 
we hope, unlike Solyndra, will be successful.
    You're on the right side of this debate, and I think you 
are on the right side of history. The Republicans are on the 
wrong side, and I think what they're doing is leading us 
astray. But my message to my colleagues is to stop dancing on 
Solyndra's grave. You're trying to--they're trying to 
manufacture a scandal where there is none. This is a 
distraction from the work that we should be doing.
    What Congress ought to be spending its time doing is trying 
to get Americans jobs and back to work and get the economy 
moving again. What Congress should be doing in energy policy is 
to encourage development of new energy sources so that we don't 
have to rely on oil and coal and nuclear so we can have a more 
diversified portfolio, we can be more independent as a Nation, 
we can produce greater economic benefit, and we can stop the 
terrible consequences of global warming.
    So I thank you for all that you've done. I do not see that 
you've done anything wrong. If anything, you're trying to do 
exactly the right thing, and I commend you for it.
    Mr. Stearns. Thank you.
    The gentleman's time has expired.
    Mr. Waxman. Did you want to respond?
    Mr. Stearns. Sure, yes, go ahead.
    Mr. Chu. Can I make a comment?
    Mr. Stearns. Sure, absolutely. Go ahead.
    Mr. Chu. First, let me just say, thank you for those 
comments. Many, many years ago, it seems forever now, I had 
left Stanford University to head the directorship of Lawrence 
Berkeley Lab because I felt that we were running--if we 
continued--we in the United States and the world, if we 
continued on this path, we would, there will be serious risks 
in climate change, and then as I got into this and began to 
encourage the folks at Lawrence Berkeley Lab to look at 
renewable energy, I began to also see an incredible economic 
opportunity that is in the direct sweet spot of the best that 
America has to offer, our research and development and our 
entrepreneurial system and the ability to manufacture things 
like high tech----
    Mr. Stearns. Mr. Secretary, I need you to wrap up. We've 
got a vote, and we also want to get a couple members in.
    Mr. Chu. So I would agree with you, this has a lot to do 
with America's economic prosperity and future as well as the 
legacy we leave to our children.
    Mr. Waxman. Thank you.
    Mr. Stearns. The gentlelady from Tennessee is recognized 
for 5 minutes.
    Mrs. Blackburn. Thank you, Mr. Chairman.
    And I have to tell you, Mr. Secretary, it's really 
troublesome to me the number of times I've heard you say today 
that this is the first time you've been made aware of something 
or that you know something now, you didn't know it then, so it 
leads me to believe that maybe you had some staff that was kind 
of keeping you out of the loop on some decisions.
    Let me ask you this: Did anyone from DOE talk to anyone 
from the White House about restructuring or subordination? Was 
there any communication between DOE and the White House about 
the restructuring and the subordination of that loan?
    Mr. Chu. Certainly at the time that we were discussing 
this, I was aware of no communication whatsoever with the White 
House.
    Mrs. Blackburn. Are you aware of any communication now?
    Mr. Chu. I was made aware of it as of yesterday.
    Mrs. Blackburn. That there was communication between DOE 
and the White House on the restructuring and the subordination?
    Mr. Chu. Well, there are some communications, again, about 
the restructuring. This is something which is the 
responsibility of the Department of Energy, and again, we were 
looking out for the taxpayers.
    Mrs. Blackburn. Would you like to provide us with the 
information of who that communication was between?
    Mr. Chu. Yes, I will.
    Mrs. Blackburn. Thank you.
    Did the White House approve of or sign off on in any way, 
did they approve of or sign off on the restructuring and the 
subordination of this loan?
    Mr. Chu. Again, my understanding is that this was within 
the responsibility of the Department of Energy, it was our 
responsibility within the interpretation----
    Mrs. Blackburn. Mr. Secretary, let me ask it another way. 
If you all had communication and the White House was made aware 
that you were going to subordinate this loan, then----
    Mr. Chu. Oh, absolutely----
    Mrs. Blackburn. Then did they sign off on this?
    Mr. Chu. Well, as I said before, the OMB looked, knew what 
we were doing, and they went ahead and said, they said--they 
did not say, no, you cannot do this.
    Mrs. Blackburn. Anybody in the White House other than OMB?
    Mr. Chu. Other than OMB concerning what?
    Mrs. Blackburn. The subordination or the restructuring.
    Mr. Chu. There may have been other opinions, and we can get 
that information back to you, but I'm saying----
    Mrs. Blackburn. I would like to know the names of anyone in 
the White House that was involved in that process.
    Mr. Chu. Right.
    Mrs. Blackburn. Let's go back to the board observer. Did 
you approve the board observer, or did anyone from the White 
House or the Vice President's Office, did anyone else have 
input into who that board observer would be?
    Mr. Chu. I didn't approve of the choice of the board 
observer.
    Mrs. Blackburn. Who approved the choice?
    Mr. Chu. I would imagine it was part of the loan program 
and Jonathan Silver.
    Mrs. Blackburn. OK. Could you provide that information to 
me?
    Mr. Chu. Sure.
    Mrs. Blackburn. OK. Did that board observer report to you 
on the interactions and the conversations and the contents of 
the meetings?
    Mr. Chu. No, that board observer was there. It's an 
observer so that we could have a closer eye on the events that 
were happening in Solyndra.
    Mrs. Blackburn. Correct, OK.
    Mr. Chu. As part of our due diligence in moving forward 
with the loan.
    Mrs. Blackburn. Sir, you did not appoint them until after 
you had restructured that loan, that was my understanding.
    Mr. Chu. That was part of the condition of restructuring, 
that we needed----
    Mrs. Blackburn. OK. Now who did they report to of their 
interactions?
    Mr. Chu. I would say that the board observer would be 
reporting to the loan program.
    Mrs. Blackburn. To the loan program, to Mr. Silver?
    Mr. Chu. Well, I can get back to you on exactly, but----
    Mrs. Blackburn. OK. That would be great. Did the board 
observer inform you or anyone at DOE of the impending 
bankruptcy filing?
    Mrs. Blackburn. The--well, as I said, the board observer 
doesn't report to me; he reports to someone in the loan 
program. And certainly as the events rapidly changed, both the 
board observer and the board of Solyndra were notified of a 
rapidly changing condition by the management of Solyndra and--
--
    Mrs. Blackburn. Did anyone from DOE report to either the 
loan program, Treasury, OMB, the White House or DOJ that there 
would be an impending bankruptcy filing from Solyndra?
    Mr. Chu. I think by that time, this is very late in the 
game, when, especially when Solyndra the company in a board 
call meeting said that they're making different projections of 
when they would go into the black.
    Mrs. Blackburn. OK. Well, I find it--and I think you need 
to realize our frustration with having people from DOE or from 
Solyndra come up here as late as July and saying things were 
fine and then to know that there was a board observer that had 
been approved by DOE that was sitting in on those meetings that 
may know, may have known that things were not going well, and 
yet we were being given different information. I see a certain 
amount of--well, let me just say that is very troublesome to 
me, and I would hope that it is very troublesome to you.
    Mr. Chu. Well, my--as I've been made aware of this, both, 
as I said before, the board observer with the board were 
equally surprised, and the fact that we have a board observer 
and the board itself being surprised that very suddenly the 
projections of the company Solyndra to the board----
    Mrs. Blackburn. Then who was choosing to keep us all in the 
dark?
    Mr. Chu. Well, look, I'm not going to speculate on that. 
I'm only just saying that both the board and the board observer 
learned about these events together.
    Mr. Waxman. Point of order, Mr. Chairman.
    Mr. Stearns. Yes, point of order.
    Mr. Waxman. Mr. Chairman, the Secretary has been here for 
over 4 hours----
    Mr. Stearns. I think you have got a good point there.
    Mr. Waxman. We have a vote on the House floor that is going 
to take us 45 minutes.
    Mr. Stearns. I agree. All right, the gentlelady's time----
    Mr. Waxman. Just a minute, Mr. Chairman.
    Mr. Stearns. Sure.
    Mr. Waxman. The Secretary has been here. I think it's 
abusive to have the Secretary, any Cabinet-level Secretary here 
and then make him wait another 45 minutes to have members ask a 
second round. There's no entitlement to a second round of 
questioning.
    Mr. Stearns. All right.
    Mr. Waxman. And I think we ought to let the witness go 
about his job.
    Mr. Stearns. All right.
    Mr. Waxman. And adjourn this meeting.
    Mr. Stearns. All right, I appreciate your opinion.
    The gentlelady's time has expired, and I think you finished 
answering her question.
    We want to complete the second round for those members that 
are interested, so, Mr. Secretary, we are going to take a half-
hour break, come back at 2:45.
    Mr. Waxman. Mr. Chairman, I move the committee do now 
adjourn.
    Mr. Stearns. The gentleman has a motion on the floor that 
the committee adjourn.
    Is there objection?
    Mr. Scalise. Objection.
    Mrs. Blackburn. Objection.
    Mr. Stearns. Objection. So we'll call the roll. Is that 
correct? While we're waiting for the clerk, Mr. Secretary, can 
we, if we adjourn for 2:45 and come back, could you----
    Mr. Waxman. I guess the question to the Secretary, it's up 
to you, but it seems to me you've done more than you could 
possibly do to answer every question. The questions are getting 
to be quite repetitive, and I don't think it's fair to the 
Secretary.
    Mr. Stearns. OK, that's your opinion.
    Mr. Secretary, we have a few members who want to come back 
right after, it would be less than a half hour. Can you stay 
for that?
    Ms. DeGette. No, it won't be.
    Mr. Chairman, it's going to be 45 minutes.
    Mr. Stearns. Are you willing to come back or stay for a 
second round?
    Mr. Waxman. Mr. Chairman, is the Secretary willing to 
respond in writing to those members that have additional 
questions?
    Mr. Stearns. No, I think we have a hearing here, we want to 
continue.
    Are you receptive to 30 minutes?
    Mr. Chu. Mr. Chairman, certainly, you know, I really have 
nothing to hide, but I think Mr. Waxman is correct; these 
questions are going over and over and over again of old 
territory.
    Mr. Stearns. Oh, I understand.
    Mr. Chu. If they want to continue that----
    Mr. Stearns. Well, I think we have about----
    Mr. Scalise. Mr. Chairman, I have some questions that 
haven't been asked, unlike some who had the opportunity to have 
a second round, I haven't. I would appreciate that opportunity.
    Mr. Stearns. Normally in an oversight committee, we have at 
least two rounds, so I'm asking you to consider----
    Ms. DeGette. No.
    Mr. Stearns [continuing]. To come back or just to delay for 
another less than 30 minutes, we'll be back and we have three 
or four members that will finish up and then we'll wrap up. So 
with your indulgence, would that be OK? Could you accept that? 
Good, we'll do that.
    Mr. Waxman. Well, Mr. Chairman, I don't--you are again 
being abusive of the witness.
    Mr. Stearns. We have a motion on the floor, but as I 
understand it----
    Mr. Waxman. Is this the only thing you have to do today, 
Mr. Secretary?
    Mr. Chu. No, I have other, I have other business, of 
course.
    Ms. DeGette. Mr. Chairman----
    Mr. Waxman. So you've been asked about all these issues.
    Ms. DeGette. As a compromise, I would like to suggest a 
compromise.
    Mr. Stearns. OK.
    Ms. DeGette. The compromise I would like to suggest is that 
we release the Secretary no later than 3:30 this afternoon. So 
we can go vote, we can come back.
    Mr. Stearns. I think that's reasonable.
    Ms. DeGette. Thank you, let's do that.
    Mr. Stearns. Let's do that. We'll do that.
    And as I understand this motion to adjourn, and we object 
to it, I think is----
    Mr. Waxman. Mr. Chairman, I'll withdraw the motion.
    Mr. Stearns. OK. So we're going to adjourn--it's temporary 
adjourn, and--recess, we're going to temporarily recess, and 
we'll be back here in less than 30 minutes at 2:45, and we'll 
try to get you out of here at 3:30.
    [Recess.]
    Mr. Stearns. The subcommittee will come to order, and we 
will resume our second round of questioning.
    And the gentleman from California is recognized for 5 
minutes.
    Mr. Secretary, are you ready?
    Mr. Chu. Yes, I am.
    Mr. Stearns. Thank you for coming back and offering us the 
opportunity.
    Mr. Bilbray, you are recognized for 5 minutes.
    Mr. Bilbray. Thank you.
    For the record, Mr. Secretary, I supported you when you 
were appointed, and I support you now. I think you have the 
greatest potential to fulfill the promise of the Energy 
Department that has been so lacking for so long, and because I 
feel that you have a basis in science, not in politics. So I 
just wanted to say that for the record.
    I do have a concern, though, as I say that, that foot for 
foot, square foot by square foot, you think that the three 
basic divisions of photovoltaics are created equal. Because 
there must be some information out there that is not available 
to the general public. You know, there are distinct advantages, 
historically, with poly and mono over thin film, not just in 
its initial performance but in its longevity.
    And that is a big reason why I was very suspect when I saw 
Solyndra propose a 20-year warranty on a technology that has 
only been able to really deliver a 4- or 5-year guarantee. And 
you may not agree, but I think you would understand why I would 
have those concerns.
    Mr. Chu. Well, if you would allow me to explain, if you 
look at the thin-film technologies, there are two thin-film 
technologies--cad telluride, what we refer to as CIGS--and how 
does it stack up against both single crystal silicon and 
polycrystalline silicon.
    Mr. Bilbray. Well, let me just stop and say, you still say 
that you think the three are equal and that there is not--the 
thin film was not a more risky venture as opposed to the other 
two?
    Mr. Chu. I think that thin film has great promise. And this 
is the reason why General Electric today is investing in a 
solar----
    Mr. Bilbray. OK. I understand General Electric. We also 
keep referring to China, and you know exactly where they have 
laid their bets.
    My biggest thing is that I worry that the way this moved 
was moved not by criminal intent but through naivete or wishful 
thinking that all solar energy was created equally and that 
anything green must be good. And I think we have seen the 
mistake of that with the application 15 years ago of ethanol, 
and now we have seen the problems that that has created, both 
environmentally and economically. And my concern was this 
naive, almost religious approach that if it is green, it must 
be good and it is going to work out.
    But that aside, you know, my concern is that when we 
approach the technologies, was the concept that because the 
Chinese weren't going at this that we could have a quantum leap 
in technology that is so far ahead of where we have been 
before, that the Chinese would be left behind because of our 
research, and this breakthrough would make a technology that 
they had basically left behind themselves, weren't willing to 
invest in, that we could jump ahead of the Chinese at that 
time?
    Mr. Chu. If you would allow me to finish, what I am trying 
to say here is that in the thin-film technology, like cad 
telluride, there are certain results of efficiency in the 
laboratory of companies and then there are certain production 
efficiencies. When they started in production, they were 
getting roughly 11 percent efficiency. Silicon was higher; 
silicon was roughly 14 or 15 percent efficiency. They both 
have--so what you had in silicon is, you had less, what I would 
call, headroom to improve the technology.
    Now, since we have started in cad telluride, as an example, 
companies are now achieving results and beginning to go into 
production where they are expecting something on the scale of 
14 percent efficiency. That is a huge improvement----
    Mr. Bilbray. I am sorry to interrupt. But, historically, 
the advantage of thin film was a lower cost even though it was, 
like, 15 to 20 percent less efficient initially and had a 
higher degrading level in the first year of application.
    Mr. Chu. Well, what is happening is, it is certainly much 
lower cost, and in the instance of cad telluride it is actually 
beginning to rapidly approach the efficiency of silicon. And so 
this is a good thing. This----
    Mr. Bilbray. When you say ``rapidly approaching,'' wait a 
minute, you know, we are looking at 20 percent historically. We 
have closed that to 10 percent, 5 percent?
    Mr. Chu. The dominant silicon being sold today is what is 
called poly silicon, and----
    Mr. Bilbray. Right.
    Mr. Chu [continuing]. That is roughly about 15 percent 
efficiency. And, as I said, cad telluride started at 11 
percent, and they are making great advances in the efficiency. 
And so----
    Mr. Bilbray. OK. Getting back to the--you were thinking, 
though, that this would be a bet to be able to have a quantum 
leap so we could jump over where the Chinese were going?
    Mr. Chu. They--sorry. We weren't making bets. There were 
companies that were investing in this and applied for a loan. 
And we think, going forward, that cad telluride, some of these 
thin-film technologies, can be very competitive.
    Mr. Bilbray. OK. I just need to interrupt because of my 
time. Because my concern is this issue, that we can jump so far 
ahead that we will be able to--production, when we are paying 
twice the price for electricity as China, when they can get the 
permits, when they have the access. You know, we talk about 
wind energy. They have 98 percent of the rare earth, and we 
haven't opened up our public lands for rare earth so we could 
produce it domestically, so we would have to buy the rare earth 
because of the permanent magnet technology. All of these things 
are tied together.
    And I would like to see the Energy Department be able to 
talk to our colleagues; that if they want to see wind 
generation, then they have to change regulations to allow 
access to rare earth. If they want to talk about these 
technologies being made available, they have to be able to make 
it legal for us to produce it competitively.
    My only problem is, if we make this quantum leap, we spend 
all the taxpayers' money to develop the technology, the Chinese 
will take that technology and outproduce us because of our 
government regulation obstructionism.
    I yield back.
    Mr. Stearns. The gentleman's time has expired.
    And I recognize the gentleman from Georgia for 5 minutes.
    Mr. Gingrey. Dr. Chu, Mr. Secretary, I want to associate 
myself with the initial remarks my colleague from California 
just made in regard to you being in the right position at the 
right time.
    You know, I do question, though, your judgment in regard to 
the restructuring of the loan. I feel that that essentially was 
throwing good money after bad. I think the decision should have 
been made to cut our losses, advance no further loan proceeds 
to the company, and try to recover as much of the $530 million 
under a structured bankruptcy sale of assets for the taxpayer.
    You know, in fact, the investors that were coming behind 
with the $75 million, I am sure many of those were involved in 
the original billion-dollar investment to start the company up, 
and so they were in the same kind of position.
    But be that as it may, I just think that maybe the advice 
from the Justice Department over the question of whether or not 
it was legal to restructure and put the taxpayer in a secondary 
position, you would have gotten the right answer, and that 
would have avoided that trap.
    The ranking member of the overall committee said earlier 
before we broke that, you know, it is time quit dancing on the 
grave of Solyndra, and, you know, we are talking about small 
potatoes, it is a non-issue. In fact, the President, himself, 
was quoted as saying, well, hey, you win some, you lose some. I 
made a football analogy in my first round of questions, and you 
win some, you lose some in football. But in a situation like 
this, you know, you don't lose $535 million and maybe win a $15 
million investment. The balance is just not there. And, quite 
honestly, half a billion dollars, to most of us, is not small 
potatoes.
    Let me just ask you a few questions in the remaining time 
that I have left. And this is about the issue of the second 
loan guarantee application, so-called Fab 3. I am not sure many 
of us even realized until here lately that there was the 
possibility of Solyndra getting yet another loan.
    When were you first made aware of Solyndra's pursuit of a 
second loan guarantee?
    Mr. Chu. Recently. But, just for the record, when we have 
an announcement of application for loans, companies apply for a 
loan. That doesn't mean the company was going to get a loan. 
And, in fact----
    Mr. Gingrey. Well, Mr. Secretary, I understand that. Of 
course, in January of 2010, executives from Solyndra appear to 
have met with DOE officials, including Mr. Jonathan Silver, 
gone now, and Matt Rogers, on several occasions to discuss the 
idea. And you were aware of those meetings--were you aware of 
those meetings?
    Mr. Chu. I believe I was aware of an application for a 
third fab plant, but that really, as you know, progressed 
nowhere.
    Mr. Gingrey. Right. Right. So is it safe to say that you 
did have conversations with Jonathan Silver and/or Matt Rogers 
before or after these meetings regarding the second loan?
    Mr. Chu. No. In an--I am not informed of applications for 
all loans. There are many, many applications. When I am brought 
in is when it comes time to approve the loan, because that is 
my responsibility. Many applications go into the Department and 
then the loan people determine that they are not going get a 
loan.
    Mr. Gingrey. Yes. Well, here again, some of the other 
folks, the band of brothers that you fell in with, 
inadvertently I guess we could say.
    According to one Solyndra executive, on February 9th, 
another meeting with Solyndra executives, Jonathan Silver 
appeared to acknowledge that they would, quote, ``likely move 
to the due diligence stage when he directly engaged in a 
discussion of the potential political challenges that a second 
Solyndra loan guarantee would present.'' And that is the end of 
his quote.
    He then asked for Solyndra's assistance in crafting answers 
to four questions that he anticipated receiving about this 
second loan guarantee. One of these questions was why DOE 
should give additional loan guarantees to a company that had 
not yet achieved significant milestones of success with the 
first loan.
    Did Jonathan Silver ever present to you reasons why he 
thinks Solyndra should get a second loan guarantee, when there 
are, as you point out, a lot of other companies desperate 
wanting--renewable energy companies, with good plans, wanting 
to have a first bite at the apple, and here he was sort of 
pushing for Solyndra to get a second bite of the apple? What 
did he say to you?
    Mr. Chu. Well, I am not sure he was pushing to get a second 
bite of the apple. What I do know is that this did not come 
before me to the point where there was serious consideration to 
give Solyndra the second loan.
    Mr. Gingrey. And they subsequently did not get that second 
loan.
    Mr. Chu. We did not.
    Mr. Gingrey. Right. Thank you, Mr. Secretary.
    And, Mr. Chairman, I will yield back.
    Mr. Stearns. The gentleman's time has expired.
    The gentleman from Louisiana, Mr. Scalise, is recognized 
for 5 minutes.
    Mr. Scalise. Thank you, Mr. Chairman. I appreciate you 
letting us have a second round of questions.
    And I disagree with the comment you made earlier, that a 
lot of these are redundant questions that are being asked. 
Because, frankly, I think there a lot of questions that have 
been asked that we haven't been able to get answers to.
    In fact, when the chairman, Mr. Stearns, at the beginning 
of the second round, asked you some very specific questions 
about other loans out there, what other loans are in trouble, I 
am surprised that you can't give an answer to that question.
    Can you get us, this committee, an answer to that question 
of what other loans are in trouble right now?
    Mr. Chu. As I said before, we watch all the loans. We, in 
learning from the experience of Solyndra, we are now watching 
the loans at a minimum of every month and sometimes weekly. 
But----
    Mr. Scalise. So can you tell, if you are watching them 
weekly, how many are in trouble? Obviously you are watching 
them weekly. There are a lot more out there.How many are in 
trouble right now?
    If you are watching them, you have to know. It is either 
none or some number in between none and the total number that 
are still out there.
    Mr. Chu. I----
    Mr. Scalise. What is that answer?
    Mr. Chu. What, that----
    Mr. Scalise. I don't think that is an unreasonable 
question, Mr. Secretary. How many loans that you are watching--
you are watching them weekly--how many loans are in trouble 
that are still outstanding?
    Mr. Chu. Again, we watch----
    Mr. Scalise. A number. I am asking you for a number.
    Mr. Chu. All right. We have two loans that are in trouble, 
Solyndra and Beacon.
    Mr. Scalise. Well, they went bankrupt. Those aren't--what 
other ones are in trouble besides those two? Is it just those 
two?
    Mr. Chu. No, I--we would be glad to look at and tell you 
our procedures and give you, not in this forum--but we would be 
glad to work with you and----
    Mr. Scalise. Well, a public forum. I mean, it ought to be--
there has to be transparency in what is going on here. We are 
trying to get to the facts, and we have been having a hard time 
getting those answers. So I would appreciate if you would get 
the committee that information on what loans are in trouble, 
starting with Solyndra and Beacon, if there are any others.
    When we talk about the subordination--and I know it is 
going to come back to this a few times because I still don't 
think this issue is resolved. And, frankly, you know, I 
disagree with you, and, obviously, a lot of us on this 
committee disagree with your interpretation. I more share the 
concerns of another part of the Obama administration, in 
Treasury, where they said the Justice Department ought to be 
involved. You chose not to get involved with the Justice 
Department.
    I am asking for the Justice Department to get involved. 
And, frankly, what I would like to see is for the Justice 
Department to challenge, right now, to challenge the 
subordination of the taxpayer. Because, frankly, it is the only 
way that we have a shot at getting that first $75 million of 
taxpayer money back.
    Mr. Stearns. Would the gentleman yield just for a second?
    Mr. Scalise. I would yield.
    Mr. Stearns. I think he is asking a very legitimate 
question. He is asking you not the company names; he is just 
asking the number.
    And staff has advised me we sent a letter some time ago 
asking for a list of all the companies, and we have not got a 
reply yet. So I think the gentleman's question of ``what is the 
number'' is a legitimate question.
    If you are looking at it weekly, can you tell----
    Mr. Chu. We believe that most of the loans are in good 
shape. We would be glad to talk about this with you and tell 
you what process we have in place. We have given you a lot of 
company confidential information. You have respected that 
confidentiality; we appreciate that. We would be willing to 
continue do that.
    Mr. Stearns. We are not asking for the names.
    Ms. DeGette. Would the gentleman yield?
    Mr. Stearns. All he is asking for--as I understand, Mr. 
Scalise, you are asking for just the number.
    Mr. Scalise. A number is all I ask for right now. And, 
obviously, we would like to follow up once we see a number. 
But, you know, maybe the number is just two; maybe it is just 
Solyndra and Beacon. But if it is more than Solyndra and 
Beacon, then clearly we would want to look more into that.
    Ms. DeGette. Will the gentleman from Louisiana yield?
    Mr. Scalise. I would be happy to.
    Ms. DeGette. Thank you.
    Mr. Secretary, is part of your reticence in saying how many 
companies you think might be in trouble or which ones they are 
in this public forum this concern about proprietary 
information?
    Mr. Chu. There is always concern that we would have, as you 
would understand. But in terms--because we will tell you what 
we know of the companies and how we found out about it in 
detail, but not in a public forum.
    Ms. DeGette. So----
    Mr. Chu. But we believe--I will say that we believe the 
majority of the portfolio seems to be in good shape.
    Ms. DeGette. So, Mr.----
    Mr. Chu. In fact, a large majority.
    Ms. DeGette. So I would suggest--I think that is a 
legitimate concern. You don't want to--we have already been 
contacted, for example, by a company that is actually in Mr. 
Gardener's district, and they are concerned, because of the 
adverse publicity around the Solyndra loan, that it is hurting 
their ability to get capital and financing, and they are an 
ongoing company.
    So perhaps we could get--we could get a number--we could 
try to get a number, but then any additional----
    Mr. Scalise. Right. And that was the gist. Reclaiming my 
time, I never asked for any specific names, but, clearly, I 
would like the numbers.
    But then the next question I have regards going back to the 
restructuring. You know, I want to see the Justice Department 
go back and challenge the legality of the restructuring, 
whether or not the taxpayer should have been subordinated. 
Because that gives us the best chance to protect taxpayer 
money.
    Would you agree that the Department of Justice should go 
and challenge that?
    Mr. Chu. As I said, we have gone through this in great 
detail with our lawyers within the Department of Energy. This 
went to----
    Mr. Scalise. And ignored other legal opinions that 
contradicted it.
    Mr. Chu. No.
    Mr. Scalise. Including the Treasury.
    Mr. Chu. The Treasury, as I said before, did not offer a 
legal opinion. They did not say that----
    Mr. Scalise. This is a letter from Treasury. I would 
imagine you have seen it. It said that you all should go to the 
Department of Justice before you do this. I mean, I don't know 
if you want to call that a legal opinion. You have attorneys 
telling you, go to the Department of Justice before you do 
this, and you didn't do that. Now, whether it is a legal 
opinion or just a personal opinion, it was sent on their 
stationery, it was sent in their email form, on a government 
email, so I would imagine it is in their official capacity.
    But let's just say, right now--and, you know, I don't want 
names--are there any loans that you are currently considering 
restructuring that are in your portfolio right now?
    Mr. Chu. I think I have answered that before. But we are--
before us, no loans that we are considering----
    Mr. Scalise. I would hope, if any did come before you, you 
would absolutely not subordinate the taxpayer. That is a whole 
other issue.
    But when we go back to some of the other things that were 
going on around you--and you gave testimony that you weren't 
aware of those, some of the things that were very political in 
nature: you know, in your department, encouraging people to--
encouraging Solyndra to delay firing people. Again, they 
weren't concerned, in anything I have seen, that 1,100 people 
were going to lose their job; they just wanted to make sure it 
happened after the election. And it did happen after the 
election, so, obviously, the folks in your agency were listened 
to.
    Are you going to do the due diligence to go and find out 
who did that and hold them accountable? And what kind of things 
would you do to hold them accountable?
    Mr. Chu. Well, we certainly will, as I said before, 
investigate actually the facts in this matter and take 
appropriate actions as we find out what actually happened.
    Mr. Scalise. And I would hope you would share that with our 
committee. Would you be willing to do that?
    Mr. Chu. Yes.
    Mr. Scalise. Now, a final question, because I see I am 
running out of time.
    The President, himself, has described this--when we talked 
about the loan program early off, he was asked and he said, 
basically, he said, we place bets. Now, would you view this as 
betting? Because, I mean, clearly, there are a lot of other 
loans out there. There are $4.7 billion of loans that went out 
on the last day of this loan program. Just on that last day 
$4.7 billion went out.
    Knowing all of the problems now that happened with 
Solyndra--and that was the very first one that went bust--have 
you changed any processes? When you, on that last day--I would 
imagine you approved all of those. So how many loans were 
approved on that last day, accumulating to $4.7 billion? And 
did you use a different methodology, a different formula to 
assess whether or not those were bets, as the President said, 
that were good for the taxpayer or not, or did you use the same 
process that failed for Solyndra?
    Mr. Chu. Well, let me step back and tell you about the last 
several months of the loan program, the 1705 loan program.
    There were, I think in May or June, roughly May of this 
year, we told many of the loan applicants there was no time to 
complete due diligence and that we are sorry, even though some 
of these applications were being considered and before us for a 
year or more. And so, at that time, we said, we cannot have the 
time to do due diligence.
    On the last of the loans, there were many of the loans 
where we also felt on those last days we could not make the 
deadline and do the due diligence. And so what we were deciding 
was which ones can we complete the due diligence. Under no 
circumstances was anyone ever in the loan program trying to 
rush it by cutting corners, not doing the due diligence.
    And so what happened is, you used the maximum time 
possible. There were another set of loans that we were working 
with companies that we did not--we were not able to complete 
our due diligence, and those loans were not made.
    Mr. Scalise. But the specific question I asked you was----
    Mr. Stearns. The gentleman's time has expired.
    Mr. Scalise [continuing]. How many loans were approved on 
the last day, and did you use the same process that you used 
under Solyndra for that $4.7 billion package?
    Mr. Chu. As you know, we have a very rigorous process in 
our----
    Mr. Scalise. How many? And yes or no?
    Mr. Stearns. The gentleman's time has expired.
    Mr. Chu. Well, I believe I agree with you that there were 
four, and there were a number of loans that were not--and the 
last day, we said, we are sorry, to those companies, we cannot 
complete these loans. So under no circumstances were we 
rushing.
    Mr. Stearns. All right. Thank you, Mr. Scalise.
    Mr. Scalise. And did you use the same process?
    Mr. Stearns. And the gentleman from Virginia----
    Mr. Scalise. He won't answer that question. I am just 
asking if he can answer that question.
    Mr. Stearns. The gentleman from Virginia is recognized.
    Mr. Scalise. Did you use the same process as under Solyndra 
for those last $4.7 billion of loans?
    Mr. Chu. Well, actually, I would imagine, as time goes on, 
our processes were being strengthened. As we get better at 
doing these things, we were actually improving the processes, 
just as we will continually improve the process in looking at 
how the loans are going forward in the disbursements. This is a 
process where we would hope to have continuous improvement, 
and----
    Mr. Stearns. All right. The gentleman from Virginia is 
recognized for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman.
    Secretary Chu, can you tell me, do you know what the value 
of the building that Solyndra owns, the one that was built, do 
you know what the value of that is, as far as the bankruptcy 
court is concerned, or what the sales price might be?
    Mr. Chu. No, I don't.
    Mr. Griffith. All right. And here is my concern. Eight to 
11 months ago, when you were making the decision to 
subordinate, you said that you thought it was better, instead 
of calling it quits in December and not giving them the 
additional $95 million, and instead of subordinating--or, you 
all made the decision you were going to subordinate because you 
thought it would put the taxpayers in a better position.
    The problem is, you told me earlier you didn't know the 
value of the intellectual property and the patents that the 
company might own. You don't know the value of the building. If 
you don't know those things in a fire sale or in a situation 
like this, how can you make a determination just 8 to 11 months 
ago that it was in the taxpayers' best interest to subordinate? 
I think it is a rhetorical question because I don't know that 
you can answer that.
    And let me move on to the next question that I have, 
because we also talked earlier--Mr. Barton brought it up first, 
and then I brought it up--this legal analysis by Morrison & 
Foerster. And all we have is the draft. And I don't think that 
you have intentionally misled the committee, but I think that 
there may never have been a legal opinion from Morrison & 
Foerster on this, a written legal opinion.
    Do you know if there was actually a written legal opinion 
made?
    Mr. Chu. I do know that there was an email, a determination 
by Morrison & Foerster of what--and they concurred with us in 
an email, in a final email, saying that this was a reasonable 
interpretation of the law, and they concurred with it.
    Mr. Griffith. Because I don't believe we have seen that. 
And so, if you could provide that email for us, I would greatly 
appreciate it, because we just haven't seen it. And so, you 
know, we have a draft that says--it has a whole section 
entitled ``You Can't Subordinate,'' basically. It says 
subordination is not allowed. So that is of great concern.
    And if all there was was an email and there originally was 
going to be a full legal memo, can you find out why there was 
not a full legal memorandum done from Morrison & Foerster in 
regard to the subordination issue? Can you do that for us?
    Mr. Chu. Yes. Well----
    Mr. Griffith. And let me say that the reason that I 
question this is that you have referred to it a number of times 
today, but it appears that you, you know, relied on maybe some 
casual communication with them but never got the formal 
opinion, even though one was started. And it appears you relied 
significantly and exclusively on your own folks.
    But a lot of times, you know, when you are trying to make 
an important decision, just as when you are making an important 
decision for your children, you consult other people before you 
decide, OK, are they too young to have a new car or what about 
that cell phone. And, in this case, you have acknowledged that 
you were making a very significant decision on the 
subordination of this loan, and yet you didn't consult with 
Justice, you didn't pay attention to other folks, OMB and 
Treasury.
    And it appears--I mean, if my kids did that to me and that 
is what they were saying, ``Well, we didn't check''--it appears 
that the Department of Energy adopted the policy of, well, it 
is better to ask for forgiveness than to make sure we get the 
answer right in the first place because we are afraid they will 
come back and say we can't do it.
    And it is true that without that subordination you knew 
that this company would go bankrupt last December. Isn't that 
true?
    Mr. Chu. Well, let me first step back and tell you what I 
know of the interactions with Morrison & Foerster.
    There was an initial email that said, we have to step back 
and look at this. And then there was a final determination by 
Morrison & Foerster in an email that was sent to us that said, 
the determination made by the counsel's office in the----
    Mr. Griffith. Did you not see their full draft, which was 
pages long, in which one section said--it highlighted and 
flagged that subordination was not allowed? You didn't see 
that? All you saw were a couple little brief emails?
    Mr. Chu. No. What I said is that certainly the 
subordination of the initial loan was not allowed, and they 
made that very clear. But in the end, the final email----
    Mr. Griffith. Let's get to that point, then. I understand 
what you are saying. And if there is something more than that, 
we would like to have it. And if I could have that email.
    Here is my problem with that. At the beginning, you know, 
the initiation of the loan, if you read the memorandum--did you 
read the Susan Richardson memorandum?
    Mr. Chu. Yes.
    Mr. Griffith. OK. If you read that and you read it closely, 
including the footnote, I believe it is the second footnote in 
that memorandum, you will see that the conclusion was that we 
can do it--we don't have to have an excuse of default; we can 
do it at any time subsequent to the original closing of the 
loan.
    And so I ask you--because you are a very bright man, much 
brighter than I am; you know, I know you didn't leave your 
brain at the door--I ask you if it makes sense to you that 
Congress would pass a bill that says at 10 o'clock in the 
morning you can't subordinate the loan to anybody else, but 
after eating lunch and reflecting on it, at 2 o'clock in the 
afternoon of that very same day, you legally could subordinate 
the loan. Because that is the opinion that Susan Richardson 
puts forward, if you take it to its natural conclusion, and 
particularly when you look at that footnote.
    Does that make sense to you, as a thinking, intelligent 
man?
    Mr. Chu. As a thinking, intelligent man, it was very clear 
that, at the time of the origination of the loan, we could not 
subordinate--we did not subordinate.
    Mr. Griffith. But 2 hours later, based on the opinion that 
you are relying on today and that you have relied on this whole 
time, you could have. Do you really think that makes sense, 
that that would have been Congress' intent?
    Mr. Chu. Well, if you mean by ``2 hours later'' you mean--
--
    Mr. Griffith. I mean 4 hours later, but 2 hours later is 
the same. I am just giving you an example, that you ate lunch 
and you reflected on it and you had a new opinion.
    Mr. Chu. Well, then when the loan became stressed and in 
trouble----
    Mr. Griffith. But there was nothing in the Richardson 
opinion, am I not correct--I am correct, but I will just tell 
you--there is nothing in there that says it had to be stressed. 
In fact, they talked about that and said it didn't have to be 
stressed, that you could do it at any time that you wanted to 
once the original loan had taken place, which means you could 
circumvent the entire law based on the reading of the law that 
your department decided to take.
    And I submit to you that, as a thinking, intelligent man, 
if you weren't sitting here on the hot seat today, you would 
have to admit that that does not make sense and, clearly, what 
you all did violated the intent of Congress and, I believe, the 
letter of the law, as well.
    Thank you. I yield back my time.
    Mr. Stearns. The gentleman yields back his time.
    We offer the gentleman from Illinois 5 minutes.
    Mr. Barton. Mr. Chairman, before you--could I ask unanimous 
consent to speak out of order just for 1 minute to read this 
email, which apparently is the email that they are----
    Mr. Stearns. By unanimous consent, so ordered.
    Ms. DeGette. Which email is it?
    Mr. Barton. It is the email that Secretary Chu is referring 
to, where he alleges that Morrison----
    Ms. DeGette. What is the date on it?
    Mr. Barton. It is dated January the 13th, 2011. It is from 
Panagiotis Bayz to Frederick Jenney.
    May I read that?
    Mr. Stearns. Sure. How long is it going to take?
    Mr. Barton. Thirty seconds.
    Mr. Stearns. OK, go ahead.
    Mr. Barton. It is very quick.
    It says, ``Rick, red line to the prior version of the memo 
attached. The only substantive comment''--this is relating to 
the memo that the Department of Energy has sent for their 
comments--``is that 19(c)(4) discussion. This reads a bit 
tortured, so I added a note for Ken to consider deleting.'' 
Here is the key phrase: ``Otherwise, I think it makes the best 
case possible based on a reasonable interpretation, supported 
by the restructuring policy arguments.''
    That does not say that it is legal. It says it makes the 
best case possible based on a reasonable interpretation. And, 
apparently, that is what the Secretary is relying on to say 
that the internal Department of Energy memo is OK.
    Mr. Stearns. Thank you.
    And the gentleman from Illinois for 5 minutes. Go ahead.
    Mr. Secretary, you wanted to say--well, go ahead, Mr. 
Secretary. By unanimous consent, go ahead.
    Mr. Chu. I think the email from Morrison & Foerster said 
that it was a reasonable interpretation. Is that not correct?
    Ms. DeGette. Yes.
    Mr. Chairman, I ask unanimous consent to put that email in 
the record so it is clear.
    And it does, in fact, say that, Mr. Secretary.
    Mr. Stearns. But just because it is reasonable does not 
mean it is the correct interpretation. You would agree with 
that?
    Mr. Chu. It was a reasonable interpretation of the law----
    Ms. DeGette. It says ``reasonable interpretation.''
    Mr. Stearns. Well, the long and short of it, we have had 
this discussion, and it appears that you have your opinion, and 
of course we have ours.
    Ms. DeGette. Mr. Chairman, I renew my request to put this 
document in the record.
    Mr. Stearns. Sure. By unanimous consent.
    Mr. Barton. Yes. I want it in the record.
    Mr. Stearns. Mr. Barton is asking for unanimous consent to 
put it in the record. And it will be put in the record.
    Mr. Barton. I concur with Ms. DeGette.
    [The email follows:]

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    Mr. Stearns. And, Mr. Illinois, you are on.
    Mr. Kinzinger. ``Mr. Illinois.'' Thank you.
    Thank you, Mr. Secretary. Obviously, when we deal with this 
amount of money, it is important to get all these questions 
out. And we appreciate you being here. We appreciate your 
service. And thank you for coming before us today.
    Let me ask you--and I know you have addressed it already, 
to an extent, but I want to ask you, did the stimulus deadlines 
accelerate the review of Solyndra's case, specifically? The 
deadlines put in by the stimulus, did it accelerate the review 
of the case?
    Mr. Chu. No, it did not. You know, from the time of the 
completed application to the time we closed on the loan, it was 
about 980 days. I would not consider that----
    Mr. Kinzinger. OK. Because in congressional testimony dated 
March 19th, 2009, DOE stimulus advisor Matt Rogers stated that 
you ``directed us to accelerate the process significantly and 
deliver the first loans in a matter of months, while 
maintaining the appropriate oversight and due diligence.''
    Did you direct the loan programs officer to speed up the 
process?
    Mr. Chu. Yes. We wanted very much--so that the loans would 
not all be taking 980 days. That is correct.
    Mr. Kinzinger. But you didn't--so you wanted it sped up 
after the acceleration of the--or, after the Solyndra loan, is 
what you are saying.
    Mr. Chu. No. As I said, when I was before Congress in the 
confirmation hearing, there was on both sides of aisle much 
concern that the loan program was not getting the loans out. 
Again, the economy was in free-fall. Hundreds of thousands of 
jobs were being lost each month. And it was considered by both 
sides of the aisle that this loan program was an effective way 
of getting capital and helping that capital be invested in 
energy projects, renewable energy and those things.
    And so, it was the concern--and, as said, nearly 500 
letters from Members of Congress on both sides of the aisle, 
saying----
    Mr. Kinzinger. OK. Thank you.
    And, in January of 2009, DOE documents show that the Loan 
Programs Office credit policy group listed 14 outstanding 
issues that needed to be resolved on the Solyndra deal, 
including analyzing the parents' working capital needs and 
evaluating the parents' funding requirements and financial 
health. A market report for Solyndra had yet to be submitted. 
One staff member reviewing the engineering reports listed eight 
different questions about its findings, including about 
Solyndra's plans to scale up production.
    Yet, on March 17th, DOE offered a conditional commitment to 
Solyndra, just a few weeks later. So you are telling me that 
DOE was able to resolve, in that short amount of time, all 14 
credit policy issues?
    Mr. Chu. I think if you are talking about these issues in 
the beginning of January versus March--and we resolved many of 
those issues when we offered our conditional commitment, then 
these--before the loan disbursements start, that the company 
will have to resolve all issues. And that is what a conditional 
commitment means: There will be additional conditions before we 
actually disburse any funds.
    Mr. Kinzinger. Let me ask you also, too, being as how this 
is all, you know, stimulus-related, stimulus-financed, how 
would you define the concept of shovel-ready projects? And do 
you think we realized those goals?
    Mr. Chu. I think what we were looking for, what Congress 
was looking for, what the administration was looking for, were 
those projects that could put Americans back to work in a very, 
very desperate time. And I think many of the loans--for 
example, if you consider the Ford loan----
    Mr. Kinzinger. Right.
    Mr. Chu [continuing]. Which we think is a big success, 
saving some 30,000-plus jobs and----
    Mr. Kinzinger. So ``shovel-ready'' is, even at the cost of 
million of dollars a job, putting people back to work?
    Mr. Chu. No. As very clearly stated in the law and clearly 
state in what we do, we wanted to make sure that there is a 
reasonable chance of payback. And in all our loans going 
forward, that is----
    Mr. Kinzinger. Thank you.
    Mr. Chu. And that probability of being paid back is 
reflected in credit subsidy scores.
    Mr. Kinzinger. OK. Thank you.
    And with my time left, I would like to yield my remaining 
time to Dr. Burgess from Texas.
    Mr. Burgess. And I thank Mr. Illinois for yielding.
    Secretary, again, your indulgence today is commendable. 
Like other members of the committee, we all stipulate that you 
are probably the smartest man in town, and that is why some of 
this is so baffling to us.
    One of the things that grabbed a lot of headlines a few 
weeks ago was the amount of money spent on legal bills by 
Solyndra and, by implication, the fact that there were big 
loans going to this company that was money that we were paying 
for Solyndra's legal bills. And I think the figure given was 
$2.4 million spent in the 2-1/2 years of Solyndra's tortured 
existence.
    You are following the loans very carefully now, you are 
looking at things weekly, you are looking at balance sheets and 
expenditures and burn rates. Is this number of dollars for 
legal fees that Solyndra went through, is that unusual in this 
portfolio?
    Mr. Chu. I can't actually speak to that. But, certainly, 
one doesn't want--you know, I can't actually address why 
Solyndra was spending those amounts of funds on legal matters 
and legal bills.
    Mr. Burgess. There was a man on your staff whose wife 
worked for the law firm----
    Mr. Chu. Right.
    Mr. Burgess. [continuing]. That was representing Solyndra. 
That, obviously, gets some attention.
    You know, I mean, here is the thing. At the end of this 
day, you are the Secretary of Energy. You are the holder of the 
Nation's nuclear secrets. You are the civilian manager of the 
Nation's nuclear arsenal. And many of these decisions that were 
made in this loan guarantee program seem to be almost the kind 
of decisions you would expect a riverboat gambler to make.
    I really ask, again, that you talk to your employer----
    Ms. DeGette. Mr. Chairman? The gentleman's time has 
expired, and he is badgering the witness. I would ask that you 
suspend this hearing.
    Mr. Burgess [continuing]. You talk to the President, and 
you need to have that honest conversation with him.
    Mr. Stearns. The gentleman's time has expired.
    Mr. Secretary, we are done. And, as we agreed upon in the 
committee, we have 3:30 in mind to end.
    I want to ask the ranking gentlelady from Colorado if she 
has any concluding comments, and then I have just a very short 
concluding comment.
    Ms. DeGette. Mr. Chairman, I just want to thank the 
Secretary for coming.
    As I said in my opening statement, I have been on this 
subcommittee for 15 years. I don't believe that I have ever 
seen a Secretary, a Cabinet Secretary, of either party in any 
of the three administrations I have served under patiently give 
us so much time.
    And so I just want to thank you. It helps us begin to 
understand the basis for this loan program, what we can do. And 
I hope that we can work with you to improve this program in the 
future so that we can support solar energy.
    Thank you.
    Mr. Stearns. I thank the gentlelady.
    And, by unanimous consent, I would put the document binder 
in our record.
    So ordered.
    [The information follows:]

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    Mr. Stearns. Mr. Secretary, also, I would echo the ranking 
member's comments. But I would say, in conclusion, that after 
listening to you for almost 3 \1/2\, almost 4 hours, you seemed 
to fail to monitor the loan guarantee program; failed to heed 
the warning sign of the Treasury Department, OMB, and even your 
own legal counsel; you ignored subsequent Solyndra bankruptcy 
predictions 2 years by your staff; you disregarded the ongoing 
possibility that you should have got Department of Justice's 
opinion. The legal opinion you got in an email is really not 
credible.
    And I think even most Members on both of sides agree, Mr. 
Green pointed out, from Texas, that illegal subordination of 
taxpayers to two hedge funds I think shows a high degree of 
mismanagement and ineptitude. And I would think, under the 
circumstances, that it could have been done a lot better.
    Don't you feel, in retrospect, that this was poorly 
managed?
    Mr. Chu. I think, as I look back at the events and at the 
time and what did we know and when we knew it, decisions were 
made--competent decisions were made by the people in the loan 
program.
    And, again, going back, this is very important, that the 
United States be supporting these innovative technologies. The 
wisdom of Congress in that bill supported that. And, again, 
they acknowledged that there were risks in supporting 
innovative companies and innovative projects, and that is why 
there was this large loan loss reserve that was set aside and 
appropriated. That money could have been appropriated for other 
things.
    Mr. Stearns. Well, I will conclude by saying, I don't know 
how many loan risks of a half a billion dollars we can afford 
to lose as taxpayers.
    And, with that, the subcommittee is adjourned.
    [Whereupon, at 3:35 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

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