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



 
     CONTINUING DEVELOPMENTS REGARDING THE SOLYNDRA LOAN GUARANTEE 

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

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 14, 2011

                               __________

                           Serial No. 112-98



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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.................................     9
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................    10
    Prepared statement...........................................    13
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................    15

                               Witnesses

Gary Grippo, Deputy Assistant Secretary for Government Financial 
  Policy, Department of the Treasury.............................    18
    Prepared statement...........................................    19
    Answers to submitted questions...............................   121
Gary Burner, Chief Financial Officer, Federal Financing Bank, 
  Department of the Treasury \1\.................................

                           Submitted Material

Draft Memorandum for the Secretary, dated January 19, 2011, from 
  Susan S. Richardson, Chief Counsel, Loan Programs Office, 
  submitted by Ms. DeGette.......................................    42
Memorandum for the General Counsel, dated February 15, 2011, from 
  Susan S. Richardson, Chief Counsel, Loan Programs Office, 
  submitted by Ms. DeGette.......................................    48
Subcommittee exhibit binder......................................    77
Emails, dated December 15, 2010, Subject: Solyndra, submitted by 
  Mr. Stearns....................................................   107
Memorandum, dated October 17, 2011, from Clinton T. Brass, 
  Analyst in Government Organization and Management, 
  Congressional Research Service, to Mr. Griffith, submitted by 
  Mr. Stearns....................................................   109
Emails, dated August 19, 2009, Re: OMB, submitted by Ms. DeGette.   113
Emails, dated August 31 through September 2, 2009, Subject: 
  Solyndra/FFB Docs, submitted by Ms. DeGette....................   114
Emails, dated January 11, 2011, Re: Solyndra, submitted by Ms. 
  DeGette........................................................   119

----------
\1\ Mr. Burner did not offer a statement for the record.


     CONTINUING DEVELOPMENTS REGARDING THE SOLYNDRA LOAN GUARANTEE

                              ----------                              


                        FRIDAY, OCTOBER 14, 2011

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:35 a.m., in 
room 2123, Rayburn House Office Building, Hon. Cliff Stearns 
(chairman of the subcommittee) presiding.
    Members present: Representatives Stearns, Terry, Sullivan, 
Murphy, Burgess, Blackburn, Bilbray, Gingrey, Scalise, Gardner, 
Griffith, Barton, Upton (ex officio), DeGette, Schakowsky, 
Markey, Green, Dingell, and Waxman (ex officio).
    Also present: Representatives Pompeo and Kinzinger.
    Staff present: Jim Barnette, General Counsel; Karen 
Christian, Counsel, Oversight; Todd Harrison, Chief Counsel, 
Oversight and Investigations; Alan Slobodin, Deputy Chief 
Counsel, Oversight; Carl Anderson, Counsel, Oversight; Krista 
Rosenthall, Counsel to Chairman Emeritus; John Stone, Associate 
Counsel; James Thomas, Coordinator, Oversight and 
Investigations; Andrew Powaleny, Press Assistant; Sean Bonyun, 
Deputy Communications Director; Anita Bradley, Senior Policy 
Advisor to Chairman Emeritus; Katie Novaria, Legislative Clerk; 
Carly McWilliams, Legislative Clerk; Phil Barnett, Minority 
Staff Director; Stacia Cardille, Minority Counsel; Matt 
Siegler, Minority Counsel; Kristin Amerling, Minority Chief 
Counsel and Oversight Staff Director; Karen Lightfoot, Minority 
Communications Director, and Senior Policy Advisor; Elizabeth 
Letter, Minority Assistant Press Secretary; and Alvin Banks, 
Minority Assistant Clerk.
    Mr. Stearns. Good morning everybody. And we convene the 
Subcommittee on Oversight and Investigations. And I will open 
with my opening statement.

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

    We convene this hearing of the Subcommittee on Oversight 
and Investigations to simply gain a better understanding about 
the Department of Treasury's role in reviewing the Solyndra 
loan guarantee, particularly with regard to the Department of 
Energy's decision to restructure the loan guarantee and 
subordinate taxpayers to private investors. While President 
Obama may claim that hindsight is 20/20, but the facts tell a 
much different story. Recent emails produced by the White House 
and OMB, as well as a long chain of others, clearly show that 
numerous members of the Obama administration from the most 
senior levels in the West Wing down to the career professionals 
at OMB and DOE knew that Solyndra was a bad bet that was 
destined to fail. And while the Obama administration may not 
have had a crystal ball, they did have financial models in 
August 2009 for telling that Solyndra would run out of money in 
September 2011, which they choose to ignore.
    In late 2010 Solyndra informed DOE that the situation was 
dire. DOE began negotiations to restructure the terms of the 
loan to keep Solyndra above water. Under the new arrangement, 
two primary investors, Argonaut, Madrone and Madrone Capital, 
were given priority over the government with respect to the 
first $75 million recovered in the event of liquidation. I and 
other members of the subcommittee have continuously questioned 
the legal basis for this unprecedented decision. Section 1702-3 
of the Energy Policy Act of 2005 clearly states in plain 
language that when DOE makes a loan, ``the obligation shall be 
subject to the condition that the obligation is not 
subordinated to other financing.''
    Previous communications produced to the committee reveal 
that there were numerous concerns within the administration 
regarding the financial and political impact of the 
restructuring. What the latest round of emails show is that 
senior officials within the Obama administration had 
significant concerns about its legal basis and those concerns 
were simply ignored. In August 2011, as discussions about a 
second restructuring were underway, Assistant Secretary of 
Treasury, Mary Miller emailed the director of OMB Jeffrey 
Zients stating that, ``Since July of 2010, Treasury has asked 
DOE for briefings on Solyndra's financial condition and any 
restructuring of terms.
    The only information we have received about this has been 
through OMB as DOE has not responded to any request for 
information about Solyndra.''
    She goes on to note that Treasury's legal counsel believes 
that the statute and the DOE regulations both require that the 
guaranteed loan should not, should not be subordinated to any 
loan or other debt obligations, and that in February, Treasury 
requested in writing that DOE seek the Department of Justice's 
approval of any proposed restructuring, and that to her 
knowledge, that has never happened.
    In a closing, Assistant Secretary Miller seemed almost 
resigned to DOE's course of action in stating that while she 
expects that DOE has a view about why loan subordination can 
occur without DOJ approval or Treasury's consultation, I wanted 
to correct any impressions that we have acquiesced in the steps 
to date, that is her quote.
    Unfortunately, Assistant Secretary Miller is unable to join 
us today to discuss her correspondence with DOE or her 
Department's role in the Solyndra review. Hopefully, my 
colleagues or witnesses here today can shed some light on the 
decision-making process that occurred around the time of this 
restructuring. In fact, one of our witnesses, Gary Burner, 
Chief Financial Officer at the Treasury Department's Federal 
Financing Bank also emailed key DOE officials involved in the 
Solyndra restructuring after hearing about the proposed terms 
of the new agreement from OMB. He noted on February 10th that 
he understood, ``these adjustments may include subordination of 
Solyndra's 535 million reimbursement obligations to DOE, and 
possibly the forgiveness of interest.'' Accordingly, he raised 
a prospect of seeking the Department of Justice's approval 
which never ultimately occurred. Judging from these emails it 
is clear that senior officials at the Department of Treasury 
were not sufficiently consulted about the restructuring, and 
when they offered their opinions and warning signs, they were 
ignored like so many of the others along the way.
    It should be noted, however, that the final rule issued by 
DOE implementing Title 17 of the Energy Policy Act specifically 
requires DOE to consult with the Secretary of Treasury before 
``DOE grants a deviation that would constitute a substantial 
change in the financial terms of the loan guarantee 
agreement.'' There is no exception allowing DOE to ignore those 
who disagree with its course of action.
    I look forward to better understanding why the Department 
of Treasury felt so strongly about being consulted prior to the 
restructuring of a loan guarantee and whether they believe DOE 
violated the Energy Policy Act of 2005.
    [The prepared statement of Mr. Stearns follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    With that, I recognize my distinguished colleague Ms. 
DeGette.

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

    Ms. DeGette. Thank you, Mr. Chairman. So if we want to know 
the legal basis for the subordination of this loan by DOE 
wouldn't it be nice to have DOE here? The majority has focused 
on an email from August 2011 in which a Treasury official 
raises questions about whether subordination of the guaranteed 
loan to Solyndra was appropriate. And the Treasury official 
expresses a view that DOE's restructuring of the loan may 
require Department of Justice approval.
    Now, I think it's appropriate for this subcommittee to 
conduct fact-gathering relating to these documents to advance 
the committee's understanding of decisions relating to the 
Solyndra loan guarantee. But if we really wanted to have a 
fact-finding hearing wouldn't we also bring DOE in to see what 
they thought when Treasury told them that they thought that the 
Department of Justice needed to approve this loan?
    The Treasury comments regarding subordination raised 
definite questions about the application of the Energy Policy 
Act provisions to the Department of Energy loan guarantee 
program, and it's the Department of Energy that implements 
these provisions. And so the Treasury email thus makes DOE's 
legal rationale for restructuring decisions a central issue of 
this hearing. I don't really see how you can have this hearing 
just bringing in one side in without the other side to respond. 
And as I have said repeatedly, Mr. Chairman, I think we need to 
have a full and fair gathering of the facts of what happened 
with the Solyndra loan and the restructuring so we can decide 
how we proceed further with solar energy and other types of 
alternative energy, loan guarantees and other types of 
supports. But despite this, the majority has refused the 
minority's request to invite the Department of Energywitnesses 
to this hearing. And astonishingly the majority has even 
objected to the minority's request to release the February 15, 
2011 memorandum by counsel for the DOE loan program that was 
produced to the committee.
    In that memo, the DOE counsel provides a detailed analysis 
of their view of the subordination issue, the statutory 
authorities in question, and DOE's position. And by the way, 
since February of this year, the Department of Energy has also 
given this committee an additional 65,000 pages of documents to 
go through.
    Now, look, it should go without saying that the DOE's legal 
analysis of restructuring should be a component of today's 
discussion. But without the DOE legal memo, with sort of having 
our hands tied behind our back, let me just talk for a minute 
about this memo. In an August 17, 2011, email to the OMB deputy 
director, an assistant secretary at Treasury expressed a view 
that, ``The statute and the DOE regulations both require that 
the guaranteed loan should not be subordinate to any loan or 
any other debt obligation.''
    She further notes that ``DOE regulations state that DOE 
shall consult with OMB and Treasury before any deviation is 
granted from the financial terms of the loan agreement.'' The 
statute and regulation she appears to be referring to contain 
the Title 17 Loan Guarantee Program which the Department of 
Energy interprets through implementing regulation. The 
Department has indeed interpreted the subordination language of 
the statute and regulations in the February 2011 memo I 
referenced. And the Department also interprets what constitutes 
a deviation from the title 17 rules.
    I'm looking forward to hearing more from the Treasury today 
regarding what the Treasury official meant by her August 17th 
email. But if we really want a full understanding of the legal 
arguments for subordination and whether the restructuring 
constituted a deviation as defined under Department of Energy 
regulations, we also need to review the Department of Energy 
memo, and have the opportunity to ask DOE officials questions 
about their rationale.
    The August email further notes that Treasury had suggested 
in February that the DOE consult with the Department of Justice 
regarding the restructuring based on a statutory provision that 
requires DOJ approval where there is a compromise of a claim. 
Communications provided to the committee show that a 
conversation between Treasury and DOE officials occurred on 
this issue in February 2011. To more fully understand what 
happened on both sides of this issue, the committee needs to 
hear from DOE as well as Treasury. Now, look, the majority may 
argue that the subcommittee will provide an opportunity to 
question DOE about its views on a later date. Mr. Chairman, I'm 
sure you intend to do that. But that approach only serves to 
ensure that half the story is told today. It makes this hearing 
appear to me to be more about generating headlines than 
engaging us in thorough fact-finding. And I hate to say that, 
and I say it with all due respect. But let's not do this 
investigation piecemeal, let's do a whole investigation, let's 
get all the facts out there and then let's figure out what to 
do.
    Mr. Stearns. I thank the ranking member. And I think it's 
self-evident that we're going to have the DOE folks up here. We 
agree with you completely, so we intend to have them up here, 
as well as the people who signed the document, so we can assure 
that we will have this happen. With that, I recognize the 
chairman of the full committee, my distinguished colleague 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. Eight months ago, 
we asked Secretary Chu to turn over all documents containing 
communications between the Department of Energy and the 
Department of Treasury related to Solyndra. We had to ask again 
in September and DOE is only now beginning to respond to our 
request. The administration claimed our request was too 
burdensome for a timely response, but it is now apparent that 
that was not the case. We recently asked the Treasury 
Department to turn over similar documents and they responded 
immediately, thank you, beginning to turn over the requested 
documents in less than a week.
    What we've seen so far suggested DOE essentially ignored 
Treasury after signing off on a $535 million loan guarantee. 
The documents also reveal the Department of Energy fervently 
steering more taxpayer cash to Solyndra with complete disregard 
to the alarm bells that were coming from Treasury and others 
within the Obama administration.
    DOE apparently stonewalled Treasury failing or refusing to 
turn over information related to Solyndra's restructuring. In 
one exchange with OMB in August of 2011 Assistant Secretary 
Mary Miller noted that, ``Since July of 2010, Treasury has 
asked DOE for briefings on Solyndra's financial condition and 
any restructuring of terms. The only information we have 
received about this has been through OMB as DOE has not 
responded to any request for information about Solyndra.'' This 
seems to be a clear violation of the Energy Policy Act of 2005 
which says DOE shall consult with OMB and the Secretary of 
Treasury before granting any deviation in that loan. Putting 
the taxpayers at the back of the line behind private investors 
in the event of liquidation for bankruptcy is not only a 
deviation, it's apparently unprecedented.
    So what happened? Why did DOE keep Treasury in the dark? 
Solyndra was burning through cash and the alarm bells were 
certainly ringing. In February of 2011, DOE restructured the 
terms of the agreement and gave two private investment firms 
priority over the Federal Government in the likely event that 
Solyndra declared bankruptcy. DOE postponed Solyndra's initial 
interest payments and pushed back the repayment of the loan. 
DOE waived several requirements that Solyndra was obligated to 
meet before receiving further funding, including Solyndra's 
consistent failure to comply with the Davis-Bacon Act and their 
inability to contribute to an agreed upon reserve fund. While 
all that was happening DOE continued to push millions of 
additional dollars out the door in a futile attempt to save it, 
save Solyndra. Six months later, as predicted by DOE's only 
financial model back in 2009, Solyndra went belly up.
    Today's witnesses hopefully are going to help us understand 
Treasury's involvement at various points of life of the 
Solyndra loan guarantee. Does Treasury believe DOE should have 
consulted with DOJ about restructuring? You have to wonder, 
given Treasury's expertise in commercial lending and project 
finance, if DOE had responded to Treasury's request for 
information would something have been different, could some of 
the taxpayers' money been saved? The Department of Energy has a 
lot of explaining to do and we will hear from them again soon, 
I assure you. Unfortunately, we also have to ask how many more 
Solyndras are there? Were there other warning flags that were 
ignored, risky gambles made with the taxpayers' hard-earned 
money? Today we focus on the startling development of one 
cabinet level agency concerned that another's actions were in 
violation of the law.
    This investigation will continue until taxpayers get the 
answers that they deserve regardless of how high in this 
administration the facts take us. And I would just like to say 
that in regard to the minority's request for a DOE witness, it 
was received less than 2 days ago before the hearing. Today's 
hearing was precipitated in part because of the large and 
coordinated document done by the White House, OMB and DOE last 
Friday afternoon just prior to the start of the three-day 
federal holiday weekend. We do intend to hold further hearings 
on this topic. DOE officials will be included in the testimony. 
And I look forward to that day.
    [The prepared statement of Mr. Upton follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Gingrey. Will the gentleman yield?
    Mr. Upton. And I yield to the gentleman.
    Mr. Stearns. The gentleman yields his time.
    Mr. Gingrey. I thank the gentleman for yielding. I want to 
point out the fact that the Department of Energy's witness, the 
very first witness we had, was Jonathan Silver and we asked him 
this very question. So we'll be glad to have other witnesses 
from the Department of Energy, but that was the first witness, 
and of course now he has resigned, as we all know.
    Mr. Stearns. I thank the gentleman. I think our time has 
expired here, so we're going to go to the minority and 
recognize Mr. Waxman.
    Ms. DeGette. Before you recognize Mr. Waxman, I would just 
like to say for the record this hearing was noticed last 
Friday, Mr. Chairman, and then it was a 3-day weekend because 
of the Federal holiday. The majority did not tell us until 
Tuesday of this week who the witnesses would be for this 
hearing, and at that point we asked for our witness. So I just 
want to clear that with the chairman. And we can yield now to 
Mr. Waxman.
    Mr. Stearns. I thank the gentlelady. All these huge 
documents precipitated this hearing that jumped last Friday.
    Ms. DeGette. The chairman insinuated that we only asked for 
the witness 2 days ago, and that's because we only found out 
about these witnesses 3 days ago.
    Mr. Stearns. Well, let me recognize Mr. Waxman for 5 
minutes.

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

    Mr. Waxman. Thank you, Mr. Chairman. After the 
subcommittee's last hearing on Solyndra, Ranking Member DeGette 
and I wrote to Chairman Upton to request that the committee 
hold hearings on the effectiveness of U.S. policies in 
promoting clean energy. We asked the committee to examine what 
steps our Nation needs to take to make sure that we do not cede 
the clean energy market to China and other countries. Well, no 
such hearing has been scheduled. In fact, the subcommittee 
chairman told the media last week that the United States, 
``can't compete with China to make solar panels and wind 
turbines.''
    I cannot disagree more strongly with the chairman's 
statement. The clean energy economy will be the growth industry 
of this century. We will lose millions of jobs if we give up 
the industry to China. We can out-compete China, but to do so 
we have to reject the defeatist antiscience, antiprogress, 
antijobs views of those who impose investments in clean energy. 
Instead of helping America lead the world in clean energy, the 
Republican-controlled House is doing everything possible to 
maintain our addiction to fossil fuels and cripple renewable 
energy companies. Republicans voted against putting a price on 
carbon, which would have created market opportunities for clean 
energy. Republicans voted to slash funding for research and 
development into new clean energy technologies.
    And now Republicans are opposing government investments in 
solar, wind and other clean energy companies. Well, this agenda 
may be good for the oil companies, it may be good for the coal 
companies, but it is terrible for the American people and our 
economy. This hearing is supposed to be about whether the 
Department of Energy had legal authority to subordinate the 
government's loans to Solyndra when the loan was restructured 
earlier this year. But this is a rigged process. The chairman 
has invited witnesses from the Treasury Department who raised 
questions about DOE's legal authority. That's appropriate. 
Members should have a chance to hear from the Treasury 
witnesses and why they had concerns. But we should also have a 
chance to hear from DOE.
    The Energy Department disagreed with--the Energy Department 
disagreed with Treasury, but they are not being allowed to 
testify. We're going to get only one side of the story, and 
that's no way to run an investigation. But it gets worse. The 
committee has received a 6-page document from the Department of 
Energy that explains in the Department's legal rationale for 
subordination.
    We asked last week if the majority would object if we 
released this document so the public could understand DOE's 
rationale. The majority objected. They did not want the public 
to see DOE's explanation, and they're not going to have a 
witness who can talk about their explanation. On Wednesday, the 
Democratic staff asked the Republican staff if there would be 
any objection if we included a discussion of the DOE legal 
memorandum in the background memorandum we provide to 
Democratic members.
    Again the Republicans objected. They asked us to withhold 
this critical information, DOE's legal rationale for its 
actions from our own members. And yesterday, the Republicans 
said they don't believe this memo should be made public at this 
time. This investigation is beginning to resemble a kangaroo 
court. At our last hearing, witnesses who asserted their lawful 
constitutional rights were publicly humiliated, and now the 
Republican majority is withholding exculpatory information from 
the public while they cast innuendo.
    Mr. Barton. Will the gentleman yield?
    Mr. Waxman. No.
    Mr. Barton. I would sure like to know what information you 
have that we don't have.
    Mr. Waxman. Mr. Chairman, can I get order?
    Mr. Stearns. Regular order, regular order. The gentleman is 
entitled to be heard and he still has time.
    Mr. Waxman. I would like the clock stopped from that 
interruption.
    Mr. Stearns. You have another 10 seconds.
    Mr. Waxman. And now the Republican majority is withholding 
exculpatory information from the public. Now, I don't object to 
an investigation into Solyndra, and based on the record to 
date, I don't see evidence of wrongdoing by government 
officials, just a bad investment decision. I don't want to 
minimize it, but this was a bad decision, as far as we know, 
made on the merits.
    Mr. Barton. The gentleman's time is expired, Mr. Chairman.
    Mr. Waxman. But I have repeatedly said I support a fair and 
thorough investigation. If mistakes were made with taxpayers' 
money we should understand them and take steps to prevent them 
in the future, but our investigation needs to be fair. 
Preventing the Department of Energy from testifying is not 
fair, suppressing exculpatory evidence is not fair. Mr. 
Chairman, I believe you are a fair man, but you are not 
conducting this investigation fairly and impartially, and I 
hope you will reconsider.
    Mr. Stearns. The gentleman's time is expired. I would say 
to him, in all deference to him, we think we are. And both you 
and the President have cited me talking about China and 
competition, it was taken out of context. And I simply pointed 
out the fact that China, which subsidized their solar 
manufacturing at $30 billion a year, have fewer regulations, 
lower labor costs, access to raw materials, a lack of 
environmental safety regulations, I think the United States 
should focus where we have a competitive, financial advantage.
    Mr. Waxman. Mr. Chairman, since you have spoken out of turn 
I would like you to yield to me for one minute.
    Mr. Barton. Well, I sure would like to be yielded at some 
point in time, Mr. Chairman.
    Mr. Stearns. Well, I think the chairman has certain 
prerogatives. You've been a chair, you understand this.
    Mr. Waxman. Well, I don't agree with that. Now you want to 
suppress statements by members.
    Mr. Stearns. Regular order. We are now going to welcome our 
two witnesses. And let me say to both of you----
    Mr. Barton. Mr. Chairman, are we through with opening 
statements?
    Mr. Stearns. We are through with opening statements. You'll 
certainly have an opportunity to ask questions and to 
extrapolate on your feelings during your questions.
    Mr. Barton. So we are going to let what the ranking member 
said go un----
    Mr. Stearns. Well, I think in a democracy, you let both 
sides have their opinion, and Mr. Waxman and Ms. DeGette 
certainly have an opportunity to make any outrageous, 
outrageous claims.
    Mr. Barton. I don't have a problem with Ms. DeGette's 
opening statement.
    Mr. Stearns. Well, I think both of us don't agree, so I'm 
asking a question in regular order. Let's return to our 
witnesses. And let me say to both of you, first of all, you're 
aware that the committee is holding an investigative hearing, 
and when doing so has had the practice of taking testimony 
under oath. Do you have any objection to testifying under oath?
    Mr. Grippo. No, sir.
    Mr. Burner. No, sir.
    Mr. Stearns. OK. 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. Burner. No, sir.
    Mr. Grippo. No.
    Mr. Stearns. Is that case will you please rise and raise 
your right hand. I'll swear you in.
    [Witnesses sworn.]
    Mr. Stearns. You are now under oath and subject to the 
penalties set forth in Title 18, section 1001 of the United 
States Code. You may now give a 5-minute summary of your 
written statement. Please begin. And we will start with Mr. 
Grippo.

   STATEMENT OF GARY GRIPPO, DEPUTY ASSISTANT SECRETARY FOR 
      GOVERNMENT FINANCIAL POLICY, DEPARTMENT OF TREASURY

    Mr. Grippo. Well, Chairman Stearns and Ranking Member 
DeGette and other members of the committee, thank you for 
inviting us here today to talk about the Treasury's role in the 
Department of Energy loan guarantee program. My name is Gary 
Grippo. I'm the Deputy Assistant Secretary for Government 
Financial Policy at the Treasury. I'm joined here by Gary 
Burner. He is the CFO of the Federal Financing Bank. He reports 
to me in the Treasury. I submitted a written statement for the 
record. I'm not going to read a lengthy opening statement here. 
In the way of introduction I would just say that the Treasury 
has two roles, two very distinct roles, in the Department of 
Energy loan guarantee program, as a consultant and also as a 
lender.
    As I think you know, that as a consultant the statute 
requires the Secretary of Energy to consult with the Department 
of Treasury on the terms and conditions of loan guarantees and 
we provide input on that basis. And as a lender, when the 
Department of Energy decides to make a 100 percent federally 
guaranteed loan as opposed to a partially guaranteed loan, 
whenever they make a 100 percent guaranteed loan, then it is 
the Federal Financing Bank that actually issues the loan to the 
private sector entity. So we have a role as a consultant, we 
have a role in lending, which is largely operational. Mr. 
Burner and I would be pleased to answer any questions. We thank 
you again for inviting us here.
    [The prepared statement of Mr. Grippo follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Stearns. And I understand Mr. Burner does not have an 
opening statement, is that correct?
    Mr. Burner. I do not, sir.
    Mr. Stearns. OK. With that then, I will start my series of 
questions. The first question I have for you I would like to 
establish early on. We keep hearing loan guarantee, but I think 
this is a misnomer. As I understand it, when the DOE gives a 
loan guarantee to Solyndra, what happens is the Department of 
Treasury prints the money, gives it to DOE and DOE gives it to 
Solyndra, there is no private bank involved, there's no other 
commercial enterprise, except it goes from Treasury printing 
the money, giving it to DOE and DOE giving it to Solyndra. Is 
that a fair estimation of what happens?
    Mr. Grippo. Let me explain what happens when----
    Mr. Stearns. No, just answer my question. Is that 
approximately what happens? There's no bank involved?
    Mr. Grippo. There is no commercial bank involved.
    Mr. Stearns. Right. So Solyndra is not going to a bank and 
saying, to Bank of America or any other bank, saying, would you 
loan me $535 million because DOE will guarantee? They never did 
that, they just came to DOE and got a check, is that correct?
    Mr. Grippo. That is correct.
    Mr. Stearns. OK. I think the American people, a lot of 
people, when you hear loan guarantee, it means that the 
government is standing behind a bank, but in this case, the 
Treasury is printing the money. The other question is, I just 
want to get this clear, in your estimation, can taxpayers' 
money be subordinated ever, yes or no?
    Mr. Grippo. I really could not give you a yes-or-no answer.
    Mr. Stearns. So you legally can't tell me?
    Mr. Grippo. I cannot.
    Mr. Stearns. In your opinion, and Mr. Burner, has there 
ever in the history of the United States, Government taxpayers' 
loan guarantee or money given to investment in private 
companies like this, ever been subordinated to the private 
sector, in your experience, your answer is yes or no?
    Mr. Grippo. I have personally not been involved in any.
    Mr. Stearns. So you can't from experience?
    Mr. Grippo. I cannot.
    Mr. Stearns. In your limited experience, have you ever seen 
taxpayers' money be subordinated?
    Mr. Grippo. I have not personally not been involved in any.
    Mr. Stearns. OK. Mr. Burner, you're the chief financial 
officer, is that correct?
    Mr. Burner. That's correct, sir.
    Mr. Stearns. So in your experience--how long have you been 
in the office?
    Mr. Burner. I've been holding this position for 5 years.
    Mr. Stearns. OK. And what was your experience before that?
    Mr. Burner. I've been with the Treasury Department for 28 
years.
    Mr. Stearns. How many years?
    Mr. Burner. 28, sir.
    Mr. Stearns. 28. So in your experience of 28 years, plus 
being the chief financial officer, can and have you ever heard 
of taxpayers' money being subordinate to outside commercial 
firms?
    Mr. Burner. No, sir, I have not.
    Mr. Stearns. Never in your entire--that's 28 plus 5, so 
that would be 33 years?
    Mr. Burner. I'm involved in a limited supply, but, yes, 
sir.
    Mr. Stearns. So 33 years experience.
    Mr. Burner. It's 28 total, not 33.
    Mr. Stearns. 28 total. In 28 years total you have never 
seen taxpayers' money subordinated?
    Mr. Burner. No, sir.
    Mr. Stearns. And has your experience been if they do, it's 
against the law?
    Mr. Burner. I'm not aware of--I can't give you a legal 
interpretation on that, sir.
    Mr. Stearns. Mr. Grippo, do you think it's against the law 
for them to subordinate based upon the Energy Policy Act?
    Mr. Grippo. I'm not in a position to offer a legal 
interpretation. I'm not a lawyer.
    Mr. Stearns. Now, Mr. Grippo, the Energy Policy Act in 2005 
in its regulations require the Secretary of Energy to consult 
with the Secretary of Treasury regarding the terms of and 
conditions of a loan guarantee, is that correct?
    Mr. Grippo. Yes.
    Mr. Stearns. What must DOE do to satisfy this consulting 
requirement?
    Mr. Grippo. The Department of Energy must come to the 
Treasury at a minimum with the terms and conditions in a term 
sheet prior to issuing a conditional commitment to offer a loan 
guarantee.
    Mr. Stearns. So basically, DOE must seek approval to go 
through with a loan guarantee, is that fair to say?
    Mr. Grippo. That would not be fair to say. We are not 
approving or rejecting the terms and conditions.
    Mr. Stearns. So it's merely they may need to inform you, 
that's all they have to do?
    Mr. Grippo. Yes. They must consult.
    Mr. Stearns. Does Treasury have the ability to approve or 
reject a loan guarantee under the statute if they find there's 
problems?
    Mr. Grippo. We do not have the authority to approve or 
reject.
    Mr. Stearns. OK. What if Treasury believes the terms and 
conditions of the guarantee do not protect the government's 
interest, what do you do then?
    Mr. Grippo. We raise the questions, we provide suggested 
changes.
    Mr. Stearns. But there's nothing legally you can do beyond 
that?
    Mr. Grippo. No.
    Mr. Stearns. Mr. Grippo, if you will go to tab 18 in your 
binder, there's an email between OMB staff on March 10, 2009 
that states, ``Treasury was apparently not very pleased to have 
Solyndra sprung on them that day and let Matt Rogers who is 
DOE's stimulus advisor know about it in no uncertain terms.'' 
Is this an accurate description of DOE's consultation with 
Treasury?
    Mr. Grippo. We were not aware they were going to come to us 
with a term sheet for the Solyndra loan at that time.
    Mr. Stearns. Was Treasury----
    Mr. Grippo. It was the first loan in the process and we had 
not worked out a routine for conducting the consultation.
    Mr. Stearns. Was Treasury rushed to provide its 
consultation on Solyndra?
    Mr. Grippo. We asked for additional time and were given 
additional time and provided consultation in due course.
    Mr. Stearns. My last question, Mr. Grippo, when did 
Treasury first learn of DOE's intention to award a conditional 
commitment to Solyndra, and how did Treasury learn of this and 
who at the DOE informed Treasury?
    Mr. Grippo. Well, it would have been around this time of 
March 10th when we were provided information on the terms and 
conditions of the loan. I'm not specifically sure what 
individual transmitted the documents to us, but it would have 
been here in early March of '09.
    Mr. Stearns. Thank you. My time is expired. I recognize my 
colleague, Ms. DeGette from Colorado.
    Ms. DeGette. Thank you, Mr. Chairman. Mr. Grippo, the 
chairman asked you if Treasury was rushed in its decision and 
you said you were given additional time. So I guess your answer 
would be no, you weren't rushed?
    Mr. Grippo. We were not rushed.
    Ms. DeGette. OK. Now, the majority has highlighted these 
comments by Mary Miller, who is the Assistant Secretary for 
Financial Markets, or was, in an August 17th email to OMB 
Deputy Director Jeffrey Zients regarding restructuring of the 
Solyndra loan. So if you can take a look at tab 12 in your 
notebook and look at that email. In the email, Ms. Miller 
writes, ``Our legal counsel believes that the statute and the 
DOE regulations both require that the loan should not be 
subordinate to any other loan or debt obligation.''
    Mr. Grippo, do you know whether the Treasury Department 
rendered a legal opinion regarding whether subordination of 
government interests in the Solyndra loan is consistent with 
the statutory requirements regarding the DOE loan guarantee 
program.
    Mr. Grippo. We did not render such a legal opinion.
    Ms. DeGette. You didn't give a legal opinion, right? I 
mean, your department. You're not a lawyer so you wouldn't 
have.
    Mr. Grippo. The Treasury did not.
    Ms. DeGette. Right. Does the responsibility reside with the 
Department of Treasury for interpreting and implementing Title 
17 as it relates to the Department of Energy's authority to 
subordinate loans authorized under statute?
    Mr. Grippo. It is not the Treasury's responsibility to 
interpret an Energy statute.
    Ms. DeGette. In fact, it's the Department of Energy that's 
charged with implementing the statute that authorizes the DOE 
loan guarantee program, correct?
    Mr. Grippo. Correct.
    Ms. DeGette. And in fact, counsel for DOE's loan program 
office authored a 6-page memorandum dated February 15, 2011 
that provided a detailed discussion of the legal basis for the 
subordination during the restructuring of Solyndra's loan 
guarantee. That's the legal document I referred to in my 
opening statement. So, Mr. Chairman, today we're talking about 
why there was subordination and what the legal basis was, and 
so I want to ask unanimous consent that this February 15, 2011 
DOE legal memo regarding subordination be entered in the 
record. I will tell you, I read it, I'm a lawyer and I found it 
to have no privileged information or anything like that. I 
think it would be helpful to have that for today and for future 
hearings talking about this issue.
    Mr. Stearns. I thank the gentlelady. We will look at it and 
we will get back to you.
    Ms. DeGette. Thank you.
    Mr. Dingell. I have a question of the chair.
    Ms. DeGette. I will yield to the chairman emeritus.
    Mr. Dingell. I ask that the unanimous consent is not going 
to be considered, it's going to be honored?
    Mr. Stearns. No, Mr. Dingell. What we do is the procedure 
has been with the ranking member and I that if she submits 
something and I haven't seen it, then I have the staff and my 
counsel look at it. Likewise, when I want to put a unanimous 
consent, I let her and her counsel look at it before we make 
the decision. And that has been our regular procedure. And I 
think even you did that when you were chair of this committee.
    Mr. Dingell. It's always been my understanding that these 
records should be as clean as possible.
    Mr. Stearns. I agree.
    Mr. Dingell. And that everybody ought to know what all the 
events are that we're dealing with, and that when a member 
thinks that this is important that it ought to be in the 
record, it ought to be in the record.
    Mr. Stearns. I think, though, that both sides should have 
an opportunity to review it.
    Ms. DeGette. Reclaiming my time, Mr. Dingell, what Chairman 
Stearns and I have been doing, I've been doing----
    Mr. Dingell. I'm wasting your time.
    Ms. DeGette. That's oK. I've been doing it with his 
documents too, is just give him a chance to review it for a 
minute and then I will renew my motion.
    Mr. Waxman. Will the gentlelady yield to me?
    Ms. DeGette. Yes, certainly.
    Mr. Waxman. This isn't a document they have time to review, 
this is a document they've had since the very first day of our 
hearings on Solyndra, it's a document that was discussed 
whether we could release it. They're familiar with the 
document. And if you ask unanimous consent, they ought to be 
able to say yes or no.
    Ms. DeGette. OK. Well, let's give them 1 minute and if they 
won't do it then I'm going to make a motion. Well, let me just 
finish my questioning. Mr. Grippo, have you seen that document?
    Mr. Grippo. I have not.
    Ms. DeGette. That memo?
    Mr. Grippo. No.
    Ms. DeGette. Mr. Burner, have you seen that memo?
    Mr. Burner. I have not.
    Ms. DeGette. OK. Are you aware of any of the legal opinions 
that the Department of Energy expressed in that memo after 
doing the legal research?
    Mr. Grippo. I am not personally aware of their legal 
conclusions.
    Ms. DeGette. OK. And can you speak to what DOE's views are 
regarding a legal basis for subordination in a restructuring 
under the DOE loan guarantee program?
    Mr. Grippo. I would not feel comfortable speaking to their 
views and state of mind, no.
    Ms. DeGette. Because that's a different agency, right?
    Mr. Grippo. Yes.
    Ms. DeGette. Mr. Burner, what about you, can you speak to 
what DOE's views are regarding the legal basis for 
subordination in a restructuring under the DOE loan guarantee 
program?
    Mr. Burner. No, ma'am, I cannot.
    Ms. DeGette. And why is that?
    Mr. Burner. I am not familiar with their authorities.
    Ms. DeGette. Once again, Mr. Chairman, it would be really 
helpful to have DOE here. And Mr. Chairman, I renew my request 
for unanimous consent to put that memo in the record.
    Mr. Stearns. While we're looking at it, and I think there 
are several other staff to take a look at it first----
    Ms. DeGette. OK. Well, the staff has seen it, and our 
staffs have been talking about it, and your staff told my staff 
they were going to object.
    Mr. Barton. Well, Mr. Chairman, if you want somebody to 
object, I'll be happy to object.
    Mr. Stearns. The gentleman objects.
    Mr. Barton. I'm reserving the right to object.
    Mr. Stearns. And let me recognize Mr. Barton, the emeritus 
of the full committee, for his 5 minutes of questioning.
    Ms. DeGette. Well, wait a minute.
    Mr. Barton. Why don't you and Ms. DeGette finish your 
business.
    Mr. Stearns. I think you finished your time.
    Ms. DeGette. I finished my questions, but I have a request 
for unanimous consent and now Mr. Barton----
    Mr. Barton. I'm reserving the right to object.
    Ms. DeGette. Well, in that case, what's the basis because--
--
    Mr. Waxman. Well, do it or don't.
    Mr. Barton. I haven't seen the memo. I don't know what 
you're talking about.
    Ms. DeGette. Well, your staff has seen the memo.
    Mr. Barton. Well, I haven't seen it.
    Mr. Stearns. Well, in all fairness, let Mr. Barton, he's 
the emeritus of this full committee, if he wants to see the 
document I think he deserves to see it.
    Ms. DeGette. Great. OK. Let's give him a copy.
    Mr. Stearns. Well, I think at the same time, we're going to 
have votes right now, and I think we want to continue our 
questioning. He has the opportunity to ask his questions. 
Presumably after he asked his questions, he can read it and we 
can have a decision.
    Ms. DeGette. In that case, Mr. Chairman, I would ask 
unanimous consent that we recess for the votes and when we 
return from the votes we can----
    Mr. Barton. I do object to recess right now.
    Mr. Stearns. Object. And at this point, Mr. Barton is 
recognized for 5 minutes.
    Mr. Barton. Thank you, Mr. Chairman. Let me make one brief 
comment on Ranking Member Waxman's opening statement. I know 
when you're in the minority and the President is of your own 
party, you have an obligation to defend that President to some 
extent. I would also point out that we've been trying to get 
the facts on Solyndra for about 6 months and it took a subpoena 
request to finally get some documents and every member of the 
minority voted against that subpoena request.
    Now, last weekend we got a fairly extensive document done 
up right at 5 or 6:00. And to the minority's credit, their 
staff spent all weekend apparently going through the documents, 
found some documents that the minority felt were worthy of 
being released, and they exercised their right to do that. And 
I tip my hat off to them for that. They worked harder and maybe 
they were tipped off, who knows, but they at least, they took 
advantage of a situation and did a thing that they thought made 
sense.
    Ms. DeGette said in her opening statement that she wants to 
get the facts on the table. That's what we're trying to do. 
There's going to be no lack of witnesses called before this 
subcommittee from the Department of Energy and other 
departments.
    But today, we're here to talk to the Treasury Department 
because they're the Department that actually financed the loan, 
it's not really a loan guarantee, and apparently they're the 
Department that raised a lot of red flags about it that nobody 
at DOE or the White House paid any attention to. Now, with 
that, I want to ask my first question. How did the Treasury 
Department first find out about the Solyndra loan?
    Mr. Grippo. About the loan itself?
    Mr. Barton. About the fact that the Department of Energy 
under President Obama had decided to go forward with it. Were 
you officially notified, or did you hear about it in the press? 
What was the first inking that they were thinking about giving 
this company $500 million?
    Mr. Grippo. I think the best answer was that it was in 
March of 2009 when we were submitted documents to provide 
consultative input.
    Mr. Barton. So you did get an official transmittal from the 
Department of Energy?
    Mr. Grippo. Yes.
    Mr. Barton. Is that a part of the record that we can look 
at, if not, could we see those documents?
    Mr. Grippo. There certainly would be emails or other 
documents that delivered the term sheet and other related 
documents.
    Mr. Barton. Chairman Stearns, in his questions, made the 
point that in the law we authorized the loan guarantee, which 
means the private sector makes the loan and the Federal 
Government agrees to pay if there's a default. But in this 
case, this was not a loan guarantee, the Treasury Department 
actually granted a loan. Is there a decision document that goes 
through that process and makes that change on the record?
    Mr. Grippo. There is a, there are a number of longstanding 
written Federal policies, including Office of Management and 
Budget circulars and other documents, which state that it is 
the Federal Government's policy to have the Federal Financing 
Bank issue a loan when another agency is making a 100 percent 
guarantee. And if I could, I'll explain why that has been a 
longstanding policy.
    Mr. Barton. So even though the law stipulates a loan 
guarantee because there was a decision to do 100 percent 
financing, existing regulations convert that guarantee to a 
loan as opposed to a loan guarantee?
    Mr. Grippo. Well, there's still a guarantee that is issued 
by the Department of Energy, it's just that in this case, it is 
issued to a government corporation, the Federal Financing Bank, 
which is under the supervision of the Treasury, rather than to 
a commercial bank.
    Mr. Barton. But in layman's terms, the Department of Energy 
guarantees that one part of the Treasury will pay the other 
part of the Treasury if the loan is not repaid, that's what it 
amounts to?
    Mr. Grippo. The Department of Energy is issuing a loan 
guarantee to the Federal Financing Bank.
    Mr. Barton. So the Treasury will send $500 million to the 
Department of Energy who will turn around and send it to the 
Federal Financing Bank, which is a part of the Department of 
Treasury, isn't that correct?
    Mr. Grippo. That is correct. And there are good public 
policy reasons for doing it that way, because it is the 
cheapest way to finance that loan for the taxpayer.
    Mr. Barton. Now, there are emails, and I may, I think I'm 
right on this, that the minority has put into the record, or at 
least released to the public, that shows that many Treasury 
officials had grave concerns about this loan. Was the Treasury 
Department ever in a position to just reject the loan?
    Mr. Grippo. No. The Treasury Department--neither the 
Treasury Department nor the Federal Financing Bank would have 
legal authority to reject the loan.
    Mr. Barton. If asked on the record, or if the President had 
asked would the Treasury Department approve of this loan being 
given or would they have objected to it?
    Mr. Grippo. I'm sorry, could you repeat that question.
    Mr. Barton. Well, my time has expired. If you had been 
given an opportunity, if the Treasury Department had had the 
authority to say yes or no on the Solyndra loan at the time it 
was granted, would the Treasury Department have approved it or 
disapproved it?
    Mr. Grippo. One, the Treasury did not have that authority. 
And two, we did not have all of the due diligence and 
background information that the Department of Energy had. It's 
not our job in the process to make a credit decision or a risk 
decision.
    Mr. Barton. Is it fair to say that based on objections 
raised before the loan was granted, after the loan was granted, 
that the Treasury had grave concerns about this loan, is that a 
fair statement?
    Mr. Grippo. That's probably not how I would characterize 
it.
    Mr. Barton. Characterize it correctly, then.
    Mr. Grippo. We provided consultative input on the 
originally terms and conditions, we made suggestions, some of 
those were accepted. Beyond that, throughout 2010 and in 2011, 
we were certainly aware of issues, we were offering advice and 
input, we were letting the Department of Energy know that we 
had expertise in finance, in structured finance and in Federal 
credit policy, and we were trying to make that available to the 
Department of Energy, but we did not have specific information 
about the loan or----
    Mr. Barton. I'm trying to help you out.
    Mr. Stearns. The gentleman's time has expired. We have a 
vote on the floor. The 10-minute bell just rang, so we're going 
to allow Mr. Waxman to do his 5 minutes, but I tell all members 
to come back here and we will have a decision on the unanimous 
consent of the ranking member, but we will let Mr. Waxman, who 
has to be on the floor, offer his 5-minute questioning.
    Mr. Waxman. Thank you, Mr. Chairman. I will have to be on 
the floor after these series of votes, so I wanted to take my 
opportunity now to ask you questions. Who has the legal 
authority to make the decision on the issue of subordination, 
is it the Treasury Department or the Department of Energy?
    Mr. Grippo. It is certainly not the Treasury Department.
    Mr. Waxman. And do you know if it's the Department of 
Energy?
    Mr. Grippo. In these instances, I'm not sure if it is the 
Department of Energy or the Department of Justice or exactly 
where the authority lies.
    Mr. Waxman. Well, the Department of Energy runs the program 
and they heard from you, your department, that there were 
concerns about the subordination issue, isn't that correct?
    Mr. Grippo. I think we raised the issue of whether they 
could compromise a claim owed to government, not specifically 
whether there was subordination, to be clear about the concern 
we raised.
    Mr. Waxman. There was no legal decision or memorandum, you 
just raised a concern to them, by the way, look at what?
    Mr. Grippo. No. We did not have a legal conclusion or 
render a legal judgment. We were flagging an issue for them to 
consider.
    Mr. Waxman. OK. You flagged an issue for them to consider, 
they heard what you had to say, and then their lawyer issued a 
legal opinion. And a legal opinion is a legal opinion, it's not 
statement of facts, it's a statement of what they think the law 
is. And that's the document we're trying to make public. This 
is a document that the Republicans have had for months. In 
fact, at the very first hearing we had on Solyndra, Congressman 
Gingrey read a portion from this legal memo and asked you a 
question. And the issue before us at this moment in the 
committee is whether we are going to make this part of the 
record, whether we are going to make a legal opinion public.
    And the chairman is like one of those serials, when we were 
kids going to the movie, we are not going to get the result 
until you come back the next time. It suggested that we will 
know about the unanimous consent decision when we come back 
from these votes on the floor.
    Well, I'm not going to be able to be here, but if they 
don't give us unanimous consent, I think we ought to have a 
motion to put it in the record. I don't understand why this 
shouldn't be part of the record. It's a key document in our 
investigation, it explains the Department of Energy's legal 
explanation for the subordination of taxpayer debt, it was 
produced to our committee, and on September 14th, it was used 
by Mr. Gingrey. The Republicans may allege that the release of 
this document could taint fact witnesses in the investigation.
    Well, the entry of a relevant document does not pollute an 
investigation, rather, it creates a more fulsome record so we 
know what DOE was thinking. We don't have DOE here. We should 
have DOE here. I don't know exactly what this testimony we're 
hearing from you has to do with it all, unless we get it in 
perspective. You flagged an issue for DOE. Now we should say, 
oK, representative from DOE, the issue was flagged, what was 
your view of that issue? All we know is that the issue was 
flagged and their legal counsel wrote an opinion.
    Now, the Republicans have released a dozen documents to the 
press on this investigation, they leaked many more to the 
national media. The release of this specific document does not 
take the investigation any more than the release of all these 
other documents. And the majority wants to enter documents in 
the record whether it supports their theory of the case and 
keep documents out that may contradict it. So we'll see what 
happens in this fight when we come back. And I know that 
Ranking Member DeGette will do an able job in pointing out why 
this ought to be part of the record in addition to my comments. 
But let me ask you----
    Mr. Barton. Would the gentleman issue----
    Mr. Waxman. No, I will not. It's my time.
    Mr. Barton. I'll ask for additional time, if you will just 
let me ask----
    Mr. Stearns. Regular order, regular order. We do have a 
vote and Mr. Waxman can take his time. He has the floor.
    Mr. Waxman. Thank you, Mr. Chairman. Mr. Grippo or Mr. 
Burner, I would like to ask about any interactions you've had 
with Mr. Kaiser on this question of the loan. Did any of you 
hear from Mr. Kaiser?
    Mr. Grippo. I did not.
    Mr. Burner. I did not.
    Mr. Waxman. And when the Treasury conducted its review of 
Solyndra's term sheet and other information in 2009, did you 
instruct anyone to give specific advice to DOE on the terms and 
conditions because of the Mr. Kaiser's donation to the 
President?
    Mr. Grippo. No, sir.
    Mr. Burner. Certainly not.
    Mr. Waxman. Do any of you have reason to believe that 
anyone at Treasury gave specific advise to DOE on the terms and 
conditions of Solyndra's loan because of Mr. Kaiser's donation 
to the President?
    Mr. Grippo. No.
    Mr. Burner. No, sir.
    Mr. Waxman. When Treasury determined the interest rate for 
the loan to Solyndra, did you instruct anyone to take any 
specific action regarding this rate because of Mr. Kaiser's 
donation to the President?
    Mr. Grippo. No.
    Mr. Burner. No.
    Mr. Waxman. Are you aware of anything that would suggest 
that Mr. Kaiser's donation to the President that was a factor 
in DOE's determination whether to grant or restructure the 
Solyndra's loan guarantee?
    Mr. Grippo. No, sir.
    Mr. Grippo. No, sir.
    Mr. Waxman. Well, I thank you for your answers and for 
being here today, and for the limited value it may be. I yield 
back my time.
    Mr. Stearns. The gentleman yields back. And we are going to 
temporarily recess the committee and we will come back, and we 
ask the forbearance of the witnesses.
    [Recess.]
    Mr. Stearns. The subcommittee will reconvene. And as we 
mentioned before the break, we will take up the unanimous 
consent requests by the ranking member to put in a document 
dealing with Susan Richardson, the chief counsel of the loan 
program from DOE dated February 15, 2011. We have had a chance 
to review it. And I think before I make my final decision, I 
will recognize the gentleman from Texas, emeritus of the full 
committee, on his reservation. And Mr. Barton is recognized for 
5 minutes.
    Mr. Barton. Thank you, Mr. Chairman. I do reserve the right 
to object. And I do want to tell the gentlelady from Colorado, 
if we have a productive discussion, about my reservation, I am 
very willing to withdraw the reservation because I am not at 
all interested in hiding any relevant information from the 
American public. And the way to get it in the public domain is 
to obviously put it into the record.
    I will start out by saying, after consulting with the 
majority counsel, it is clear to me that this is a key memo. It 
is also clear to me that the majority counsel had every 
intention to probably have--in fact, I would say it would 
definitely have a hearing specifically on this memo and that 
the minority counsel was made aware of that at least 2 to 3 
weeks ago.
    There are apparently at least two memos that are identical 
in terms of content, with the exception of who they're 
addressed to. One memo is addressed to Secretary Chu from the 
general counsel and the other memo--and I think the memo that 
the gentlelady from Colorado wanted to put into the record is a 
memo to the general counsel from a lady named Susan Richardson, 
who is the chief counsel of the loans programs office. The 
content--at least from what I can tell in trying to read both 
memos very quickly--is identical, but the salutation and the 
address are different. That, to me, is somewhat puzzling.
    So at the appropriate time, I would hope we would put both 
memos into the record, if we're going to put one of them: The 
one addressed to the Secretary of Energy and the one also 
addressed to the general counsel.
    The key part of the facts in the memo is on page 3 and it's 
got--the paragraph headline is ``issue.'' And here's what--I am 
going to read it because I think it's important. ``The issue is 
whether the proposed subordination of certain of the borrower's 
reimbursement obligations to the DOE is consistent with 
subsection 1702(d)3 of Title 17.'' This is of the Energy Policy 
Act of 2005 of which I was a conference chairman and the 
committee chairman that supported this provision, and also 
supported the law.
    Subsection 1702(d)(3) provides that the guaranteed 
obligation shall be subject to the condition that the 
obligation is not subordinate to other financing.'' I want to 
repeat that, Mr. Chairman. ``Subsection 1702 d, subsection 
three provides that the guaranteed obligation shall be subject 
to the conditions that the obligation is not subordinate to 
other financing,'' not subordinate to other financing. That, to 
me, is explicitly clear.
    Now, here's the answer that--either Susan Richardson or the 
general counsel, depending on which memo you decide to put into 
the record--here's the short answer to that question. The 
proposed subordination is permitted under Title 17. The 
subordination condition contained in subsection 1702(d)(3) is, 
by its terms, applicable only as a condition precedent to the 
issue of the loan guarantee. Well, the question I would have 
for the author of the memo, Mr. Chairman, where does that come 
from? Under what fairytale do they decide after reading that 
the obligation is not subordinate just out of the blue make the 
statement, is applicable only as a condition precedent to the 
issuance.
    Now, as it turns out, Mr. Chairman, the reason that they 
answered that is that this memo was issued after Solyndra had 
already received some of its loan proceeds and was in default. 
This is an opinion on my part. I am not saying it's a fact, but 
I think it's an informed opinion.
    The Department of Energy is looking for a reason to 
continue the loan and to restructure it but they have a problem 
in that they can't subordinate it. And the only way to 
restructure it is if they can. So the rest of this memo, Mr. 
Chairman, goes through a convoluted explanation of why they 
think they can subordinate.
    And finally, on the bottom of page 6 in a footnote number 
two, they basically say, we think we can subordinate it because 
the Secretary of Energy has broad authority to do whatever he 
wants to do. That's not a real reasoned legal opinion, Mr. 
Chairman. So I would hope that we will find out how many of 
these memos are floating around, who actually authored them, 
have the staffs on both sides depose the authors, probably have 
a hearing specifically on this topic, and let's get to the 
bottom of it, because it is clear to me that the Department of 
Energy violated the law when they agreed to subordinate the 
taxpayers' money to private investors, some of whom appeared to 
have been heavy contributors to President Obama's campaign.
    And I want to thank the gentlelady for wanting to put the 
memo in the record. It is one of the key--if not the key 
documents, but we need to get all the facts on the table, not 
just this one document.
    Mr. Stearns. All right. I thank the gentleman. I think what 
we're going to do here is have a--by unanimous consent----
    Ms. DeGette. I'd ask unanimous consent to respond to the 
gentleman.
    Mr. Stearns. OK. I certainly was going to do that. I 
thought we might have a discussion that you might want to have 
more time on that. I think other members would like to do that. 
I think we will limit this to 3 or 4 members, maybe perhaps 15, 
20 minutes on this discussion if it goes that long. You are 
recognized for 5 minutes.
    Ms. DeGette. I just want to respond on the reservation of 
rights. I want to thank the chairman emeritus for restoring 
this debate to some sanity. We won't object to the other--if 
Mr. Barton will--apparently it's the same memo, and it has 
different addressees.
    Mr. Barton. That is correct.
    Ms. DeGette. But it has the same text in the memo.
    Mr. Barton. That's my quick reading.
    Ms. DeGette. I don't object to that coming in either. And I 
think the chairman emeritus is understanding the point that I 
have been making all along which is, we need to have a full 
investigation. We need to have all of the evidence in the 
record. We need to figure out what happened because just to 
have Treasury come in and say, ``Well, we said it should go to 
DOJ'' without having DOE in to say, ``Well, here's what we 
thought about what Treasury said, and here's why we did this,'' 
and to have the actual author of this memo in, we can't know 
what happened.
    And that's really the purpose of the Oversight and 
Investigations Subcommittee, is to figure out what happened. 
And so, you know, I think that the chairman emeritus' questions 
about this legal memo are good questions. I just only wish that 
Susan Richardson, or somebody else who drafted this memo, was 
here to answer those questions. So anyway, I am glad we're 
going to put this memo and the other memo in the record. I 
think it helps, and I would also ask the chairman after the 
recess next week, let's have another hearing, let's bring these 
folks in. I think we really need to know what they're doing.
    Mr. Stearns. As the gentlelady heard me earlier, we intend 
to bring Secretary Chu in and to bring the Department of Energy 
in, and I am glad that you support that.
    Ms. DeGette. Mr. Chairman, with all due respect, I do 
support bringing Secretary Chu in. And I think it's important 
to bring him in, but I also think we should bring in the 
individuals in DOE who actually wrote these memos and who had 
these communications and who gave these legal opinions. 
Otherwise, I fear that he might not know the legal basis for 
this. We need to know it from him but we need to----
    Mr. Stearns. All right. And I would say to the ranking 
member, my staff has told your staff that we are going to do 
that.
    Ms. DeGette. Excellent.
    Mr. Stearns. So I think excellent is a good word to use.
    Mr. Terry. Mr. Chairman?
    Mr. Stearns. The gentleman from Nebraska is recognized for 
5 minutes.
    Mr. Terry. Strike the last word.
    Mr. Stearns. Do you request to strike the requisite number 
of words?
    Mr. Terry. I do.
    Mr. Stearns. You are recognized for 5 minutes.
    Mr. Terry. Thank you, Mr. Chairman.
    And I agree with the gentlelady from Colorado and our 
friend the chairman emeritus from Texas. I am glad these two 
documents are being submitted to the record. I think that's 
important.
    I do have some concerns. Usually before the documents are 
submitted, we have some level of understanding about them. And 
some of the concerns that I have that now we're discussing 
them, we're discussing them in theory because interviews 
haven't been done with these parties. Traditionally what 
happens is, when we get documents that are conflicting, or we 
have questions about--there are interviews done by staff so 
that we're better informed. That has not been able to be done, 
and the staff's point here of not releasing these--of course, 
Mr. Chairman, as we have been briefed, the minority has had 
these documents for at least a week, if not more; is that true, 
Mr. Chairman?
    Mr. Stearns. That's my understanding.
    Ms. DeGette. If the gentleman will yield. Many of the 
emails that have been put in the record, interviews have not 
been conducted with the authors of those emails either.
    Mr. Terry. Let me ask you this: You want to have a hearing 
next week? I love that. Well, maybe not--well, I would if you 
would. But I'm not sure our colleagues would agree to having 
one next week. But the week after. So in the meantime, would 
you be helpful, gentlelady, the ranking chair, of providing, 
encouraging Susan Richardson to have an interview, any of the 
associates with her that wrote this memorandum? I think it's 
important that even Dr. Chu's staff be involved because the 
first one was ostensibly written to him, which raises a lot of 
questions, why was a subsequent one--they felt it was necessary 
to erase his name out there and to try to hide the original 
January memo. I think those are important questions to ask 
because it looks like there's a cover-up to protect Dr. Chu in 
this.
    Ms. DeGette. Will the gentleman yield?
    Mr. Terry. Sure.
    Ms. DeGette. I think that's a pretty incendiary statement, 
and I don't think we know. They might have had two memos; one 
with his name, one with Susan Richardson's name. I think that 
these allegations flying around about cover-ups are exactly the 
problem with this investigation. And what I would say is----
    Mr. Terry. You not allowing us to go through regular order 
to address the issue here raises those questions.
    Ms. DeGette. The gentleman asked would I be willing to 
encourage the administration to provide Dr. Chu and the other 
witnesses. I would be happy to do that, recognizing that the 
administration doesn't always do exactly what I tell them to 
do, sadly enough.
    Mr. Terry. Well, it would be helpful--reclaiming my time. 
It would be helpful because, frankly, from my perspective--and 
the rhetoric from at least the two top people on this committee 
has been obstruction and diversion. So I appreciate the 
gentlelady's--what I believe is a sincere gesture of helping 
give those.
    The point was, we hadn't had time to do those interviews. 
But I will tell you what, when things change from one version 
to another, it is a legitimate question to say, why was it 
changed? Why was Dr. Chu's name removed there? That's a valid 
question, and it looks like it was to protect him. Why were 
discussions occurring on subordination in October? So 3 
months--3 full months before the January memo was written. And 
then the February supposed official one made, it looks like--
and I want to know this during your interviews, the bipartisan 
interviews that will occur. It appears that perhaps there may 
have been another order, maybe verbal, that they were--the 
legal department was to design a memorandum supporting, 
supporting subordination as opposed to an unbiased legal 
analysis that the Department of Justice could have given. So I 
would appreciate those questions in the interview, and I will 
yield back.
    Mr. Stearns. OK. The gentleman from Texas, Mr. Burgess, is 
recognized for 5 minutes.
    Mr. Burgess. Thank you. And striking the requisite number 
of words on the reservation.
    I think it is important here to--when Secretary Zients, 
former Secretary Zients from the Department of Energy was here, 
one of the very last things we asked him was, would you make 
available members of your staff, to our staff, to be able to 
talk about these issues? And our staff on both sides, I think 
was doing that due diligence and proceeding. And this has all 
been difficult because, there was an obstruction at first. We 
couldn't get the very simplest of documents out of the 
Department of Energy and Office of Management and Budget until 
a subpoena was issued in July. And a subpoena was issued along 
party lines. Every Democrat voted against it. So to say today 
the Republicans have held exculpatory evidence for months, I am 
sorry to be incendiary, but that's a lie. That is a lie, and it 
should not be allowed to stand.
    We got the draft memo only as a result of the subpoena. And 
we got the sanitized memo--if I can use that incendiary 
language--we got the sanitized memo only because we asked--
since this is a draft, do you have a final? That is the issue 
before us here today. And to say that the Republican staff hid 
things is, again, I will stand up for them. That's a lie. It's 
not right. Correct the record. They have done their due 
diligence, both the staff on both the Democratic and the 
Republican sides. They did what we asked them to do. We said, 
Secretary Zients, can we have access to your staff, can we talk 
to them?
    Now again, the word ``sanitize'' may be incendiary but I 
have got to tell you, when you look at the so-called draft, 
attached a legal memorandum respecting the permissibility of 
the subordination of the context of the proposed restructuring 
and it's addressed to the Secretary through the general 
counsel's office. I mean, what are we to think when we see 
that, even though it says ``draft'' on this? And the only 
reason we got this was a subpoena.
    Look, the administration needs to hear something today, and 
it needs to hear that when we ask questions, they need to 
respond. We ask for documents, they produce. We call a hearing, 
they show up. If not, we're left to our own imaginations. And, 
as many of you know, I have a very vivid imagination. So you 
show me this, and I think, someone's sanitizing something; 
someone's hiding something. We have members of the press in the 
room. They're asking me questions when I walked out the door to 
go vote. What is the deal? Was one memo different from the 
other? Why was one cleaned up? I don't know the answer to the 
question. I would like to know the answer to the question. I 
would like us to call the relevant people here to this 
committee and get that straightened out. And I will yield back 
the balance of my time.
    Mr. Stearns. I recognize Ms. Schakowsky.
    Ms. Schakowsky. I move to strike the requisite number of 
words.
    Mr. Stearns. The gentlewoman from Illinois is recognized 
for 5 minutes.
    Ms. Schakowsky. I would like to yield to my colleague, 
Congresswoman DeGette.
    Ms. DeGette. Mr. Chairman, I think we should cut this 
debate off because Mr. Burgess really didn't want to say what 
he just said.
    The documents from the Department of Energy were not 
produced under subpoena. The only subpoena was for the 
documents from OMB, not for DOE. All of the documents from the 
Department of Energy were produced to this committee--65,000 
pages--were produced to this committee voluntarily. And this 
particular memo--and in addition, the other memo which says 
``draft'' on it and Secretary Chu's--oh, the Chu one was the 
OMB production. But this one was produced many, many months 
ago. And so, you know, if we want to try to cater to the press 
and make a scandal where there is none, we can do that, if we 
want to have a full and thorough investigation. I would suggest 
we put these memos in, and we bring the DOE people in. We talk 
to them about why there was one draft and another one and so on 
instead of making these allegations completely unsupported by 
any evidence.
    And I will also say, Mr. Chairman, that the DOE wasn't even 
invited to this committee. Mr. Waxman and I wrote a letter to 
you asking that the DOE be invited to this committee. So to 
somehow say that the DOE is now trying to hide something about 
these memos is again inaccurate. I think that emotions are 
running high. I am glad we're putting both of these memos into 
the record. Let's bring the DOE in to talk to them about it 
instead of making these allegations that are completely 
unsupported by any evidence. And I yield back.
    Ms. Schakowsky. I yield back.
    Mr. Stearns. The gentlelady from Tennessee is recognized 
for 5 minutes.
    Mrs. Blackburn. Thank you, Mr. Chairman. And in response to 
what Ms. DeGette said regarding Mr. Burgess' comments, I just 
want to make certain that we all understand that it was the 
subpoena from OMB under which this draft memo became available. 
And it is because of this draft memo that was made available 
under the subpoenaed documents that we then were able to get 
the final version of this memo after they went back to DOE for 
that request.
    So just for a correction for the record, it was because of 
that subpoena--and that is exactly what Dr. Burgess was saying 
in his comments. I think this is such a very serious issue. As 
we look at not only Solyndra and the situation there, as we 
look at this loan program in its totality, as we look at the 
other loan guarantee programs that are with other departments 
and how they are working, this is the type of issue we need to 
drill down on. We do need to have the time for the staff to do 
their due diligence and for the members to do their due 
diligence. And I do hope that we will subpoena other members 
that were involved in this process of writing this email and 
the attached document that go from January 21, 2011, which is 
the email that came under the OMB subpoena and then into the 
final document that goes through detailing the subordination 
that is the February 15 document. And I would encourage the 
chairman to continue with moving forward with that hearing.
    At this time, would any of my colleagues like the balance 
of my time?
    Mr. Terry. May I have 30 seconds?
    Mrs. Blackburn. I yield to Mr. Terry.
    Mr. Terry. Thank you.
    Just referencing part of the gentlelady from Colorado's 
statement about cutting off the discussion here, I mean, let 
the record reflect that they initiated this discussion about a 
memo, made specific accusations against the majority of hiding 
those from them. So it is completely appropriate now that we 
have the venue to A, defend ourselves against those 
accusations, and to be able to have a valid discussion about 
what--the fact that there's two memos with two different 
headings--and we don't know what else the differences are at 
this point--are completely appropriate. As a former reformed 
lawyer that did a lot of trial work, the judge would say, 
``Madam, you opened the door.''
    Mrs. Blackburn. Reclaiming my time, I yield to Dr. Gingrey.
    Mr. Gingrey. I thank the gentlelady from Tennessee for 
yielding.
    It just seems to me that this issue has been brought up by 
the minority's request for unanimous consent to submit this 
memo for the record. The minority knows that in consultation 
with the majority that a commitment was made by the majority to 
have a subsequent hearing and to have Secretary Chu come and 
testify about this memo and who gave directions in regard to--
essentially who knew what and when did they know it? And the 
minority, at this hearing today, has sort of preempted that 
process after seemingly agreement was made between majority 
staff and minority staff that this would be done in a timely 
manner under regular order so the dots could be properly 
connected. And all of a sudden, you know, we get this put on us 
this morning, unanimous consent to release a memo, a draft, 
essentially, that's incomplete. And we can't connect these 
dots.
    So I am glad that the gentleman--the chairman emeritus Mr. 
Barton from Texas is in all probability going to withdraw his 
objection. But let's get this done and move forward to that 
hearing that the chairman of the subcommittee, Mr. Stearns, has 
committed to the minority that we will have. So I think that 
should end the discussion quite honestly, and let's go on with 
going back to this issue of subordination of the loan.
    Mrs. Blackburn. Reclaiming my time and I yield to Mr. 
Griffith.
    Mr. Stearns. The gentlelady's time has expired. I will 
recognize Mr. Griffith as the last speaker for us. And I am 
prepared to rule with Mr. Barton. Mr. Griffith, would you 
perhaps, give to Mr. Scalise a little bit of time so we can 
wrap this up? We have two witnesses here and I would like to 
keep moving because I think the witnesses are showing great 
forbearance.
    Mr. Griffith.
    Mr. Griffith. I will do my best, Mr. Chairman. I am 
actually glad that the memos have come in. I do agree with some 
of the comments that have been made previously, that the staff 
was trying to get this thing in the right order so that you 
didn't have speculation and so forth going on.
    But I am glad it's in because I want the press and the 
lawyers of the United States of America to take a look at this 
memo. When I read this memo several weeks ago, I made a comment 
on it then that it looked like a law school project. I even 
texted my staff and asked them if they could find out when 
Susan Richardson was admitted to the bar, because I believed it 
must have been only about 3 months before the memo was written. 
It turns out she was admitted in 1983, but that was a surprise 
to me because of the quality of work. There is no reference to 
court cases in this thing. It references one previous code 
section. It doesn't give you any court cases on that code 
section that it says that there is a distinction with. And then 
you get to the part where it says in here, Once such a 
condition precedent--that being you can't subordinate--has been 
satisfied, paren, or waived--and there's nothing in the Code 
that says ``waived''--it has no continuing legal effect. In 
other words, as I said at the hearing when Mr. Silver admitted 
that he had not--sitting in the chair you are sitting in, Mr. 
Grippo--he had not even read the memo before putting the 
taxpayers of the United States in the back seat to the tune of 
$75 million, it was astounding to me that this memo was relied 
upon.
    I think it's great that the Department of Treasury at least 
threw up a warning signal in there somewhere and said, y'all 
better have Justice look at this, because I, frankly, would 
like to see not only her asked to be here, but I would like to 
see Susan Richardson subpoenaed to be here because I want to 
find out exactly why she was putting a memo together like this. 
Was she told to come up with this? That's what I believed the 
very first time I read it.
    And what is interesting is, on page 1 it says, ``default.'' 
And this is what leads you to suspicion and speculation because 
these are the series of things--you have already heard about 
footnotes from some of the others. Default on page 1. Well, the 
Code also requires that if there's a default, the Attorney 
General be notified. Did that happen? Their own rules require 
in 609.18, if there's a deviation, Secretary of Treasury is 
supposed to consult with or notify--I mean the DOE is supposed 
to notify the Secretary of the Treasury. I'd like to know if 
that actually happened because this clearly was a deviation 
after a default.
    So they didn't follow their own rules. I don't know if they 
had notified the Attorney General. It appears from the memos 
and the emails that we've got they didn't notify Treasury of 
what was going on. And you know, it just seems like this entire 
memo--in fact, one of my original notes says, it's 
inconvenient, boo-hoo. And I think what happened here was, 
Treasury--excuse me--Department of Energy made a bad loan. They 
realized they had made a bad loan. They were trying to figure a 
way to cover up the fact--not that they had done anything 
illegal but cover up the fact that they had made a bad loan. 
And they went and broke the law. And with that, I will yield to 
my colleague.
    Mr. Stearns. The balance of the time is recognized to Mr. 
Scalise from Louisiana.
    Mr. Scalise. I thank my colleague for yielding.
    Mr. Chairman, I thank you for continuing to help us shine 
light on what is a major scandal that we have been trying to 
get to the bottom of on this side. And unfortunately, our 
colleagues on the other side have blocked us and stonewalled us 
on every front, going back to predating the subpoena. But we 
had to get a subpoena to get this information and everybody on 
the minority side voted against that subpoena, voted against 
going forward with that so we can finally uncover some of the 
things that we have uncovered. And there is a lot that we have 
uncovered, and there's even more to come that we are trying to 
find out. And we continue to get stonewalled on every front. 
And they keep saying, Why in the Department of Energy here? 
Well, the Department of Energy's loan program head was here a 
few weeks ago; and in fact, I asked the head of the Department 
of Energy's loan program who made the decision to subordinate? 
And he refused to answer that question under oath.
    Finally he acknowledged under oath that he would get me the 
names of everyone involved in the subordination, everyone 
involved. He admitted that under oath and then he resigned. And 
of course I am going to have to question the legal counsel 
later, Mr. Chairman, if he is still compelled to get us that 
information. Because just because he resigned, he said under 
oath he would get us that information. Who made the decision to 
put the taxpayers in the back of the line? This isn't about the 
press or you know Republicans and Democrats. There's $535 
million of taxpayer money at stake. And when we said we want to 
get the information, we weren't able to get it until we 
subpoenaed. And in fact this document wasn't even originally 
given to us by the Department of Energy. It came through OMB. 
And then we went back to the Department of Energy and they 
said, Oh, yes, we forgot to give you this. We forgot to give 
you this? How could they forget this document? This is the 
document--and it's a legal counsel opinion that basically says 
you can ignore the law. Well, you can't ignore the law. The law 
is very clear. This is the law on subordination. One sentence. 
It says you can't do it. And yet they went and got a legal 
opinion anyway? I want to know who else was involved in the 
decision to subordinate.
    Was it just Susan Richardson? Or was she directed by 
somebody else to come up with this opinion because they wanted 
to give the loan anyway? We have got memos from the White House 
saying, Get this thing done. We want the Vice President to be 
involved in the ribbon cutting. They were concerned about a 
photo-op so in order to do that they allowed $535 million of 
taxpayer money to be put in the back of the line of some 
private venture capital firm based on a phony legal memo from 
their in-house counsel, and we couldn't even get this 
information until we forced a subpoena that everybody on the 
minority side voted against. Those are the facts, and we're 
trying to get more facts. And we need all of this to come out 
and we need more hearings because we haven't gotten all of the 
facts from the people that were involved in this. And thank 
you.
    Mr. Griffith. I thank the gentleman and the chair, and I 
yield back.
    Mr. Stearns. The chair is prepared to rule. If the 
gentleman from Texas no longer has a reservation----
    Mr. Barton. Mr. Chairman, I am going to reserve my 
reservation. I do have a question, though. If I understand Ms. 
DeGette quickly, she is agreeable to putting both memos in the 
record?
    Mr. Stearns. She is. She has told me both memos.
    Mr. Barton. On the second memo, there is an addendum to it 
that has a number of tabular information regarding proposed 
finances of Solyndra. Does she wish that to go in the record? 
Is there any objections?
    Ms. DeGette. I don't know what those tabular items are. If 
I can see those, I just want to make sure it's not proprietary 
information or something. But I would assume we wouldn't 
object.
    Mr. Barton. I would be agreeable to whatever the chair and 
the ranking member----
    Mr. Stearns. Well, I am going to take the position that 
both documents, by unanimous consent, will be a part of the 
record.
    Ms. DeGette. I reserve objection on the table, on the 
second one until I can see it. Show it to me.
    Mr. Barton. That's why I am asking the question.
    Mr. Stearns. Here is the tabular.
    Mr. Barton. It is a financial projection for Solyndra for 
about 5 years into the future. And I am not saying you should. 
I am just saying it was attached to the memo.
    Ms. DeGette. Mr. Chairman, I don't object to the addendum. 
I would ask that the majority and minority staff just review 
that to make sure there's not proprietary information. It looks 
like profit and loss statements and it is stamped confidential.
    Mr. Stearns. Without objection, both documents are part of 
the record, including the tabular. And with that, we are----
    Mr. Terry. I have a question though because what the 
gentlelady from Colorado said is not what you said.
    Mr. Stearns. Well, I am making the tabular part--by 
unanimous consent, she can object. But she is not objecting. So 
the tabular is part of the record.
    Mr. Terry. Regardless of whether it's proprietary?
    Ms. DeGette. What I am saying is that subject to the 
agreement of the staff to redaction of any confidential 
business information. Here's what the problem is: We agreed to 
these two memos and then the chairman emeritus came in with 
this----
    Mr. Stearns. Can I say to the ranking, the tabular is such 
fine print, I don't think either side is going to look at this. 
I think we should move on, instead of having another discussion 
about the tabular. I think your decision is----
    Ms. DeGette. You know, you brought----
    Mr. Stearns. Are you objecting to----
    Ms. DeGette. I am objecting to the tabular thing until we 
can review it and decide. The memo itself I do not object.
    Mr. Stearns. Well, then, if you object to that, then I 
think our side is going to object to putting the original memos 
in.
    Ms. DeGette. Fine. Whatever you want to do.
    Mr. Barton. I think we have agreement to put--to put both 
documents in.
    Mr. Stearns. We do have agreement.
    Mr. Barton. And the gentlelady has made a point that she 
wants to make sure there is no proprietary----
    Mr. Stearns. OK. Here is the way we are going to put it. We 
are going to put the two documents in by unanimous consent, 
part of the record, we are going to put the tabular in subject 
to the review by the staff for redaction. So ordered.
    Ms. DeGette. Thank you.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Stearns. Now we will move on to our witnesses who have 
been kind enough to stay with us. And at this point, I think 
our side is recognized next and that would be Mr. Terry.
    Mr. Terry. All right. Gentlemen, thank you for your 
patience. I have some rather bland questions. But first I want 
to make a point about whether or not--I think it was Mr. 
Grippo, did you say that you didn't feel that you were rushed 
to provide your information or after the consultation, your 
feedback?
    Mr. Grippo. Let me be clear about what happened. We were 
provided with a term sheet for this deal. We were asked for a 
very quick turnaround for our consultation. We felt we needed 
more time. We asked for that.
    Mr. Terry. But you didn't feel rushed?
    Mr. Grippo. Well, we felt that we needed more time. We 
asked for it. They agreed that we should have more time and in 
due course, gave our consultation.
    Mr. Terry. Well, are these dates correct then that I just 
have in some notes, March 10, 2009, DOE asks Treasury for the 
consultation. Then March 17, 2009, DOE approves and commits to 
the loan. March 19, Treasury submits their consultation and 
questions. It seems to me that your consultation was fairly 
irrelevant to DOE.
    Mr. Grippo. I am not aware of that sequence of events 
myself on those particular things.
    Mr. Terry. All right. We will submit those. They're in the 
documents, but I am going to get to, in my 3 minutes left, 
another set of questions here.
    Mr. Burner, in tab 2 of your binder is a memorandum that is 
March 16, 2010 titled Treasury/FFB consultation with the 
Department of Energy on the Solyndra fab two LLC project or 
entitled the project. Have you seen this memo before?
    Mr. Burner. Yes, sir I have.
    Mr. Terry. All right. Do you know who drafted the memo?
    Mr. Burner. A member of my staff.
    Mr. Terry. Under your instruction?
    Mr. Burner. Yes.
    Mr. Terry. OK. Why was the memorandum to file drafted 
almost 1 year after a call with DOE? And I am referring to the 
first paragraph of the memorandum that seems to be documenting 
a call a year early.
    Mr. Burner. The staff member was directed to put it in 
final but did not. I found out about that about a year later 
and asked that it be put in final at that time. This is the 
same memo. It has not been changed since it was originally 
drafted.
    Mr. Terry. All right. So your aide or assistant drafted the 
memo a year earlier?
    Mr. Burner. Yes.g
    Mr. Terry. But did not submit it or something?
    Mr. Burner. Just didn't get put into final. I felt I would 
rather explain this to you than explaining that we might have 
backdated a memo.
    Mr. Terry. Good. I appreciate that. I have had things 
similar in my office where I had to accept staff members' goof-
ups as my own. So I feel for you.
    Mr. Burner, again, I would like to address a few points 
made in the FFB memorandum to file of that date relating to the 
Treasury's call----
    I have got time.
    Mr. Stearns. I am sorry. You've got time.
    Mr. Terry. The memo that the FFB staff made two conclusions 
about the Solyndra project that the equity Solyndra had in the 
project was 27 percent as opposed to what appears to be a 
standard of 35 percent.
    I can't find where 35 percent is referenced. Is that one of 
the conditions precedents in a rule that I don't know about? 
Where does that 35 percent come from?
    Mr. Burner. In discussions before that, we were under the 
impression that there would be 35 percent loan equity put in 
the deals as a standard.
    Mr. Terry. So this is a Solyndra-specific issue, that you 
were under the impression that Solyndra had said there would be 
35 percent equity by the ownership?
    Mr. Burner. It was in going forward and reviewing deals, we 
had expected to see 35 percent equity put into the deals, and 
that was not what happened.
    Mr. Terry. So it is not Solyndra-specific but deals, 
plural?
    Mr. Burner. Yes. Yes, sir, you are correct.
    Mr. Terry. OK. And in that regard, where can I find the 
reference to the standard of 35 percent? And then after that, 
why is that important that they have 35 percent equity?
    Mr. Burner. The equity--the number actually comes from--if 
this was a partially guaranteed loan, it would be 80 percent of 
80 percent, which would be 36 percent equity. So, oK, we 
rounded it to 35 percent as sort of a standard. 80 percent is 
sort of a guarantee. It's sort of a Federal credit policy that 
things be partially guaranteed rather than fully guaranteed as 
preference.
    So this would have put the government on an equal basis in 
terms of risk, if there was 35 percent equity as opposed to--
and 35 percent equity on a fully guaranteed deal as opposed to 
having a 20 percent equity and having the loan be 80 percent 
guaranteed.
    Mr. Terry. And the risk then means having unbalanced risk, 
what are the potential consequences to the government?
    Mr. Burner. It was felt that it was a better risk for the 
government if there was more equity in the deal.
    Mr. Stearns. The gentleman's time has expired.
    I recognize the chairman emeritus on the ranking side, Mr. 
Dingell, the distinguished gentleman from Michigan.
    Mr. Dingell. Mr. Chairman, I thank you. And I express to 
you the deep sympathy over the difficulties we are having this 
morning. I have never seen such a big fuss over such a small 
matter in this committee.
    I have a couple questions for our witnesses.
    Gentlemen, the issue here of subordination of the Federal 
guarantee and guaranteed loan did not occur when the initial 
transaction took place. It occurred later after Solyndra began 
to get close to failure, yes or no?
    Mr. Grippo. That is correct, yes.
    Mr. Dingell. OK. And the United States has, from time to 
time over history, submitted itself to a subordination and to a 
lower treatment of its rights in order to carry out some public 
policy, is that not right?
    Mr. Grippo. I am not personally aware of those 
transactions, but it could be well the case that that's 
permitted.
    Mr. Dingell. Well, these two documents that we are hearing 
about, these are essentially work papers which are defining 
what the government should do, is that right?
    Mr. Grippo. I am sorry. Which documents are you referring 
to?
    Mr. Dingell. The two of which we have had such a splendid 
fuss.
    Mr. Grippo. Forgive us, but I don't think we have been 
privy to those memos.
    Mr. Dingell. Now, I would note that the memorandum for the 
general counsel has some very interesting remarks. It says 
here, ``Based on the analysis of the directorate portfolio, 
management division of the loan program's office, (Director 
PMD) DOE has determined that a restructuring of the borrower's 
obligations under the loan guarantee will yield the highest 
probable net benefit to the Federal Government by minimizing 
the Federal Government's potential loss on the guaranteed 
loan.'' Is that right? Yes or no?
    Mr. Grippo. I have not seen the memo.
    Mr. Dingell. All right. But that's in there.
    Now when the government confronted this problem, they 
looked to see how they were going to save this loan and how 
they were going to save the businesses, Solyndra. Is that 
right? And so they felt that the approach which was taken was 
the best, is that right?
    Mr. Grippo. I believe that was the Department's view.
    Mr. Dingell. Now what was the policy impact of the Treasury 
on this? Did you superintended or second-guess or come up with 
any corrections to the Department of Energy? Or did you just 
approve the release of the money? Which was the course that you 
took?
    Mr. Grippo. It was not our statutory decision to make. We 
rendered no legal judgment.
    Mr. Dingell. You just saw to it that the money was properly 
released, is that correct?
    Mr. Grippo. I'm sorry?
    Mr. Dingell. You just saw to it that the money was 
correctly and properly released according to the rules and 
regulations----
    Mr. Grippo. Yes.
    Mr. Dingell [continuing]. Of the Treasury Department? That 
was all you did?
    Mr. Grippo. The Department of Energy certified to us that 
the money should be released.
    Mr. Dingell. I think, Mr. Chairman, if we are going to have 
a proper discussions of this, we ought to bring DOE in and let 
DOE tell us about why it was they came to the conclusions about 
which we are in this great befuddlement today.
    And I simply would make a couple of observations here. We 
have developed the technology for new batteries and all kinds 
of things like that that are being made in China, in Korea, in 
Germany, and in all kinds of other places. The result of that 
is that other people are making batteries that essentially were 
designed over here. And when the Chevy Volt drove out of the 
factory brand-new, it was an American car, drove out of an 
American factory with Korean batteries which were designed in 
this country. And what we're trying to do is to get back 
control of the battery industry because our people in the auto 
industry--and I do have some familiarity with that endeavor--
have come to the conclusion that if the United States doesn't 
control this kind of technology, that it is going to see the 
entire manufacturing industry of automobiles move overseas. 
That doesn't seem to me to be very good sense.
    So we're trying to develop an industry that will enable us 
to compete on the production of batteries. And the Congress 
came to this policy when we passed the legislation that we are 
discussing today. And it was our decision that we wanted to 
have these kinds of subsidies so we can compete with the 
Germans. Now the Germans have as much sunshine over there as 
does Alaska. No more. And yet they're big in this whole 
business and they're controlling this industry. They and the 
Japanese and the Koreans and the Chinese. And the United States 
is little by little being frozen out. And we want to be in this 
new technology. But we are not seeing ourselves in it because 
they subsidize and finance the efforts of their industry and we 
do not. So we started out.
    So it's pretty clear we made some mistakes on the matter. 
And they were big mistakes and they cost us a lot of money. But 
the hard fact of the matter is, losing control of this 
technology is going to cost us a heck of a lot of more money 
and it's going to cost this industry and jobs, not just of the 
new technology, which is where our hope is as a manufacturing 
nation, but also unfortunately in preserving existing industry.
    So Mr. Chairman, I thank you for your courtesy. And I hope 
that this committee will look at this as something where we had 
a mistake or a bunch of mistakes and set out to try and correct 
those mistakes but understand two things, first of all there's 
no criminal or serious misbehavior here. There just was some 
dumbness. And unfortunately, we find ourselves in the awkward 
position where we have got to go forward and try to save these 
kinds of industries for the benefit of future generations of 
Americans and quite frankly for the health of this one. Thank 
you, Mr. Chairman.
    Mr. Stearns. The gentleman's time has expired. I recognize 
the gentleman from Pennsylvania, Mr. Murphy, for 5 minutes.
    Mr. Murphy. I thank Mr. Chairman. I thank you gentlemen for 
being here. We appreciate your candor. I also want to make sure 
it is very clear, Republicans support clean energy. As a matter 
of fact, we would love to follow through on the President's 
constant promises we ought to be cleaning up coal. We are, 
however--primarily the purpose of these hearings, protect 
taxpayers for potential or actual corruption, incompetence, 
violations of law, or ignoring the law, and that's why we're 
having this hearing.
    But Mr. Burner, again, thanks for being here. On February 
10, 2011, you sent an email to the loans programs office 
general counsel and director of the Department of Energy loan 
monitoring program, am I correct on that?
    Mr. Burner. You are, sir.
    Mr. Murphy. That email is on tab 8 of your minder binder. 
You are probably familiar with that. In the email you have 
learned that DOE is ``close to implementing a set of 
adjustments to the Solyndra guarantee including subordination 
of DOE 's interests,'' is that correct?
    Mr. Burner. That is correct.
    Mr. Murphy. In this email, what did you recommend that the 
Department of Energy do?
    Mr. Burner. Absent other authorities, we recommended the 
Department of Energy go seek and consult with the Department of 
Justice.
    Mr. Murphy. Can you describe the context of this email that 
led you to ask for a Department of Justice consultation?
    Mr. Burner. In my experience with our client agencies, when 
there is a workout situation potentially developing that the 
Department of Justice is consulted with, they have statutory 
authority over such matters. I do need to say though that some 
agencies have their own authority so, it's not a 100 percent 
call every time.
    Mr. Murphy. But that's out of your agency. In your area, 
that's one that you push for to make sure things are done 
correctly and follow the law. Am I correct in assuming that?
    Mr. Burner. I am sorry?
    Mr. Murphy. Out of the Treasury, that is something that you 
practiced to make sure that other departments are following the 
law as----
    Mr. Burner. This was advice to a couple of colleagues on an 
area of law that they may--I was not sure they were aware of.
    Mr. Murphy. Thank you. Were other Treasury officials 
involved in the drafting of this email you sent to DOE?
    Mr. Burner. Yes, sir. I am part of a team. And this was a 
group effort and then I was the person who transmitted the 
email.
    Mr. Murphy. So given this, why did Treasury think it was 
important to write Department of Energy and ask it to seek 
Department of Justice approval of the Solyndra restructuring? 
What specifically was it that was your concern there.
    Mr. Burner. The concern is that the authority to compromise 
a claim against the government is Department of Justice's 
unless they have their own authority. We do not know what their 
actual authorities are. And that's why we wrote the email to 
them, was to warn them.
    Mr. Murphy. But you were not legally required to contact 
Department of Justice in this?
    Mr. Burner. No, sir.
    Mr. Murphy. Are you aware of the following Federal statute, 
31 USC 3711(b) which says, ``Unless otherwise provided by law, 
when a principal balance of a debt exclusive of interest 
penalties of administrative costs exceeds $100,000 or any 
higher amount authorized by the Attorney General, the authority 
to accept the compromise rests with the Department of 
Justice.'' Are you aware of that?
    Mr. Burner. I am aware of the authority lies with 
Department of Justice. I am not a lawyer so I am not familiar 
with the statutes themselves.
    Mr. Murphy. Certainly this seems to fit in with the issue 
that this exceeds $100,000 in interest penalties and 
administrative costs. I just wanted to get this on the record.
    Mr. Burner, also, DOE responded to your email of February 
10, 2011, asking Department of Justice to seek approval of the 
Solyndra restructuring. They did respond to you, am I correct?
    Mr. Burner. Yes, they did.
    Mr. Murphy. And in fact, DOE staff debated, and I quote, 
that there is ``gross misunderstanding of the outcome of the 
restructuring of the Solyndra obligation.'' Now you talked to 
DOE about your email, am I correct?
    Mr. Burner. That is correct.
    Mr. Murphy. What was the substance of that conversation?
    Mr. Burner. The primary purpose of the conversation was to 
make sure that DOE was aware that they may have an obligation 
to consult with the Department of Justice.
    Mr. Murphy. And why didn't they believe it was necessary to 
talk with Department of Justice?
    Mr. Burner. They believed that the results of the deal, the 
reorganization, restructuring did not compromise the claim so 
that it had not reached a point where they needed to take it to 
the Department of Justice.
    Mr. Murphy. Did they convince you it wasn't necessary to go 
to the Department of Justice? Was their discussion convincing, 
in your mind?
    Mr. Burner. They were in a workout situation. I thought it 
would have been wise for them to go to the Department of 
Justice.
    Mr. Murphy. Now given all of the information you have seen 
at that time and since then, to your knowledge, do you believe 
today that the Department of Energy should have sought 
Department of Justice approval?
    Mr. Burner. Yes. I have said that I believe that they--that 
it would have been wise for them to seek Department of Justice 
approval.
    Mr. Murphy. And given the problems with Solyndra, have you 
raised concerns about potential default for any other loans 
approved by the Department of Energy or paid out by the Federal 
Financing Board?
    Mr. Burner. At this time, I have not been made aware of any 
other deals that are in a workout situation.
    Mr. Murphy. Thank you. And Mr. Chairman, I just want to 
make sure we're aware that Solyndra told Department of Energy 
it needed to restructure the loan in October of 2010. And the 
memo that was the subject of so much debate here wasn't written 
until January. And at no point did Department of Energy's legal 
counsel ask Department of Justice if this was legal, even 
though both OMB and Treasury staffers thought Energy needed to 
do that. So I just want to make sure we are clear on that.
    Mr. Stearns. I thank the gentleman from Pennsylvania. I 
think your point as well as the distinguished gentleman from 
Michigan, we need the Department of Energy up here. We are 
going to have a hearing. The senior loan officer, Jonathan 
Silver, of course has resigned. But DOE will be here. I know 
the Secretary of Energy Mr. Chu had indicated that the senior 
loan officer, Jonathan Silver, was an outstanding loan officer. 
So that in mind I think a lot of us are very concerned. So we 
will have this hearing. And with that, I recognize the 
gentleman from Massachusetts, Mr. Markey, for 5 minutes.
    Mr. Markey. Thank you, Mr. Chairman.
    Mr. Grippo, I would like to ask you a few straightforward 
business questions. Let's just say you are considering a loan 
guarantee for a company and the price of the product that this 
company sells has declined by 63 percent over the last several 
years, including by more than 20 percent since February. 
Without knowing anything else about this company, does that 
sound like a relatively high risk or low risk project?
    Mr. Grippo. I am sorry. Could you just restate that? I want 
to make sure I am understanding the question.
    Mr. Markey. A product that sells drops 63 percent over the 
last several years and 20 percent since February. Is that a 
high risk or a low risk?
    Mr. Grippo. If the price of their product is falling?
    Mr. Markey. Yes.
    Mr. Grippo. Assuming that the costs of the company are not 
commensurately falling, then that would have risk to it.
    Mr. Markey. What if the same company's business model was 
predicated on demand for its product expanding dramatically, 
but due to fundamental changes in the market, people just were 
not buying this product like everyone thought they would? Would 
that further increase or reduce the financial risk of the 
company?
    Mr. Grippo. Again, let me just ask you to repeat that so I 
make sure I am understanding the assumptions in the 
hypothetical.
    Mr. Markey. If it was predicated on demand for its product 
increasing, but instead because of fundamental changes in the 
market it was decreasing, would that increase or decrease the 
financial risk of that company?
    Mr. Grippo. If a creditor was making an assumption or had 
knowledge that demand would increase, that would tend to reduce 
the risk.
    Mr. Markey. Yes. Now what if it also turns out that there 
were better financed competitors, including one that already 
had a very large government-backed loan guarantee? And what if 
that company's technology had so many problems that the 
technical experts at the Department of Energy assigned to your 
loan guarantee application actually asked the company to 
withdraw it at one point because they didn't think it could be 
commercially viable? Would that increase or decrease the risk 
of our hypothetical company defaulting on its loan?
    Mr. Grippo, If I understood what you have laid out, it 
sounds like that would increase the risk.
    Mr. Markey. That would increase the risk. Thank you.
    So I am not talking about Solyndra. I am talking about the 
United States Enrichment Corporation which has asked DOE for a 
$2 billion loan guarantee to make fuel for nuclear reactors, 
almost four times as much as Solyndra.
    Now, Members of Congress have continued to insist that DOE 
approve it, even as the price for uranium has dropped 22 
percent since Fukushima melted down, even as utility after 
utility has abandoned their plans to build new nuclear 
reactors, and even after DOE awarded another loan guarantee to 
another company to do the exact same thing.
    And 2 years ago, DOE did, in fact, ask USEC to withdraw its 
application because of the grave concerns that DOE had with the 
technology. Based on the circumstances that I have described, a 
shrinking customer base, declining prices, intense competition, 
and problematic technology, do you agree that DOE should 
exercise particular caution before we risk billions in taxpayer 
dollars?
    Mr. Grippo. I can certainly say that the Department of the 
Treasury's input and view would be that extreme care should be 
taken in putting the taxpayer at risk or offering any exposure 
to the taxpayer.
    Mr. Markey. Well, 13 House Republicans, including one on 
this committee, wrote the Energy Secretary in February, urging 
him to quickly approve this uranium enrichment product. Last 
week, Speaker Boehner stated that a denial of this loan 
guarantee was tantamount to the Obama administration betraying 
southern Ohio. Not giving a loan guarantee to a company that 
has these kinds of obvious financial problems, it seems to me, 
is not a betrayal of the taxpayers. Do you agree with that?
    Mr. Grippo. I would prefer not to offer an opinion on that, 
sir.
    Mr. Markey. So in my opinion, what the betrayal is is in 
the Republican budgets that cut investments in clean energy by 
70 percent next year and 90 percent over the next 3 years. 
That's solar and wind. That's what they're talking about. Not 
coal, not nuclear. Wind and solar, the competitors to those 
incumbent industries. That's what this is all about. Kill the 
competition that Peabody Coal or the nuclear industry has 
feared for years is finally arriving in wind and solar. That's 
what the hearings are all about. Keep the loan guarantees for 
those old industries. And that's what is happening out on the 
House floor right now. That's what continues to happen in this 
committee, attacks on the Clean Air Act, attacks on wind and 
solar, attacks on the future. And this is really a debate about 
the past versus the future. And we can see that in the 
insistence that Republicans have that loan guarantees be given 
to a corporation, which obviously has a business model which is 
failing.
    So I thank you, Mr. Chairman. I yield back the balance of 
my time.
    Mr. Terry [presiding.] Thank you, Mr. Markey. And now the 
gentleman from Texas, Dr. Burgess, is recognized.
    Mr. Burgess. Thank you, Mr. Chairman. I listened with some 
interest to what Mr. Markey was saying and certainly might be 
willing to work with him on that concept if he would be 
willing. And I think that's an important part of our 
discussion, and certainly is something that the members of this 
committee should look at. Let me also just say that I favor 
renewables. I've got a solar manufacturing company in my 
district. I'm not aware that they've gotten any loan 
guarantees. I might be wrong. I know I've got a big wind 
turbine manufacturer in my district. I know they haven't gotten 
any loan guarantees. They do a great job, they sell a good 
product, they're a strong competitor in the market, they do 
compete against imports of foreign manufactured blades, but 
just remind people that cheap Brazilian blades will not stand 
up against the harsh Texas winds like good old Texas blades 
that are made in Gainesville, Texas. I always encourage people 
to buy locally when they're buying long wind turbine blades.
    You answered--Mr. Burner, you answered Dr. Murphy's 
question, he asked if there were any other loan guarantee deals 
out there that were of concern, and your answer was you're not 
aware of any deals that are in a workout situation. Did I hear 
that correctly?
    Mr. Burner. That's correct.
    Mr. Burgess. Did Solyndra come to your attention only when 
it was in a workout situation? Was there any point along the 
line when you were concerned about what was happening with 
Solyndra before it got to the point where it was in a workout 
situation?
    Mr. Burner. Only through the news, sir.
    Mr. Burgess. Well, oK. Let me phrase this in a different 
way. I mean, a lot of us are concerned because Solyndra seemed 
to create some of its own problems by accelerating the--or 
actually the Office of Management and Budget and the Department 
of Energy created some of the problems because Solyndra was 
pushing because they that a photo-op coming up in September of 
2009, I believe, with the Secretary and Vice President Biden 
was going to be brought in on a telecommunications device.
    So you worry when there are time pressures on these loans 
if everything is done correctly. And just last week, or two 
weeks ago, at the end of the fiscal year there was a big push 
to get, I think it was almost a third of the total renewable 
energy budget in the stimulus bill, there was a push to get 
that out the door relatively quickly. And I, for one, worried 
about that. I wanted this committee to scrutinize that, but 
apparently there wasn't time to do so. Are there any of those 
deals now that are now made and the money has gone out the door 
but they went through rapidly, are there any out there that 
give you heartburn, not necessarily because they're in a 
workout situation, but just because the business model itself 
reminds you of something that might not work?
    Mr. Burner. I'm not exactly sure how to answer that 
question, sir. I didn't review every single project that came 
through.
    Mr. Burgess. Are there any of those projects that keep you 
up at night now?
    Mr. Burner. No, sir, not this minute, because we don't make 
the credit decisions on these programs. When we reviewed those 
we reviewed the term sheets and things of that nature, so I 
don't really have the kind of knowledge.
    Mr. Burgess. But the review of the term sheets, you're 
absolutely at peace with all of the ones that have gone through 
your office?
    Mr. Grippo. Let me offer an answer. We did review all of 
the conditional commitments offered and indeed loan guarantees 
issued. We did offer, we had time to and did offer comment to 
the Department of Energy on all of them. If I could just take a 
step back and say this. In all of these deals, the Treasury is 
looking to do two things, and we did these in all the deals 
over the last 6 weeks or last month. We're looking to make sure 
that the subsidy that is offered is needed to get the project 
done, in other words, could this occur through the commercial 
markets without a government subsidy, and if subsidy is needed, 
is it minimized so that the taxpayer isn't exposed to more risk 
than it needs to be.
    Mr. Burgess. I'm going to interrupt you there for just a 
minute because if there is a change in the environment, as Mr. 
Markey was talking about, is that something that crosses the 
threshold that gets your attention?
    Mr. Grippo. I'm sorry?
    Mr. Burgess. If there's something in the market that 
changes, you know, the prices, competitors that enter the 
market, does any of that enter into your decision?
    Mr. Grippo. We focus on the terms and conditions of the 
actual loan guarantee, but we certainly would look at general 
market conditions, and if we see something, we would offer 
advice.
    Mr. Burgess. Well, something that concerns me about a lot 
of these, and it's not part of this investigation or even this 
discussion, but the Waxman-Markey bill that was debated and 
passed through this committee and then passed through the floor 
of the House in June of 2009 contained in it a provision for 
providing credits, payments to companies that would sell carbon 
offsets to other companies that weren't as green or clean, that 
never materialized. And I worry that some of these projects 
were developed in an environment where the Secretary thought 
that, or someone thought that these credits would be there, 
these sales would be there to other companies, and that did not 
materialize because the legislation never got through the 
Senate and never got signed into law. Did you all take that 
into account at any level?
    Mr. Grippo. If we are aware of it, we would definitely take 
that into account, and if we could analyze it, would provide 
input to Energy on it.
    Mr. Burgess. Can I just ask you one follow-up thing? You 
have an inspector general at Treasury, correct?
    Mr. Grippo. Indeed.
    Mr. Burgess. Has that individual been involved in looking 
into any of this activity?
    Mr. Grippo. The inspector general is looking at our 
activities.
    Mr. Burgess. Mr. Chairman, can I ask that that report be 
made available to this committee when it is completed?
    Mr. Terry. Yes, you can ask that.
    Mr. Burgess. Thank you. You've been most generous with your 
time, and I appreciate the lightness of the gavel that you've 
had today.
    Mr. Terry. At this time we recognize Mrs. Blackburn for 5 
minutes.
    Mrs. Blackburn. Thank you, Mr. Chairman. And I want to 
thank both of you for your time and your attention and your 
patience today. This is an issue that the taxpayers continue to 
come to us with. They're concerned about what took place with 
the Solyndra process and they are concerned that this is being 
repeated, the lack of attention to detail for the loan 
guarantees are being repeated in other programs. I do have a 
couple of questions that I want to ask, and I know we want to 
finish with you all before we head for votes again.
    Mr. Burner, you have been with Treasury for 28 years, is 
that correct?
    Mr. Burner. That's correct.
    Mrs. Blackburn. How often does a loan workout situation 
come before you? And in reading the documents for the hearing 
today and looking at your email chain that you had with DOE and 
with your staffers, you know, the workout language was repeated 
regularly in a couple of those emails. So how often does this 
come before you?
    Mr. Burner. We don't see workouts very often because 
they're handled usually by the guaranteeing agencies, for 
example, and we may not even know that a workout has taken 
place, because under the guarantee, the agency may pay us 
directly and leave the original documents in place.
    Mrs. Blackburn. So basically, your part of the due 
diligence is to provide the guidance that is given in the 
February 10th email that you had to Frances and Susan, I guess 
that would be correct, stating that if there are to be 
adjustments that may include subordination of Solyndra's loan, 
then this would need to be a referral to DOJ for the authority?
    Mr. Burner. In this case, I was just attempting to offer 
some experience and advice to a couple of colleagues on 
something they may or may not have been aware of.
    Mrs. Blackburn. All right. Then let me take you on through, 
let's see, there is another email that I have, on August 12, 
2011, an email at 11:51 a.m., where you are asking Frances, 
``Can we get an update on the status of Solyndra today, if so 
please call Pearl.'' Would you like to comment on that? Why was 
Solyndra still on your plate?
    Looking at Solyndra, if you were there to offer the 
guidance and then to help them with how to go then why would 
you have reentered that process in August and sought an update?
    Mr. Burner. In this case, the request for getting an update 
came from my supervisor, and I think people were hearing, 
starting to hear that there were problems with Solyndra.
    Mrs. Blackburn. OK. And the supervisor?
    Mr. Burner. Was Mary Miller.
    Mrs. Blackburn. Mary Miller. And is she a Treasury 
employee?
    Mr. Burner. She's the Assistant Secretary.
    Mrs. Blackburn. Assistant Secretary. And she had expressed 
to you?
    Mr. Burner. I heard it indirectly through someone else, but 
there was a request that we see if we can get a briefing on 
Solyndra.
    Mrs. Blackburn. All right. That is great. And I see that--I 
have an L.A. Times article that I had looked at, a September 
26, 2011 article, that references a White House meeting in late 
October, Lawrence H. Summers, then-director of the National 
Economic Council, and Tim Geithner the Treasury Secretary, 
expressed concerns that the selection process for federal loan 
guarantees wasn't rigorous enough and raised the risk that 
funds could be going to the wrong companies, including ones 
that didn't need the help.
    So is it fair to say that the problems with this process, 
with loan guarantees such as Solyndra, had risen to the level 
of the Assistant Secretary Mary Miller and to the Secretary 
himself?
    Mr. Grippo. Why don't I answer that. There were principles 
and deputies at all these agencies, the Department of Energy, 
the Treasury Department, the Office of Management and Budget, 
going up the line to the Deputy Secretary and Secretary, who 
would periodically review the status of this program. And as I 
think that memo you've quoted alludes, one of the issues that 
was discussed was the amount of subsidy that may be needed in 
order to carry out some of these projects, which is what I was 
talking about a little earlier.
    Mrs. Blackburn. OK. Let me ask you this: When we look at 
repayment to the American taxpayers, will FFB structure how 
we're repaid or will Treasury restructure how that will be 
repaid, has there been a discussion on that issue?
    Mr. Grippo. In the case of Solyndra are you asking?
    Mrs. Blackburn. Yes.
    Mr. Grippo. No. That would be an issue for the Department 
of Energy, and it would not be the Treasury.
    Mrs. Blackburn. And you all would not be involved in that 
at all. Thank you. I yield back.
    Mr. Terry. The gentlelady yields back. The gentlelady from 
Colorado.
    Ms. DeGette. Thank you. Mr. Chairman, I just want to 
clarify once and for all the unanimous consent that we have on 
these documents. We have unanimous consent that the February 
15, 2011 legal memo and the draft January 19, 2011 legal memo 
on subordination will be entered into the record with no 
redactions. In terms of the financial information that is the 
addendum, our staffs have agreed that they will work together 
to make sure that there's no confidential information, 
proprietary or other sensitive information, they'll work 
together to redact whatever they can and then they'll put that 
in the record as well.
    Mr. Terry. That is my recollection, but I will refer to 
counsel to agree that I agree.
    Mr. Bilbray. Mr. Chairman.
    Mr. Terry. So counsel and I agree with your verbiage. But 
Mr. Bilbray. 
    Mr. Bilbray. Just to clarify, I think the ranking member 
meant that they would redact what was necessary, not what they 
can.
    Ms. DeGette. Yes, correct.
    Mr. Terry. Only what would be determined in a bipartisan 
way to be proprietary or sensitive business information.
    Mr. Bilbray. Thank you, Mr. Chairman.
    Mr. Terry. All right. So we're clear?
    Ms. DeGette. Yes.
    Mr. Terry. All right. Mr. Bilbray, you are recognized for 5 
minutes.
    Mr. Bilbray. Thank you, Mr. Chairman. Mr. Chairman, seeing 
there's a lot of statements about agendas here, I just want to 
make it quite clear that this member does not have an ax to 
grind with the Secretary of Energy. I just want it on the 
record that I think that finally we have a Secretary of Energy 
who is a scientist, a physicist, not a political operative. And 
so this member's intentions is to get to the facts and find out 
how this could have happened. Especially when you have somebody 
like Secretary Chu running a Department and seeing what appears 
to have happened indicates to me that the biggest problem here 
was that it appears that politics and prejudice and bad policy 
created a situation that could have very possibly crossed the 
line later into a legal item that we will clarify obviously in 
the coming weeks. But just for the record, I just don't want 
anybody to think that this member has an ax to grind against 
the Secretary.
    I hope to God that this does not cause him to have to do 
what Silver did, and that is basically step aside and step out 
because of this problem. So just so everybody understands where 
this member comes from, in fact, I think this Secretary has the 
possibility of finally fulfilling the goals of the Energy 
Department by creating energy opportunity rather than 
continuing to allow it to dwindle.
    Mr. Grippo, I got some questions specifically about the DOE 
loan guarantees that were just given out under the stimulus 
deadline on the 30th. In fact, on the day of the deadline, it's 
closing, $4.7 billion of loans were given right on the last 
day. Was the Treasury consulted about each of these deals 
before the close?
    Mr. Grippo. Yes, we were. In some cases well before the 
closing.
    Mr. Bilbray. OK. Do you believe the Treasury had adequate 
time to consult on all these items?
    Mr. Grippo. Yes.
    Mr. Bilbray. All these deals? Your review--in your review, 
do you believe the financial model for these deals were ripe, 
do you think they were sound?
    Mr. Grippo. Let me be very clear about how I answer that. 
Because we do not do all the due diligence that the Department 
of Energy does. We're not privy to all of the background 
information.
    Mr. Bilbray. Well, obviously they don't do all the due 
diligence that the taxpayers would like either. But go ahead, 
I'm sorry.
    Mr. Grippo. So we are not making a credit decision, right. 
We are not determining whether this is an appropriate risk and 
whether a loan should go forward. We are commenting on the 
terms and conditions of the loan guarantee. What should the 
interest rate be, what should the duration of the loan be. So 
we did not have insider provide comment on the details of the 
actual financial model.
    Mr. Bilbray. OK. Let's look at it from the holistic point 
of view. What do you think about the overall health of the 
DOE's loan guarantee portfolio at this time?
    Mr. Grippo. It's difficult for us to judge without all the 
information, but I think the best answer I could give is that 
it is too early to tell how the overall portfolio will perform 
and it may take some time. There are 30 some odd transactions 
in the portfolio. We've obviously been talking about one of 30. 
We're not aware that others are having problems. And so it will 
take time to watch the portfolio perform.
    Mr. Bilbray. Wow. I mean, if you were my stockbroker and 
telling me that--gave me that I would not be really 
enthusiastic about putting more investment into it until I see 
how this thing shakes out. Is that a fair perception from an 
investor's point of view?
    Mr. Grippo. It would not be. I am not implying that we 
perceive that there are problems, other problems.
    Mr. Bilbray. It's just that it hasn't, but you still stated 
that we need to see how this works out?
    Mr. Grippo. As you indicated, many of these deals just 
closed a few weeks ago, and obviously we have to wait to see 
them perform.
    Mr. Bilbray. OK. The memorandum about the conditions in 
2009, the Treasury expressed concerns about there wasn't enough 
equity in the deal, basically that there are concerns there 
wasn't enough skin in the game for some of these guys. Under 
the 1705 portfolio do you think that there was enough skin in 
the game in this instance with Solyndra?
    Mr. Grippo. I do not actually recall the details myself of 
that analysis, but it would not be uncommon for us to comment 
on the amount of skin in the game and to argue for other equity 
investors to have more skin in the game to protect the 
taxpayer.
    Mr. Bilbray. Thank you very much. And you're basically--
everything that was done last week basically we don't know how 
much of a risk it is, we've got to wait and see how it evolves?
    Mr. Grippo. I think that's fair to say.
    Mr. Bilbray. Thank you. I yield back.
    Mr. Terry. Thank you, Mr. Bilbray. Dr. Gingrey, you're 
recognized.
    Mr. Gingrey. Mr. Chairman, thank you. Mr. Grippo and Mr. 
Burner, thank you for testifying from the Department of 
Treasury, and thank you for your patience. Some of these 
questions that I'm going to ask may have already been asked. I 
had to miss some of this to go do an interview. But first of 
all, Mr. Burner, in your experience as chief financial officer 
of this Federal Financing Bank, which actually made the loan, 
provided the funds, have you been involved in restructuring of 
loan guarantees before either in or out of government?
    Mr. Burner. Only peripherally.
    Mr. Gingrey. Let me ask you then, maybe it's a bit 
hypothetical, but in cases where the terms of a loan guarantee 
were changed or restructured by other agencies have those 
agencies sought the approval of the Department of Justice to 
your knowledge?
    Mr. Burner. If they don't have their own authority then 
they would seek approval of Department of Justice, if they have 
their own authority they would not.
    Mr. Gingrey. Then let me ask Mr. Grippo, because what you 
just said I think is the crux of this matter. Is that the 
reason, Mr. Grippo, in your opinion, that the Department of 
Treasury said to the Department of Energy, look, there's a tab 
here, there's a red flag, and it is our strong advice that you 
consult the Department of Justice before going ahead with this 
restructuring?
    Mr. Grippo. We did not know what all of the Department of 
Energy's authorities were. We did not even know the details of 
the restructuring. We had heard that there would be a 
restructuring and it seemed like good advice in our 
consultative role to tell them to seek, to go to the Department 
of Justice which is customary.
    Mr. Gingrey. And I commend you for that. I think you're 
absolutely correct in doing that. Either one of you, why do you 
think that the DOE then was so hesitant to seek DOJ approval to 
get, you know, a little bit more security, cover their back, 
you know, to--why do you think they didn't do that?
    Mr. Grippo. I don't have an answer for you.
    Mr. Gingrey. Mr. Burner, do you have any opinion on that?
    Mr. Burner. I'm sure they had their reasons. I'm not really 
sure. They had a legal theory on this, I'm sure.
    Mr. Gingrey. Yes, yes. Well, if DOE, the Department of 
Energy, was so confident in their legal analysis that the 
subordination was permitted, why not go to the DOJ, the 
Department of Justice, just to cover yourbase, just to get a 
little back-up, you know, CYA rather than CYB? Other agencies 
typically seek the Department of Justice's approval of loan 
guaranteeing restructuring. And I asked you that question and 
you said you're not really sure of that. Is that your answer, 
that you don't know--Mr. Grippo, I didn't ask you that 
specifically. Other agencies, do they typically seek the 
Department of Justice approval of loan guarantee restructuring?
    Mr. Grippo. Well, I don't have specific knowledge about 
other loan guarantees, but I'm generally familiar with what the 
statute says. And unless an agency has its own authorities, the 
procedure is to talk to the Department of Justice. And that's 
what we were doing. We were making a procedural call and saying 
we can't make a judgment on what's going on here, we're not 
making a legal opinion or drawing a legal conclusion.
    Mr. Gingrey. Well, I'm not putting words in your mouth. I 
don't want to do that. But it sounds like to me that you were 
strongly suggesting to them since they did not have the 
statutory authority--I mean, I will refer back to the Energy 
Policy Act of 2005 under title 17 incentives for innovative 
technology section 1702 terms and conditions, paragraph D, 
subparagraph 3, subordination. And you have heard this several 
times from members on our side of the aisle. The obligation, 
that is the loan, shall be subject to the condition that the 
obligation, the loan, is not subordinate to other financing. So 
that was your concern, was it not?
    Mr. Grippo. We were not interpreting that statute, we were 
recognizing it and offered the advice.
    Mr. Gingrey. Well, it doesn't require--I think my first 
grade grandson could pretty much read and interpret that. It 
doesn't take a rocket scientist. That's as plain as the nose on 
your face. And they literally ignored the warnings and went 
ahead with this. And the result, of course, is the taxpayer is 
in a subordinate position to $75 million worth of additional 
investment.
    And when Mr. Silver was here we asked him these questions, 
and we have it on video and audio, I mean it's clear what he 
said to us, look, we were thinking, in our mind, that the 
taxpayer would come out better if we found a way to circumvent 
and break the law, and that's what it's all about. Mr. 
Chairman, I yield back.
    Mr. Terry. Thank you, Mr. Gingrey. At this time, we will 
recognize the gentleman from Louisiana, Mr. Scalise.
    Mr. Scalise. Thank you, Mr. Chairman. Again, I appreciate 
the witnesses being here to answer questions as it relates to 
the Department of Treasury's role in the Solyndra scandal. As I 
look through the emails, starting with the February 10th email 
of 2011, Mr. Burner, that was when you had sent an email over 
to the Department of Energy expressing your concern about the 
restructuring. You were later sent an email back. I think your 
original email was on February 10th. And on February--later 
that day you got the email that said could you give me a call 
to discuss. This was the email from the Department of Energy's 
legal counsel where they asked you to discuss this. There's no 
email chain here. Who were all of the people involved in 
discussions that you had about this concern that you were 
raising, was it just the legal counsel staff over at the 
Department of Energy? Because now we're off of emails, we're 
just on phone calls or conversations off line. Who were all the 
people involved that you----
    Mr. Burner. Do you mean on the phone call itself or?
    Mr. Scalise. Well, just in general. As you were raising 
concerns and maybe others around Treasury, I think you were 
getting your information from the Office of Management and 
Budget that there was possibly a subordination coming down, and 
by, I guess, your legal counsel's review they felt that that 
was illegal, it was in violation of the statute, you cited in 
your February 10th email.
    So obviously you were having other conversations at 
Treasury, but then you were also having conversations with 
people outside of Treasury, whether it was the Department of 
Energy, was it the White House as well. Who were the other 
people that were involved in conversations that aren't included 
in the email documents we have?
    Mr. Burner. Members of my staff, as we say in the email, we 
heard from some OMB staff that this was going to be an issue, 
other people at the Treasury Department and staff lawyers at 
the Office of the General Counsel at Treasury.
    Mr. Scalise. OK. And then when you get outside of Treasury, 
clearly as you were emailing with the Department of Energy 
about the concerns that you expressed on February 10th, and you 
actually cited a number of statutes that I'm sure your legal 
counsel had given you the statutes to cite, but you 
specifically cited some statutes and then went further to 
discuss your concerns that a subordination putting the 
taxpayers in the back of the line didn't meet legal muster. 
That's when you said you should go consult the Department of 
Justice.
    Mr. Burner. We weren't making a judgment on what they were 
doing because we didn't really know what they were doing.
    Mr. Scalise. Right. But if you were hearing--because you 
were hearing this from OMB, you were hearing they may be 
subordinating the taxpayer, and then you cited some statute and 
said, you can't do it basically, you don't have the legal 
authority, that's why you need to consult the Department of 
Justice. Because I think in your email, reading from your 
February 10th email, unless other authorities exist, the 
statute rests with DOJ and the authority to accept the 
compromise of a claim of the U.S. Government in those instances 
where the principal balance of a debt exceeds $100,000. So you 
specifically said you can't subordinate the taxpayer unless you 
got some approval from the Department of Justice.
    Mr. Burner. We were specific on the fact that they should 
go to the Department of Justice, but we were not commenting on 
what they were saying.
    Mr. Scalise. The next email you got back was could you call 
me, could you give me a call to discuss, thanks. And that's 
from the Department of Energy's legal counsel. So again, now 
we're going off the emails. Who all were involved in those 
discussions? Not emails, but actual discussions. Was it just 
the Department of Energy? Was anyone from the White House 
involved in those discussions?
    Mr. Burner. I had no calls from the White House, sir, no.
    Mr. Scalise. All right. Who else at the Department of 
Energy?
    Mr. Burner. There were four of us on the phone call that 
had the discussion.
    Mr. Scalise. You and who were the other three?
    Mr. Burner. A member of my staff, the director of portfolio 
management and Susan Richardson from the Department.
    Mr. Scalise. OK. Then there was a gap from the February 
11th email. And the next email we have here is August 12th. So 
there's a pretty substantive gap. And then in those emails, 
we've got the folks over at DOE and some other people at 
Department of Treasury get involved in this. And in fact, we've 
got, I guess, your superior at the Department of Treasury, Mary 
Miller. You said she's the Assistant Secretary?
    Mr. Burner. Actually, Mr. Grippo here is my superior.
    Mr. Scalise. Because Mary Miller is involved in an email 
where she says, I may be on a call tomorrow morning about the 
Solyndra loan restructuring. What does the statute say about 
putting the government in a subordinate position? We told DOE 
that they need to consult with Department of Justice. Again, 
this is Mary Miller above you expressing concerns. At any 
point, and she even refers to, in a later email, a July 2010 
concern that the Department of Treasury raised with the 
Department of Energy. At any step of the way, was there a 
feeling that they're not going to comply with the law, because 
you all say this in your emails, they're not following what 
we're saying about getting Justice involved. Why didn't you all 
get Justice involved? We're talking about $535 million here. 
There's another $4.7 billion that went out the door just a few 
weeks ago.
    Mr. Grippo. Congressman, why don't I answer that because 
this refers to a variety of emails here, and obviously that's 
an important question and an important question for the 
committee. It is not our role to interpret the Department of 
Energy's statutes and authorities. And in no case were we ever 
doing that. We were never rendering a legal judgment as to 
whether they were complying with the law or not.
    Mr. Scalise. You were telling them they should consult with 
the Department of Justice.
    Mr. Grippo. We were identifying an issue and asking a 
question. We weren't answering it or drawing any legal 
conclusions. And in fact----
    Mr. Scalise. You're citing specific statutes.
    Mr. Grippo. We are citing statutes, but we are not----
    Mr. Scalise. I mean, if you're concerned that somebody--
please don't comply with the law, and then you don't hear back 
from them, at some point, if you keep hearing they're not going 
to comply with the law, don't you feel compelled to then go and 
alert the Department of Justice who you're telling them to 
alert, but they're ignoring it?
    Mr. Grippo. It is really not the role of the Department of 
the Treasury to manage----
    Mr. Scalise. You are all cutting the checks, you are 
cutting the taxpayer checks.
    Mr. Grippo. These are all Department of Energy authorities, 
and it would be highly unusual for us to insert ourselves in 
that way in management of another agency's program.
    Mr. Terry. Thank you.
    Mr. Scalise. Mr. Chairman, I do have a point of 
information, because I did ask, and I got an answer from the 
head of the loan program at our last hearing under oath. He 
said he would get this whole committee the names of all the 
people involved in the chain to subordinate the taxpayer from 
the White House on down. I asked him under oath and he said he 
would get me that information under oath. And I know he's 
resigned now. But I have a question to legal counsel or 
somebody on staff, are we still going to be able to get that 
information?
    Mr. Terry. Yes.
    Mr. Scalise. Because that is critical information.
    Mr. Terry. It will be added to the questions for the 
record.
    Mr. Scalise. Thank you. I yield back.
    Mr. Terry. The gentleman from Colorado, Mr. Gardner is 
recognized.
    Mr. Gardner. Thank you, Mr. Chairman. And thank you as well 
to the witnesses for spending the time with us today. A couple 
of questions and to follow up with what Mr. Scalise had said. 
You identified that your roles at the Treasury Department are 
two-fold, both as lender and as consultant. As a lender don't 
you have a responsibility to refer this to DOJ?
    Mr. Grippo. We actually do not. If you look at the statutes 
which govern the Federal Financing Act----
    Mr. Gardner. But you consider yourself a lender.
    Mr. Grippo. It is processing a loan, but the Department of 
Energy is making the credit decision.
    Mr. Gardner. Then why do you call yourself a lender, 
because as a lender, you're the Federal finance bank, don't you 
have an obligation, a fiduciary obligation as a lender to the 
people of this country?
    Mr. Grippo. We certainly, in our consultative role, have a 
responsibility to raise these issues and questions, which is 
what we were trying to do.
    Mr. Gardner. And your consultative role includes going to 
the Department of Justice and saying, hey, we are afraid. And I 
think at one point you made the statement, you had said that--
on things that raise issues of compromising a claim of the 
Federal Government.
    Mr. Grippo. Well, in that instance, our advice was to refer 
the matter to the Department of Justice.
    Mr. Gardner. And so why wouldn't you go to the Department 
of Justice?
    Mr. Grippo. The Treasury Department?
    Mr. Gardner. Yes.
    Mr. Grippo. Because it's not our statute, we did not have 
all the facts, we did not have the details.
    Mr. Gardner. Why didn't you have all the facts?
    Mr. Grippo. Because it's not our program. To be clear about 
our role in the restructuring.
    Mr. Gardner. But you're the lender, I mean, you call 
yourself a lender?
    Mr. Grippo. The Federal Financing Bank did issue the loan. 
But to be very clear about the responsibilities, it's the 
guarantor agency, in this case, the Department of Energy which 
is assuming 100 percent guarantee of the loan, is deciding 
whether to make it, they're responsible for monitoring it, 
they're responsible for all of the financial aspects of that 
credit risk.
    It is not the Treasury's responsibility to monitor that, 
and indeed we would not have the information to do so.
    Mr. Gardner. I guess when you call yourself a lender, as 
the Federal finance bank, and in this particular instance 
because you gave 100 percent of the money, there was no bank as 
an intermediary, and I would like a list of all other loan 
guarantees that you're actually not just guaranteeing a loan, 
you're actually paying 100 percent of the money, cutting out 
the bank itself, if I could get the information on other 
instances where you've given the money just directly, I would 
appreciate that for the record, if we could. But if you're the 
lender, I don't understand why you wouldn't ask these 
questions.
    I do have some other questions that I want to get to. And 
Mr. Grippo, I would refer to tab 3 in your binder. There's an 
email dated July 26, 2010 between Treasury, OMB and DOE staff. 
The email references a conversation between the agencies on 
Solyndra and DOE's monitoring plan. Did this--why did this 
conversation happen in the first place?
    Mr. Grippo. I was not a party to this email. This took 
place in July of 2010. And the most complete answer I can give 
you is that the various agencies, predominantly OMB and the 
Department of Energy, were having weekly discussions on the 
status of the loan program and the efforts to monitor the 
portfolio.
    Mr. Gardner. Were you concerned about DOE's monitoring of 
Solyndra?
    Mr. Grippo. We do not have any specific information from 
the Department of Energy, and certainly didn't have any direct 
contact with Solyndra, that would inform our judgments.
    Mr. Gardner. You were not concerned about DOE's monitoring 
of Solyndra?
    Mr. Grippo. As a general matter, we felt that the portfolio 
should be properly monitored, but we did not have any specific 
information about Solyndra.
    Mr. Gardner. Now, this email exchange actually took place 
shortly after Solyndra had pulled back their IPO, is that 
correct?
    Mr. Grippo. Yes, I believe that's correct.
    Mr. Gardner. And 3 months after its auditors had doubted 
Solyndra's ability to continue is a going concern, is that 
correct?
    Mr. Grippo. That is correct.
    Mr. Gardner. So in this email, it appears that OMB and 
Treasury, since you are both on this email, are asking for a 
number of pieces of information from Solyndra that would 
indicate its financial health, is that correct?
    Mr. Grippo. Yes.
    Mr. Gardner. Financial statements, financial model, current 
market prices, cost data. Why were you asking about this?
    Mr. Grippo. Our role is, as the consultant to the 
Department of Energy under the statute, is to be helpful 
wherever we can. We felt we had experience with federal credit 
policy and with corporate finance that could be of use. This is 
an email from the Office of Management and Budget to the 
Department of Energy. We contributed to this because we felt we 
had something to add and can help.
    Mr. Gardner. So were you concerned then with this loan or 
the monitoring?
    Mr. Grippo. We----
    Mr. Gardner. You asked for a lot of information here. I 
mean, current financial statements, financial model, latest IE 
report, tare sheet summary, actual performance numbers, monthly 
variance reports, market price, monthly production, credit 
committee papers, it goes on and on. Were you concerned about 
the loan?
    Mr. Grippo. Again, this is an email from the Office of 
Management and Budget to the Department of Energy.
    Mr. Gardner. And Treasury is on the email.
    Mr. Grippo. We did contribute to it. But we were not 
responsible for the sending of this or for the monitoring of 
the portfolio.
    Mr. Gardner. Are you concerned that there are others out 
there like Solyndra?
    Mr. Grippo. No, I'm not at this time. I don't have any 
information that would lead me to have additional concerns one 
way or the other.
    Mr. Gardner. Mr. Chairman, I have additional questions. I'd 
ask if I could submit those for the record.
    Mr. Terry. Yes, you may submit those for the record. The 
gentleman from Virginia, Mr. Griffith, is now recognized.
    Mr. Griffith. Thank you, Mr. Chairman. Mr. Burner, you sent 
an email to Frances and Susan, and I believe that's Susan 
Richardson and Frances, and I apologize, I can't pronounce her 
last name, is that correct?
    Mr. Burner. That's correct, sir.
    Mr. Griffith. Can you pronounce her last name for me so I 
can get it right? If you can't it's oK, I understand.
    Mr. Burner. I could try, but I will apologize to Frances 
formally, but Nwachuku.
    Mr. Griffith. Nwachuku. All right. And you wrote that to 
both of them on February 10th. You got a message back from 
Frances on that same day that says there's been a gross 
misunderstanding, is that correct?
    Mr. Burner. That's correct, sir.
    Mr. Griffith. And then on February 11th, you got an OMB 
circular from Frances. Susan does not appear to be on this, is 
that correct? Which says, and I don't know where we are, it's 
somewhere, I don't know where, I can't keep track. I don't have 
tabs, so I have to try to figure it out by counting.
    Mr. Burner. There's an excerpt from an OMB circular that 
Susan sent.
    Mr. Griffith. And that says workouts--do you have a copy of 
that in front of you?
    Mr. Burner. Yes, sir, I do.
    Mr. Griffith. OK. And that says, does it not, that workouts 
mean plans that offer options short of default? That's the 
first phrase, is it not?
    Mr. Burner. Yes, sir.
    Mr. Griffith. And then it goes on to explain that that's 
not modifications, that that's not a modification at the very 
end, is that correct?
    Mr. Burner. That's correct, sir.
    Mr. Griffith. At the time that you received that you were 
not aware of the legal memorandum that DOE had that Susan 
Richardson was in draft form, and then later on February 15th 
became a formal form, or at least according to what we have 
today, you were not aware of that legal memorandum, isn't that 
correct?
    Mr. Burner. That's correct, sir.
    Mr. Griffith. And notwithstanding the fact that you were 
getting data, or a copy of an OMB circular from Frances that 
said that, let me quote that again, that said workouts mean 
plans that offer options short of default. And what she was 
basically saying to you was we don't think that we're modifying 
this loan or we're doing something that would create the 
necessity to consult with you all, isn't that correct? That was 
the purpose of these emails and conversations, we don't believe 
that we're making a change that puts--that compromises the 
taxpayers' position, isn't that correct?
    Mr. Burner. As I recall, that's what they were saying.
    Mr. Griffith. That was the general demeanor. And yet 
they're sending this to you on February 11th, but these memos 
that we had the big fight about today are dated January 19th, 
and as I pointed out in my comments earlier, first line of the 
third paragraph, and I know that you don't know anything about 
this, but I'm just pointing it out to you, a default relating 
to a financial requirement has occurred under the loan 
guarantee agreement in relationship to Solyndra.
    Is there any way in your mind that Frances wouldn't have 
known that the legal opinion was already rendered that said 
that there had been, in fact, a default but now we're going to 
try to fix it when she's trying to tell you that workout means 
plans that offer options short of default?
    Mr. Burner. I can't comment on what Frances knew.
    Mr. Griffith. And further it is, in fact--do you know Peter 
B-I-E-G-E-R?
    Mr. Burner. Mr. Bieger, yes.
    Mr. Griffith. And Mr. Bieger is an attorney, is he not?
    Mr. Burner. He is a staff attorney at the Treasury 
Department.
    Mr. Griffith. So he works with you all?
    Mr. Burner. Yes, sir.
    Mr. Griffith. And subsequent to that, are you aware that he 
stated in a memo that claim compromises include loan workouts, 
are you aware of that? Again, I can't tell you what tab that 
is. I'm back here on Mr. Bieger's, Wednesday, October--excuse 
me, August 17, 2011, memorandum, authority to compromise--it's 
titled ``Authority to Compromise claims owed to the 
government.''
    Mr. Burner. It's the first time I have seen this memo, sir, 
but it does say that.
    Mr. Griffith. It does say that, does it not?
    Mr. Burner. Yes, sir.
    Mr. Griffith. Yes, it does. And so I would have to say to 
you, based on the evidence that you now know that there was a 
subordination of $75 million, that it appears that in the 
restructuring, they may have agreed to forebear payments 
totaling $30 million for 3 years, wouldn't you agree that those 
terms sound like a substantial change under the regulations 
regarding this loan guarantee program?
    Mr. Burner. A substantial change? It was certainly a 
change, sir. Whether it was substantial is a----
    Mr. Griffith. But it would be your opinion, would it not, 
and I'm asking you for your opinion----
    Mr. Grippo. That's really something that the Department of 
Energy would have to answer, ``it'' being their statute and 
indeed, their program and Treasury would not have offered, and 
even in these emails, is not offering any legal interpretation. 
It is citing statutes only.
    Mr. Griffith. So if they had agreed just to completely 
forebear the entire loan, it wouldn't matter they didn't 
discuss it with you if they decided it wasn't a substantial 
change, is that what you're saying?
    Mr. Grippo. I'm saying that I personally am not a lawyer, 
could render that judgment, and it's not the Treasury's role 
institutionally to render that judgment for DOE.
    Mr. Griffith. So what's the purpose of having you in the 
loop if you have no authority? Thank you. I yield back.
    Mr. Terry. Thank you. I ask unanimous consent for Mr. 
Pompeo to be able to ask questions since he's not a member of 
this subcommittee. Hearing none, Mr. Pompeo, you are 
recognized.
    Mr. Pompeo. Thank you, Mr. Chairman. Thank for granting 
unanimous consent for me to ask a couple of questions. I will 
try and be brief. I appreciate you gentlemen being here today. 
This is the third time we've had folks come and we still can't 
get anybody to take responsibility. We had an OMB official, now 
a former DOE official, we had two senior Solyndra executives 
who took the fifth, and today we hear lots of that's not my 
job, that's not my role.
    And so I hope you can appreciate the frustration that we're 
having as we try to get folks to answer questions about these 
very important matters. Mr. Grippo, let me start with you. I 
want to go back to almost the very beginning. There was an 
email to tab 1. It's March 19th. And the Treasury review board 
at this point had approved a conditional commitment on March 
19th--excuse me, on March 17th, and you all expressed concerns 
on March 19th. That seems backwards to me. So you talk about 
your role consultatively, are you with me? If you look in tab 
1, there was an email expressing about 15 or 16 concerns the 
Treasury Department had.
    Mr. Grippo. I'm looking at that tab, yes.
    Mr. Pompeo. Right. And the conditional commitment by the 
credit review board had happened two days earlier on March 
17th.
    Mr. Grippo. I have to say I'm not aware when the 
conditional commitment was.
    Mr. Pompeo. If it was on March 17th, would you find that 
odd that your consultation, your comments, were still being 
worked after the date that the conditional review had been 
made?
    Mr. Grippo. I really can't say. I'm not sure.
    Mr. Pompeo. So you think it would be oK? Assume the fact 
that March 17th was the date that the conditional review had 
been approved. Would you find it odd that you were still making 
comments after that?
    Mr. Grippo. Again, I don't know when the conditional 
commitment was offered.
    Mr. Pompeo. That's not what I asked.
    Mr. Grippo. I understand. I don't know when the conditional 
equipment was offered. We had the opportunity to provide this 
input, is my understanding.
    Mr. Pompeo. Got you. Very good.
    Mr. Burner, let me turn to you. Let me turn sort of more 
towards the end. Tell me what your role is today now that this 
business is in bankruptcy as the lender trying to collect this 
money on behalf of the taxpayer.
    Mr. Burner. We have no role in the collection to the 
taxpayer. We have the guarantee. So DOE is paying us when as 
due. And it's my understanding that they are in bankruptcy 
court at this point.
    Mr. Pompeo. So has DOE paid you?
    Mr. Burner. DOE has paid us, has and will pay us when as 
due according to the guarantee.
    Mr. Pompeo. And so when would that be?
    Mr. Burner. We receive regular payments, and then at some 
point, I assume the loan will be extinguished by full payment.
    Mr. Pompeo. And so when is the next payment due from DOE?
    Mr. Burner. I don't have that on the top of my head, sir. 
It's a semi-annual loan.
    Mr. Pompeo. And DOE has not missed a single payment to the 
FFB to date?
    Mr. Burner. No, sir.
    Mr. Pompeo. It made all those payments. Thank you, Mr. 
Chairman. I yield back the balance of my time.
    Mr. Terry. The gentleman yields back. And there's no other 
members wishing to ask questions, so I want to thank--so I ask 
unanimous consent that the contents of the document and binder 
be introduced into the record and to authorize the staff to 
make appropriate redactions. No objection.
    So without objection the document will be entered into the 
record with any redactions that the staff deem appropriate.
    [The information appears at the conclusion of the hearing:]
    Mr. Terry. So at this time we thank you. The ranking member 
and I thank you for your patience, for your dedication and your 
testimony here today. The committee rules provide that members 
have 10 days to submit additional questions for the record to 
the witnesses. And there's already been one member that has 
suggested there will be additional questions submitted to you, 
so we do appreciate your time. And we are adjourned.
    [Whereupon, at 12:55 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

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