Wexaminer The House Energy and Commerce Committee released a report on the Energy Department’s decision to subordinate taxpayers to private investors in the ill-fated Solyndra project. That is, the taxpayers would have to wait in line behind the private investors and let them recoup all of their losses first. Only after that could taxpayers could get any money back – assuming there would be any money to recoup at this point. In this case, that would be a reported $328 million of the $335 million federal loan guarantee to Solyndra.
This is significant because the plain language of the department’s own rules for loan guarantees states that taxpayers must not be subordinate and instead must come first. The committee’s report argues that Energy Department officials made a spur of the moment decision to violate this standard as part of a desperate attempt to keep the company afloat, then scrambled after the fact to justify their action:
DOE’s negotiations with Solyndra’s investors over the terms of the restructuring
agreement took place in early December 2010. The emails and communications exchanged between Solyndra’s investors and DOE during this time period show that the negotiations were tense, and that the investors were hesitant to invest additional capital in the company. The negotiations between the parties reached a breaking point on December 7. After DOE rejected a proposal from the investors, the investors then proposed that the parties “should use the time to start discussing the bankruptcy process.”