Companies fail when “the bottom of the market falls out,” Dr. Chu testified before a subcommittee of the House Energy and Commerce Committee. That, he said, is what happened to the solar panel business, for two reasons that he maintained could not be foreseen.
“This company and several others got caught in a very, very bad tsunami,” he said. New plants to manufacture solar panels started up in China and elsewhere, while the market for the panels was softening because of economic troubles in Europe. Prices dropped 70 percent in two and a half years, he said.
But Republicans pursued the theme that the problem was incompetence and political influence. Clifford Stearns of Florida, chairman of the oversight and investigations subcommittee, which held the hearing, said, “it is readily apparent that senior officials in the administration put politics before the stewardship of taxpayer dollars.”
Dr. Chu said he had come into office in January 2008 trying to speed up a loan guarantee process that had been established by a 2005 law, but which had not at that point resulted in any actual loans. His goal, he said, was to create jobs in a faltering economy.
Dr. Chu also stressed that private investors had put more than half a billion dollars into Solyndra, which had a new design for lightweight solar modules.
“When it comes to the clean energy race, America faces a simple choice: compete or accept defeat,” he said. “I believe we can and must compete.”
His prepared testimony also made an indirect dig at some members of Congress. “We appreciate the support the loan programs have received from many members of Congress — including nearly 500 letters to the department — who have urged us to accelerate our efforts and to fund worthy projects in their states,” the statement said.
Mr. Stearns, though, complained that the policy was an effort to keep President Obama on a “green jobs pedestal.”
“Two of the first three deals approved under Secretary Chu’s acceleration policy have now blown up and filed for bankruptcy,” he said, referring as well to a Massachusetts energy storage company, Beacon Power. “No one has admitted any fault whatsoever, and the president and our Democrat colleagues just shrug and say, “Hey, sometimes things don’t work out.’ ”
Dr. Chu was the only witness.
The hearing has two focuses: the business judgment of the Energy Department and the White House, and the possibility of political influence. The chairman of the Energy and Commerce Committee, Fred Upton, Republican of Michigan, asked in an opening statement, “What did Secretary Chu know about the situation at Solyndra, and when did he know it, and how did he act on this information, if at all?”
The form of the question mirrors what was asked 35 years ago about President Richard Nixon’s involvement in the Watergate break-in.
“We have heard from President Obama, and even from you, Secretary Chu, that nobody had a crystal ball and no one could have predicted Solyndra’s demise,” he said. “But the truth is, the D.O.E. staff did predict this — one of the models reviewed by D.O.E. staff specifically showed that Solyndra would run out of cash in September 2011.”
And the company’s auditors said six months after the initial loan agreement was completed that Solyndra would have problems, he pointed out.
For the most part, Democrats are not defending the government’s judgment in making the loan.
But Representative John D. Dingell, also of Michigan, questioned in his opening statement the Republicans’ other contention, that the loan was rushed through because one of the investors, George Kaiser, an Oklahoma oil and gas billionaire, was a “bundler” for the Obama campaign.
“I have yet to be presented with a single piece of evidence that President Obama, Vice President Biden or any of their staffs used political pressure on D.O.E. to circumvent the normal vetting process, an assumption/presumption that my Republican colleagues continue to propagate for media attention,” he said.
Representative Joe Barton, Republican of Texas, said that political influence by Mr. Kaiser was inevitable.
“It’s the elephant in the room,” he said. “Everybody and their dog at D.O.E. knew who he was.”
Republican questioners were alternately respectful of Dr. Chu, who won a Nobel Prize in physics, and condescending.
Joe Barton of Texas praised Dr. Chu’s integrity but asked about a decision that Dr. Chu approved, to allow Solyndra to restructure its loan and take in new money, putting the government second in line for reimbursement in case of liquidation. He said the 2005 law that established the loan program that said that in case of liquidation, the government “shall be” first in line.
“Do you understand what the word ‘shall’ means?” he asked.
Mr. Stearns asked Dr. Chu whether the White House’s appointment of an outside expert to review the loan guarantee program reflected badly on the secretary. “Doesn’t this mean, simply, it does to me, that the president has lost confidence in you, your acumen, your financial acumen?” he asked.
Dr. Chu replied, “we welcome outside eyes.”
Mr. Stearns said, “you don’t take it as a personal affront on your integrity?”
“No,” said Dr. Chu.
Speaking to reporters at the end of about five hours of statements and testimony, all parties sounded feisty. Dr. Chu said: “We really have nothing to hide; we really have nothing to be ashamed about.”
He added that the government would have to help incubate new manufacturing industries, because this played to “the U.S. technological sweet spot,” which is the development of new technologies.
Mr. Stearns was later asked if he thought Dr. Chu should be fired. “My personal opinion is I think possibly he should be reassigned,” he said.
Mr. Barton was more charitable, but darker. “I think Secretary Chu is trying to be a team player,” he said. “I think probably he is taking the heat for some decisions out of his control.”
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