Following the relentless investigation of Solyndra, one of the few companies that declared bankruptcy after receiving a Dept of Energy (DOE) loan guarantee, the White House ordered an independent review of the loan program.
That review was released today. Rather than focusing on Solyndra, it examines the status of the program as a whole and how it might be improved.
The DOE renewable energy loan guarantee program was initiated in 2005 under President Bush and expanded in 2009 as part of the Recovery Act. It ended in September 2011 and hasn’t been renewed, although the larger program continues. It was intended to support young firms and projects that might have difficulty attracting private financing.
Since President Obama came into office, DOE awarded 30 loan guarantees that total $23.8 billion for renewable energy companies and major automakers like Ford and Nissan. As of November 30, only about $8.3 billion – a third of the money – had been spent, although that just doubled with the $8.3 loan guarantee it awarded to two nuclear plants.
Generally, the task force concluded the overall loan portfolio is expected to perform well and holds less risk than Congress originally anticipated when they approved the program. They also found the DOE has done a good job of balancing the inevitable risks in the range of projects it selected.
When Congress approved the program, it set aside $10 billion for potential losses. DOE, however, is expected to lose $3 billion at most from companies that default on their loan guarantees.
"We have always known that there were inherent risks in backing innovative technologies at full commercial scale, and it is very likely that there will be other companies in the portfolio that won’t succeed," says DOE Secretary Chu. "But the vast majority of companies are expected to pay the loans back in full, on time and with about $8 billion in interest – while supporting a total of 60,000 American jobs and helping us compete in a rapidly growing global industry," reports Politico.
In terms of improving the program the task force recommendations DOE develop an "early warning system" – it would monitor trends in the market that could affect loans and keep much closer tabs on the status of every single loan recipient and related firms that could impact the loans.
Another recommendation is to better clarify lines of authority among managers and implement more explicit objectives and standards in managing loans. They suggest creating the position, "Chief Risk Officer" who would oversee a "Risk Management unit" which would monitor the loans.
The GOP is still threatening to pursue contempt charges against the White House if it doesn’t release even more internal documents related to Solyndra.
During the course of the investigation, the White House has turned over about 1,800 pages of documents, and 185,000 pages have been submitted by federal agencies.
White House spokesman Eric Schultz released this statement on February 15:
"After 187,000 pages of documents, nine committee staff briefings, and five Congressional hearings, Republicans’ allegation of unresponsiveness is as unfounded as their allegation of political favoritism.
Congress has now been investigating this loan for an entire year and everything disclosed affirms this was a decision made on the merits at the Department of Energy. Yet, despite no evidence to support their accusations – or perhaps because of it – the Committee continues to demand more materials with no real relevance to the Energy Department’s decision making on the loan.
At last month’s House Republican retreat, the Leadership increased pressure on its members to ratchet-up oversight of the Obama Administration for political reasons. It is no coincidence that within days of that directive, House Republicans are
escalating this investigation. It is troubling that House members would use their investigative authority and taxpayer resources to seek a political advantage. We believe political motivations shouldn’t drive this investigation."