House Republicans are pushing the “No More Solyndras Act” and, man, it’s almost something President Obama can support. Just add two words to the title — “Talking About,” placed after “More” and before “Solyndras” — and bingo, the prez is right on board.
But fat chance the GOP will let go of what it clearly sees as a key campaign issue. This new legislation [PDF] from Fred Upton (R-Mich.) has no chance of becoming law — it might pass the House, but will die in the Senate — but it is providing Republicans a chance to take aim at one of the administration’s most highly publicized stumbles.
But before we plunge into that legislation, let’s recap where things stand with the U.S. Department of Energy Loan Guarantee Program.
Point 1: According to a March report [PDF] from the Government Accounting Office, “For 460 applications to the LGP from its nine solicitations, DOE has made $15.1 billion in loan guarantees and conditionally committed to an additional $15 billion, representing $30 billion of the $34 billion in loan guarantees authorized for the LGP.”
Point 2: Under an April 2011 budget compromise, Congress gave the DOE a little leeway in considering some lingering 1705 applicants after the Sept. 30, 2011, expiration of that Recovery Act program, moving them over to the Section 1703 program. The deal also gave the DOE $170 million to cover the credit subsidy cost for these prospective loan guarantees. (The credit cost subsidy is a charge, usually around 10 percent of the value of the loan, that is collected to cover the cost of any losses to the portfolio — like Solyndra). The DOE also got authorization to do up to an additional $1.5 billion in loans for Section 1705 holdovers, but with no appropriation for credit cost subsidy.
Now onto the “No More Solyndras Act.” It would prohibit the DOE from considering any loan applications made after the end of 2011, and since the DOE hasn’t issued any solicitations since then, that would render any remaining loan-making authority moot; there wouldn’t be anyone to give the loans to.
That’s why Upton wasn’t kidding last week when he said his legislation would end the loan guarantee program. Of course, he said it with a certain amount of prejudice: “The Obama administration’s gross mismanagement of the loan guarantee program necessitates the phase out of the Title XVII loan guarantee program. With the bankruptcies starting to pile up, our message to American taxpayers is clear: There will be No More Solyndras.”
Even granting loans to 1705 applicants who were moved over to the 1703 program would be difficult under Upton’s legislation because it would require new levels of Treasury Department oversight and signoff.
Plus – yes, there’s more – even the loan guarantees already in place would be more difficult to administer under Upton’s legislation, which would forbid the DOE from restructuring any loans for troubled companies in a way that would remove the government as senior debt holder. You might recall that the DOE did that with Solyndra when the company ran into trouble. That move helped bring in additional private investment, but put those private investors ahead of the government in making claims on Solyndra assets in the event of a bankruptcy.
At a hearing last week on “No More Solyndras,” the DOE’s acting chief, David Frantz, outlined what the DOE sees as the many successes of the program. And, indeed, an independent analysis earlier this year said the program was basically working out as Congress had designed it, if not better.
But the successes, in the view of most Republicans, remain overshadowed by the failures, including the big one, Solyndra. What’s more, even cases where the loan guarantees appear to be working, fostering development and growth, aren’t persuasive to the GOP. As Mike Pompeo (R-Kan.) put it, commenting on a the loan guarantee program put in place under President George W. Bush: “The government’s got no business having the section 1703 or 1705 program in the first instance.”