Stearns said a first step would be to bring in DOE’s legal counsel next week to hear more about how the loan guarantee was structured, and then hear from Chu later in November.
“When you’re doing an investigation and you have this amount of detail, I think you should move systematically and carefully on this and progress in a way that you understand why all the people made their decisions and then bring the top guy in last,” Stearns said, referring to Chu.
Stearns said a key focus of upcoming hearings would be the Energy Department’s decision to “subordinate” the loan guarantee made to the company so that private investors would be repaid before taxpayers.
“We are going to ask the legal counsel for Secretary Chu to come forward and explain of course how and why they subordinated the roughly half a billion dollars to two private hedge funds that were prepared to put in $150 million,” Stearns said. “They put in $75 million before Solyndra of course went bankrupt, and at that point, all the taxpayers’ money was subordinated to these two hedge funds.”
Stearns said Republicans believe that the Energy Policy Act of 2005 does not allow the government to subordinate the loan in this way.
“It cannot, cannot be legally subordinated,” he said.
Stearns added that the chief financial officer of the Treasury Department has told Congress that he has never seen a subordinated loan similar to the one made to Solyndra.
Susan Richardson, chief counsel for the Energy Department Loan Programs Office, authored a memo that argued it was legal to subordinate the loan.
But Stearns dismissed that argument.
“Counsel cannot decide on her own … what is in the best interest of the United States,” he said. “You have to follow the law, and in this case she did not.”
Stearns said Republicans on the committee will begin looking at other companies that received financing from the Energy Department once Chu testifies next month.
“The next step is to try to look into some of these other companies and try to evaluate them and to try to develop a broad consensus of what went wrong,” Stearns said.
This story was updated at 1:47 p.m.
Andrew Restuccia contributed to this story.