Monday, February 13, 2012

GOP & Dems React Totally Opposite To DOE Loan Report

Feb 10: On Friday afternoon, the White House released a highly anticipated, 75-page, independent review of the current state of the Department of Energy (DOE) Loan Guarantee portfolio, focusing on future loan monitoring and management. The review was requested on October 28, 2011, by the White House Chief of Staff and was conducted by Herb Allison, who has wide-ranging experience in the finance, business, and government sectors during a career in public and private service that spans four decades and both Republican and Democratic Administrations.

The White House said the independent report "confirms that the loan portfolio as a whole is expected to perform well and holds less than the amount of risk envisioned by Congress when it created and funded the program." The report also includes a number of recommendations on how to improve the management of the Department's loan program and ongoing monitoring of the loan portfolio. The Department of Energy is reviewing the recommendations to determine the best way to use them to further strengthen the program.

    In a blog posting the White House indicated that "DOE's loan programs are generating $40 billion in private investment in America's economy that is supporting 60,000 direct jobs and thousands more up and down the supply chain. With the help of this program, American workers will build wind, solar, geothermal and nuclear power plants across the country that will help power our economy for decades to come -- as well as the next generation of automobiles that will reduce our dangerous dependence on foreign oil. And these numbers don't include the investments made in the supply chain or from other investments made from projects that have been able to get financing because the loan program helped structure and establish a market for them."

    The White House noted that when Congress first developed this program under the Bush Administration, the purpose was to help fund some high risk projects to put America at the cutting edge of innovation. The White House indicated, "There's no question, as the report indicates, we expect more bumps along the road in emerging industries like clean energy. But as the President said in his State of the Union message, that's not a reason to throw up our hands and cede the jobs of the future to China or Germany or anywhere else. We have subsidized oil companies for a century.  It's time to end the taxpayer giveaways to an industry that's rarely been more profitable, and invest in a clean energy industry that's never been more promising."

    Among other things the report recommends:

  • DOE should assign authorities for decision-making only to individual managers and never to committees where collective responsibility can obscure individual accountability.
  • DOE should develop explicit objectives and standards of performance for managing the Portfolio during the construction phase of the projects and beyond.
  • DOE should create a new Risk Management department encompassing all DOE functions that monitor LPO [Loan Program Office] and should appoint a highly experienced Chief Risk Officer to head it. DOE should also reorganize oversight of the Program.
  • Overall governance of the Programs would benefit from access to senior government officials of other departments and agencies who have knowledge of proven 'best practices' across credit programs government-wide.
    Senate Majority Leader Harry Reid (D-NV) indicated, "Clean energy jobs are critical to rebuilding our economy and powering America's future growth opportunities. I am encouraged that this independent evaluation shows that the Obama administration's investments are helping the private sector create thousands of good paying, clean energy jobs in Nevada and across the country. This should be an area where Democrats and Republicans can agree, and I hope Republicans will work with us to help create more clean energy jobs, reduce our dependence on foreign oil and make our country stronger and more competitive."
    Senate Energy & Natural Resources Committee Chairman Jeff Bingaman (D-NM) said, "Mr. Allison's review is a careful and thoughtful analysis of the Department of Energy's loan programs. As the report makes clear, Congress established these programs to support innovative projects employing technologies that have not reached commercial maturity, and thus were not likely to receive support from commercial debt markets. That's why Congress provided money up front to account for anticipated losses. The report gives reassurance that the accounting for the risks of DOE's loans appear to be accurate.  Mr. Allison also provided a number of recommendations to further improve these programs. I look forward to having Mr. Allison come before the Committee next month to present his analysis and recommendations, once our Members have had a chance to read and consider today's report."
    Representative Edward Markey (D-MA), Ranking Member on the House Natural Resources Committee said, "Republicans have been infected by a Solyndra syndrome, and hopefully this report is the cure. This report serves a strong dose of reality for Congressional Republicans who have chosen to use the failure of one loan guarantee recipient as the premise for abandoning all support for clean energy. Clean energy has been an economic bright spot in our tough economic times, creating jobs and attracting investment. It is time for Republicans to stop persecuting the entire clean energy industry and join Democrats to start producing America's clean energy future. This report also makes some important recommendations about how the Loan Guarantee Program can be reformed. I strongly support the Department of Energy immediately moving to implement any and all recommendations from the Allison Report that will enhance taxpayer protections."
    House Energy & Commerce Committee Ranking Member Henry Waxman (D-CA) said, "The Allison report shows that the DOE loan program is working. It is promoting innovation, creating jobs, and helping U.S. companies compete with China. The report is a repudiation of the partisan attack on the program by congressional Republicans and the oil and coal industries. I hope Republicans will stop insisting that the U.S. cannot compete in these industries of the future and join an effort to promote U.S. manufacturing, increase our energy security, and protect our environment."
    Senate Energy & Natural Resources Committee Ranking Member Sen. Lisa Murkowski (R-AK) said, "It's clear that implementation of the DOE's loan programs has flaws that need to be addressed. As the Senate committee of jurisdiction, it's our responsibility to understand these problems and correct them to ensure that the programs are working as intended and are not wasting taxpayer dollars. Simply ignoring the problems does the programs a disservice and leaves them vulnerable to elimination. Between the House and the Senate, we are the only committee that has not held a hearing to look into DOE's loan programs. I'm a strong proponent of the program, but it's clear that there are some issues that need to be addressed for me to defend it." 
    House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-FL) expressed concern with the Allison's audit. They said, "Two out of the first three loan guarantee recipients, Solyndra and Beacon Power, have already filed for bankruptcy. The committee leaders are concerned with the health and management of the overall program, and have repeatedly requested financial information on the entire portfolio."
    They said in a joint release, "The first step on the road to recovery is overcoming denial, and this audit is a long-overdue acknowledgement that the Obama administration has a problem. But when taxpayers are the ones paying the price, this sort of managerial soul searching should take place before billions of dollars are doled out, not after. It would be a stunning case of bureaucratic disregard to declare victory because the government is expecting to lose 'just' $3 billion. One key lesson is that taxpayers should not have been placed in the position to lose one dollar, let alone billions, all because the stimulus allowed companies with shaky finances to apply for and receive taxpayer support without putting up any money.

    "The very suggestion of an early warning system misses the point given that the internal warnings on Solyndra were abundant well before the half a billion dollar loan guarantee was finalized. What use are early warnings if they are ignored? Every warning on Solyndra fell on deaf ears – while the experts understood Solyndra was doomed for failure, they were overruled every step of the way. If the Obama White House is indeed sincere about protecting taxpayers, its team of lawyers should swiftly comply with our subpoena for West Wing Solyndra documents. It has been 100 days since we were forced to subpoena the White House, and they continue withholding documents and shielding key staff from our investigators. This report reveals broad-based weaknesses, but it does not answer some of the most fundamental questions about how these risky bets were made over the objections of experts. Our investigation continues as we work to ensure taxpayers are never again stuck paying hundreds of millions of dollars because of the Obama administration's risky bets."

    Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) said, "The findings of today's report are startling. The Obama Administration has acted as if Solyndra was a fluke, but the reality is -- as this report concludes -- the entire process was flawed. Most concerning is the revelation that the Secretary of Energy was not adequately informed about loan performance and risk while his department was ill-equipped to assess that risk. The report also noted that the Department did not have clear guidelines for granting loans and relied on an ad-hoc decision-making process. Billions of taxpayer dollars were -- and remain -- in jeopardy because of President Obama's green energy gamble, while private capital has been pushed aside by government money and markets disrupted by government intervention. This report underscores the importance of our Committee's and Congressional investigations into Department of Energy and Obama Administration agencies to shed light on a process that has been shielded from the scrutiny of the very public who are underwriting the risk."

    Access the White House blog post (click here). Access the complete report (click here). Access the statement from Senator Reid (click here). Access the statement from Senator Bingaman (click here). Access a release from Representative Markey (click here). Access a release from Representative Waxman (click here) Access the statement from Senator Murkowski (click here). Access the joint release from Reps. Upton & Stearns and link to related information (click here). Access the release from Rep. Issa and link to related information (click here). [#Energy]

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