US Treasury officials to testify next on Solyndra loan

Tue Oct 11, 2011 10:06pm EDT

Related Topics

* Friday hearing to feature Treasury Department testimony

* Email shows Treasury disagreed with Solyndra restructure

By Roberta Rampton

WASHINGTON, Oct 11 (Reuters) - A Congressional probe into a $535 million government loan guarantee to Solyndra will focus on whether the Energy Department broke the law by agreeing to restructure the failed solar panel maker's debt earlier this year at a hearing on Friday, and will feature testimony from the Treasury Department.

Republicans on the House Energy and Commerce committee will ask Treasury officials, who they have not yet named, about the terms of the last-ditch deal for Solyndra, which filed for bankruptcy in August, and was later raided by the FBI.

"The subcommittee looks forward to hearing testimony from the Treasury Department this Friday, especially in light of the recent discovery of documents that reveal the Treasury believed DOE violated the law in restructuring the Solyndra loan," a committee spokesman said.

The Energy Department has stood by its decision in February to allow Solyndra to restructure its debt when it ran out of operating cash. Under that plan, some $75 million in private investment was ranked ahead of the government in the event of bankruptcy.

That private money came from Argonaut Private Equity, a private fund owned by Obama fundraiser George Kaiser, and Madrone Capital, affiliated with the Walton family, which founded Wal-mart Stores Inc .

A top U.S. Treasury Department official complained about that decision in an internal email the committee obtained last week. Mary Miller, Treasury's assistant secretary for financial markets, said in an Aug. 17 email to the White House, that Treasury Department lawyers did not think the law allowed for the government loan to be subordinated.

Miller said Treasury had wanted the Energy Department to get approval from Justice Department lawyers.

"To our knowledge, that has never happened,'" Miller said in the email.

The loan was provided by Treasury's Federal Financing Bank and was guaranteed and monitored by the Energy Department. Energy Department lawyers determined the restructuring was legal, a spokesman for the department said on Friday when Miller's email was made public.

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