Treasury Official Thought Solyndra Loan May Have Been Illegal

From The Hill:

House Republicans released an email Friday evening showing that a senior Treasury Department official in August expressed concern that the Energy Department’s early 2011 restructuring of the solar company Solyndra’s $535 million loan guarantee may have been illegal.

The restructuring put private investors, who were providing another $75 million to the struggling company, first in line for repayment if the company went under. In addition, House Republicans probing Solyndra – which collapsed several weeks ago – say DOE may have violated requirements to consult with Treasury on the revision of the loan agreement.

The Energy and Commerce Committee’s GOP leaders wrote to Treasury Secretary Tim Geithner Friday seeking documents about Treasury’s communication with the White House, DOE and other agencies on the financing.

They are questioning whether DOE ran afoul of a provision in a 2005 statute, which first authorized the loan program, that requires DOE to consult with Treasury on loan guarantees and major subsequent changes in the terms.

“In the course of our investigation, we have uncovered information that raises questions as to whether the Department of Energy satisfied the requirement to consult with the Department of the Treasury about the $535 million loan guarantee issued to Solyndra in September 2009 and the restructuring of that agreement in February 2011,” states the letter from Rep. Fred Upton (R-Mich.) and Rep. Cliff Stearns (R-Fla.), who heads the committee’s investigations panel.

They cite an August 17, 2011, email from Treasury’s Assistant Secretary for Financial Markets Mary J. Miller to Jeffrey D. Zients, the deputy director of the White House Office of Management and Budget.

The email, according to the Republicans, states:

[O]ur legal counsel believes that the statute and the DOE regulations both require that the guaranteed loan should not be subordinate to any loan or other debt obligation. The DOE regulations also state that DOE shall consult with OMB and Treasury before any ‘deviation’ is granted from the financial terms of the Loan Guarantee Agreement. In February, we requested in writing that DOE seek the Department of Justice’s approval of any proposed restructuring. To our knowledge, that has never happened.

Read the whole thing here.