Thursday, September 15, 2011

Solyndra hearing: Did the loan restructuring break the law?

Katie Fehrenbacher, editor at earth2tech, along with Greentech and ABC News, have been the folks following the Solyndra saga most diligently. I think our first post dates to October 8, 2008:
Was Solyndra the Reason Goldman Sachs Threw First Solar Under the Bus? (FSLR; GS; SPWRA)

Re-reading it I'm surprised, considering what was going on in the wider market, how calm it sounded.
The sniveling little voice in my head had said "oh my God, we're all going to die" a few hundred times as the DJIA dropped from 10,831.07 on Oct. 1 to 8,451.19 on Oct. 10.

I was probably trying to keep the pups from going all catatonic, curling up on the floor and moaning.
I had dibs on that move.

Here's e2t:
One of the uglier details of the Solyndra scandal is that when the Department of Energy helped Solyndra restructure its loan in early 2011, it agreed that $75 million in new funds from private investors became senior debt that ensured it would be paid back ahead of $385 million in federal loans (taxpayer money). During the hearing on Wednesday that looked into what happened in the run up to Solyndra’s bankruptcy, Republicans raised the suggestion that putting private investors funds before government money in such a way is breaking the law.

During the hearing, Rep. Fred Upton (R-Mich.) called the subordination of the government funds to private investors an “apparent violation of the law,” and Rep. Joe Barton (R-Texas) called the subordination potentially “a direct violation of federal law.”

Republicans pointed to a paragraph in the Energy Policy Act of 2005 that says obligations, or loan guarantees, shall not be subordinated to other financing, and asked Executive Director of the Loan Program Jonathan Silver why he didn’t think that restructuring the loan to subordinate funds was against the law....MORE
Also at earth2tech:
Solyndra’s struggles get uglier: employee lawsuit, refinancing details