By the fall of 2008, the DOE picked companies that might be eligible, and one was Solyndra. By that time, members of Congress had been criticizing the DOE loan program for not making any loan guarantees in the three years since the program had been created, the report notes.
So the pressure was on. And here was a big sticking point. The 2005 legislation said any company wanting government money must pay in full for the cost of their federal loan guarantees. That means because they were getting a taxpayer-backed loan, they in effect were getting an insured loan, so the company had to pay whats called a credit subsidy, in case the company defaulted. That subsidy could total in the tens of millions of dollars, the House panel report says.
And the 2005 legislation required companies to pay this subsidy in full at the time of the loan guaranty, the House panel memo says.
In early 2009, DOE Secretary Chu had issued a directive to officials working on the loan program to take measures to accelerate the review and issuance of loan guarantees, the House panel report says.
By then the Presidents stimulus plan was passed, and that made an important change to the way the DOE ran its loan guaranty program, the memo says. The stimulus plan wiped out the credit subsidy, causing taxpayer costs to rise.
Companies getting DOE loan guarantees would no longer have to pay the credit subsidy cost, the report says. That gave them less incentive to protect taxpayer loans.
Instead, the stimulus appropriated approximately $6 billion in funding to pay for the credit subsidy costs of these projects, the panel says.
What did companies have to show to get yet another taxpayer-backed subsidy for their own no money down, no income, taxpayer-backed loans?
Nothing they only had to show a deadline date for when construction on their green energy project would begin, says the House panel report.
