Dems: Bush-era Loan Deserves Same Scrutiny as Solyndra
Waxman wants probe into collapse of broadband firm Open Range.
Oct. 27, 2011 — -- Congressional Democrats have asked House investigators to expand their probe of the Obama Administration's ill-fated loan to Solyndra to cover another speculative federal lending effort -- this one approved under President Bush.
In a letter to Energy and Commerce Chairman Fred Upton (R-Mich.), three senior Democrats called on investigators to broaden their probe to cover a $267 million Agriculture Department loan to a Colorado-based start-up that tried to extend broadband Internet service to rural and underserved areas.
"There is also no good rationale for ignoring the $267 million loan to Open Range," said the letter, signed by Reps. Henry Waxman (D-Calif.), Diana DeGette (D-Colo.), and Edward Markey (D-Mass.). "Your reaction to the Open Range bankruptcy could not be more different than your reaction to the Solyndra bankruptcy."
On October 5, 2011, just weeks after Solyndra shut its doors, Open Range filed for bankruptcy. House Democrats said an investigation matching the vigor of the probe into Solyndra would show that the committee is serious about scrutinizing federal lending decisions, and not simply looking for opportunities to score political points.
The circumstances surrounding the Open Range loan differ somewhat from the Solyndra loan. Open Range was granted its loan at a time when it was receiving healthy financial reports from auditors. In April, when the company began to struggle, the Agriculture Department restructured the loan to reduce the government's exposure. As a result, the amount of federal loan money consumed by the company was contained at $73.5 million.
The Energy Department loan to Solyndra also started strong, but it was forced to restructure the loan around the same time the Open Source deal was being revised. Instead of dialing back its stake, Energy officials found additional money for the company, and allowed private investors to jump ahead of the government, so that the investors would be eligible to collect the first $75 million recovered when bankruptcy proceedings kicked in. Solyndra wound up consuming about $528 million of a $535 million loan.
But House Democrats said there were enough similarities to warrant a comparable level of attention. And their letter accused Republicans of downplaying the Open Range bankruptcy because the loan occurred under the previous, Republican administration.
"That is not a defensible reason for ignoring Open Range," they wrote.
House Republicans called the request for a broader investigation a "strange twist" coming from "members who fought so hard to block this investigation."
"The Democrats have a fundamental misunderstanding of the Solyndra investigation," said an emailed statement from the office of Rep. Upton, the Energy and Commerce Committee chairman. The probe is not into green energy, said the statement, but into a "gross mismanagement of taxpayer dollars."
An Agriculture Department spokesman said in an emailed statement that, while the loan was approved before the new administration took over, the department still considers the goal of expanding broadband Internet into underserved areas an important goal.
"While we are of course disappointed this company did not succeed, rural infrastructure loans are essential to economic development in many communities throughout the country and 99 percent of these loans are repaid successfully," said Dane S. Henshall, a USDA spokesman.