Thus goeth down the drain half a billion tax payer dollars. Business Week:
Two senior Treasury officials said Friday that they had never seen a loan restructuring similar to an Energy Department loan to a failed solar panel maker.
The half-billion dollar loan to Solyndra Inc. was restructured earlier this year so that private investors moved ahead of taxpayers for repayment on part of the loan in case of a default.
Treasury officials Gary Grippo and Gary Burner told a House committee they had never seen that occur in a federal loan. Grippo is a deputy assistant treasury secretary and Burner is chief financial officer at the Federal Financing Bank, which made a $528 million loan to Solyndra in 2009.
The two Treasury officials stopped short of declaring the loan restructuring illegal, as some Republicans allege.
"I can't give you a legal interpretation on that, sir," Burner told Rep. Cliff Stearns, R-Fla.
Grippo, who oversees the financing bank, said it was not Treasury's job to make legal interpretations. Instead, he said Treasury officials correctly raised questions about the deal in a series of emails and memos.
"Our role is to be as helpful as we can," Grippo said.
I'm sure. What's not surprising is that Obama donor George Kaiser would move in front of taxpayers to recoup his investment once Solyndra is liquidated. But the reason given by the Energy Department is priceless:
The Feb. 15 memo by Susan Richardson, the loan program's top lawyer, said the restructuring was allowed because a clause preventing private investors from moving ahead of taxpayers only applies to the original loan.
Continuing to block subordination -- the legal term for placing taxpayers' interest second -- is "inconsistent with the statutory scheme" and would make it harder for the government to restructure loans for troubled companies, Richardson wrote.
So, even though we're throwing good money after bad in the restructuring, and the risk of default is elevated, we move the taxpayers to the back of the line anyway.
Tell me this isn't an effort to please a big Obama contributor.