tv Today in Washington CSPAN June 21, 2012 6:00am-9:00am EDT
facility -- we expect -- [inaudible] mr. chairman, ormat has been in business for close to 30 years. this experience enabled us to propose early commercial energy power project to the department of energy. thank you for opportunity for me to speaker today. i welcome any questions that you may have. >> thank you. doctor, your recognize. >> chairman jordan, ranking member kucinich, members of this committee it's an honor to appear before you today to talk about department of energy loan guarantee programs. my name is veronique de rugy. advocate for no the energies are right to be outraged by the large amount of subsidies going to fossil fuels.
yet, they are wrong to think that the answer is more subsidies for form of energy that they approve of. the department of energy's 1705 loan guarantee program is a cornerstone of the department of energy's and the u.s. energy policy. the policy is often justified on two grounds. first, advocates argue that renewable energy companies do not have access to sufficient credit to support new projects. second, the department of energy argues that by investing in green technology, it would create up to 5 million green jobs. so how do these claims stand up to scrutiny? looking at the flow of 70 nope five loan program, we find first that nearly 19% of a 1705 loans
went to subsidize projects that were backed by large companies such as nrg energy, or even the financial giant goldman sachs. in practice it is hard to argue that these companies would have had a hard time having access to capital to fund projects that would have been viable. second, according to the department of energy data, under 1705, $16 billion in loans were guaranteed, and 2388 permanent green jobs were created. that means that for every $6.7 million in taxpayer exposure, one job was created. these numbers dismiss this loan program is ineffective -- as an effective job program. but while the data speaks for itself, the real problem with
the 1705 loan program lies below these numbers. it even goes beyond the recent waste of $538 million of taxpayers money following the failure of solyndra. solyndra is a symptom of more fundamental problems that make loan guarantee programs in general and d.o.e.'s loan guarantee program in particular a bad deal for taxpayers. such programs suffers from three main problems. first, every loan guarantee program transfers the risk from lenders to taxpayers, creating a moral hazard problem. because the loan amount is guaranteed, thanks have lessons and to evaluate applicants thoroughly or apply proper oversight. the same is true for the company that borrows the money. also, these programs privatize gains and socialize losses.
in other words, taxpayers bear the risk of the project, but the companies, and the bank, that receive the guaranteed get all the upside. second, every loan guarantee gives lenders an incentive to shift sources to governments support a project and away from unsupported ones. regardless of the merits of the project. this has a cascading effect. for instance, once the government subsidizes a company, that company becomes a relatively safe asset in the eyes of other investors. however, safety in the market often signals low return on investment, and it's likely to scare but venture capitalists. and that means lower rate of innovation. but it gets worse. the data shows non-venture capital, private investor, tend to congregate towards the safety
provided by the government guaranteed projects. and that, too, takes resources away from unsubsidized projects towards subsidized projects. and these unsubsidized projects, they may have actually a better probability of surviving and a better business absent the subsidy. and make no mistake, this actually can hurt green energy production as this trade off can actually take place within the green energy industry. third, at their worst every loan guarantee produces political incentive, incentive into business decisions creating the condition for businesses to seek financial reward by pleasing political interest rather than customers. it is called crony capitalism. it is a bipartisan problem, and it entails real economic costs.
so whatever the intentions that motivate the program, the evidence is clear. it's just not working to do something about loan program does expose taxpayers to solyndra like a waste. but more concerned of the systematic distortions it introduces into the market and the unintended consequences those may have. thank you. >> thank you, doctor. we appreciate that. want to yield to mr. kelly for five minutes of question. >> i thank you all for being here and and and sometimes it seems like an exercise of futility because there's other things you would like to be doing. but our job is to protect the taxpayers, and being a small businessperson i've navigated trying to borrow money. mr. green, you talked about the monkey were able to borrow. through the 1705. you said this is a loan that is made. what is the interest rate of the loan? >> i don't know what the interest rate is but it is very low bystanders.
headset by the government. >> wait a minute. you have an idea. spent it's like the fed fund rate plus 50 basis points speak to the average american what would that mean? what interest what would he be playing speak with what would the average american -- >> no, an average terms, the average american wouldn't understand because i understand you guys make good investments. a lot of expense to taxpayers, these are loans that are probably almost 0%, rice speaks i think they're very low interest rates but the government sets that rate. >> i understand it but that's why you went after a spin and also because of the size of the loan. >> let me tell you, i watch you earlier on. it would go, poor taxpayer. truth of matter is you can't borrow this money in the open market for the price the government is charging you. that's the fact of the matter. let's just get beyond. let me ask you something.
i watched you all significant eyeballs let go and borrow money. when you borrow money to something called the five c's, you guys get pretty good character, good capacity of capital, collateral. everything. you got goldman sachs, warren buffett owing -- owning 50% of the country. free money. it's free money that goes out to these countries but i don't blame you for going after dick don't misunderstand me. anybody in business would love to have that opportunity so when you see the outfit dislikes are you kidding me? are you kidding me? i can borrow this money at this rate. i couldn't help myself but i can do it for almost nothing to i'm going after that brass ring, or that gold ring. you didn't even need to capitalize to this program. the truth of the matter is the money was so cheap you had to go after. that's not a condemnation.
that's a smart businessman. not a good business move for the american taxpayer. i'm trying to imagine this feeding frenzy, when this money was put out there. who came after this month at the numbers of people that came after this money. what, 15 billion that was put out the? i think that's what the number is. so my question then comes down to what did the american taxpayer invest? we have a slide that shows credit ratings. can we put the slide of? do we have access to the? when you're in school, a be is a pretty good score. i lived on these. the truth of the matter is, a be is a high risk, it's john gray. now, imagine taxpayers, we risk some of your money but we wrist it because we had to take that gamble. so i look at this i look at the
credit ratings, we're telling people we made good investments for you. most of the money went to junk grade opportunities, right? that brings be down to, so how do you navigate that territory? how do you get to the guys who win the money? so it has to be a process. i think, i was looking at some gao numbers. 460 applications for the program. i think 25 got the money. about 7% of people applied got the money. what do those people do to get that money? dr. de rugy, who is paul thomson? >> paul thomson is working in our development business department. >> who does he work for? >> who is he working for? >> yes. >> in the company? >> obvious for your firm, right?
>> i don't -- >> let me ask you this. before thompson worked for you, who did he work for? >> who do the work -- before he worked for a? >> yes spent i don't know. >> it was harry reid. i want you to see something. this may refresh her memory. we have a little thing i want to show that we can maybe put up. this will help you remember this. >> you drive along i 80 and you see steam coming up from the graphic and may not look like much, but it's geothermal energy. geothermal can mean over 16,000 construction jobs in nevada. >> harry reid saw the potential before just about everybody else. >> harry reid got over 144 million. >> it's about energy. harry reid is making that happen. >> so here you read, you go
through this, and here's my point. here's my point. there's a way to navigate these waters. when only 7% of applicants actually get the prize, you've got to wonder as an average american sitting in my homes, and my business, how did these guys get there and all the rest didn't. and we find out that almost every single one of these is tied in in some way to the administration to so there's a way to navigate the waters. there's a way to be successful. they died -- the id is you better be tied into someone influential. mr. thompson right now is busy, and i know that harry reid visits the facilities. i visit a lot of facilities throughout western pennsylvania, too. the american people are starting to wonder, billions and billions and billions of dollars invested. by government that picks winners and losers and a lot of it based on highly suspect ways.
how do you get the? i wish we had more time. this is an interesting subject i know people don't want to hear about this. at the end of the day, people want to know where the money went and how did it get there. this is a difficult, difficult map to navigate, and you know that and i know that. free money is free money. this feeding frenzy had to be phenomenal but when you guys got that information, wow, man, let's get our share. it's amazing to me who got their share and how they got there should. the old store, if you're not on the table you're probably on the menu. somebody got to the table in a hurry and they got a bigger share of the pie than other people. who funded it all? hard-working american taxpayers and they deserve to know how that happened. >> i thank the gentleman. we will come to a second round. give the gentleman wartime. >> i hope so. >> yield now to the ranking member, mr. kucinich. >> first, i want to say that i want to associate myself with
concerns my friend mr. kelly has expressed. but, you know, bottom line were talking about our money, how people get too detailed. i don't take it as an entity with democrat or government. mr. thompson who were talking about, if i'm correct, just to show his bipartisan nature, he was able to be appointed as tom involved in the transition for then governor gibbons for natural resources issues. so, you know, the fact of the matter is we could go, and i have gone into who's contributed to whom. people are contributed democrats and republicans alike. a part of the problem with this process. men and women sit on these committees are good people. people who serve in congress is good people. the system is rotten. it's up for sale. and unfortunate assumption, or the assumption that occurs is unfortunate nexus between money
and power is, you know, it's inarguable. the only question is about these programs spent will the gentleman just? >> of course spent i would just point out i think that is the point the doctor made spent i don't disagree. >> this is a problem when jeff government handing out -- >> the issue is moral hazard is there. i agree with that. now, also just to make a point, there are some of my friends from the other side of the aisle who signed a letter, actually an urgent letter to secretary salazar saying look, let's get the solar programs moving. with unanimous consent i would like to put it in the record. so there's bipartisan support for the programs, but there's a partisan debate over who got what and why. now, we also, another little item i would like to clarify here, i want to ask unanimous consent, goldman sachs, now, we
know we have a wholly-owned subsidiary, goldman sachs, testifying, but goldman sachs involvement goes way beyond this subsidiary. in fact, goldman sachs stands behind several of the loan guarantees granted by d.o.e., which don't involve the subsidiary here today and i want to insert it for the record from this article from "the new york times" which states that goldman sachs is also involved in the desert sunlight solar farm, getting a guarantee of $1.46 billion. without objection? >> without objection. >> so, several very large companies are dissipated in projects that received d.o.e. loan guarantees. and, unfortunately, the committee's investigation has not asked many of them about their involvement. now, mr. mancini, it is my understanding that your company is a wholly owned subsidiary of open stacks grew. given the fact, what was goldman sachs involvement in cogentrix
1705 project in colorado? >> congressman kucinich, to answer that question i think you have to understand how we structured this project. we structured this project at cogentrix like we would any other projects for the construction of a power project. >> what was their involvement? >> the involvement of goldman sachs really was derivative to the whole process. if i could just explain. first, at the cogentrix level, at the opera and level we had to go out and secure, negotiate a power purchase agreement with an off day, a utility in this case, for the purchase of the power. the next thing we would do would be to select an equivalence provider, a construction manager. and then and only then would we go out and try to find the
financing package that would make this project viable speaks a what was goldman sachs involvement? >> so, goldman sachs provided equity capital to cogentrix to make $160 million of commitments to this project. we are, in fact, the project leading financier, not the government. >> thank you. mr. rakowich, it is my understanding your company is mainly comprised of warehousing operations throughout the world, and that project amp deals in place and solar panels on your rose. i understand that bank of america played a very significant part putting this deal together. what is bank of america's involvement in this project? >> congressman, bank of america would be the lender to the extent that we roll out the solar on these roads. bank of america -- >> to what extent the? >> well, to the extent of
roughly 80% of the project cost. >> and how much is that? >> it's hard to say. the maximum amount of the program is $2.6 billion. >> thank you. mr. mancini and mr. rakowich, your companies have both been the subject of chocolate request from this committee. and, of course, you were both requested to testify, and thank you for being here. to your knowledge, is to mancini, what shall parent company goldman sachs ever given a document request or an invitation to testify, to your knowledge? do you have any of you? >> to my personal knowledge i do not speak how about you, mr. rakowich, west bank america ever send document request, do you know if? >> not to my knowledge. document request? i don't have. >> mr. chairman, i just want to say that i think that this committee could be ever more effective in its work if we were
to have goldman sachs and bank of america here to answer questions about their involvement, since they stand behind. these are come in the scheme of things, these are small companies in the schema thing. in terms of goldman sachs and bank of america, that the highest level, and i think if we were able to bring them forward to kind of question that mr. kelly has race, it would be an opportunity for us to really go deep and find out what's happening. and also going to the interplay of the politics contributions. >> appreciate that from the ranking member. would not yield to mr. mulvaney. >> thank you, mr. chairman. i think the chairmen and ranking member for the courtesy of allowing me to participate today. i want to talk about something different for a few minutes and then follow up on some of the things mr. kelly and mr. kucinich were raising. i want want to deal first with the issues that the true impact, the truth statement impact of these programs. as i said and i listened a folks testify, one of the things that became really apparent is one of
these projects would been done anyway. you said you started this in 2006. you started doing this program and effective actually have put some these photovoltaic systems on your rose before the loan program started, is that right? >> congressman, that is true. those programs prior to this were almost entirely -- by the utilities that we in essence, you know, they financed that program at that point i. spent on the program he testified regarding the program in california. i understand that that is not actually lead to any installation of photovoltaic operations onto rooftops, is that correct? >> that is correct. >> so the 1705 program hasn't actually generated any stimulative effect, has its? >> well, congressman, if you don't mind, let me just give you
a bit of context to that because the program itself is a four year program designed to start on september 30 of 2011, okay? so if you look -- >> in fact you have to start, the program required you to start september 30 of 2011. >> correct. and we had started construction at the appointed time, but the and programs largely to be done in years three and four of the for your program. and so it would be, if you will, rolled out over time. >> i understand. i'm not being critical of the program. i understand the difficulties of having a supply go bankrupt and the impact on the delay of the system. the truth of the matter is this was a program that was supposed to create jobs right away. and it looks like it hasn't done a single, hasn't created a single job. mr. crane, i understand is thousand folks that work for your company, energy, and i think the report that i read, the total amount of loan
guarantees that you and your partners have on those three projects are roughly $5.2 billion. i congratulate you on employing 5000 people but i hearken back to mr. rakowich's, the ratio jobs to the mound that is involved in the equation. you know, i'm a simple country lawyer but i can handle the math. i do 5000 into 5 billion i get $1 million job. might -- am i doing the math right? >> first of all i should clarify, maybe it was a flight of record that 5000 people that work at nrg, old unemployed. three projects are talking about maybe you'll like this number more, is roughly employ 4000 people directly spent i can or should i don't like that number more. more money for jobs. >> the indirect impact is a multiple of that, but you know, as the ceo of the company, county judge is something that public policymakers like to do.
>> we have to do. let me ask you the same question i asked mr. rakowich which is, with these projects have gone on but for the 1705 program? >> congressman thompson three projects we are involved in absolutely would not have involved -- let me put there's no way the project would happen. without the federal loan may be one in five chance. the first solar -- i said -- first solar maybe one in five chance that the amount of money, congressman, the private sector did not, i may contrary to what dr. de rugy said, the private sector projects finance market was not large enough to do projects of this size. most of the banks involved in projects are actually european banks and they've not been into this condition over the last few years speak let's talk about the csr project. i'm hoping there's a second round of questions. you said is the one chance in four but going on, wendy ju all
start the analysis, start planning for this particular project? >> congressman, one of things also, i'm sorry, but all the three projects that were involved in, nrg was not the initial opponent of the project. we bought into the projects well after they were stupid i can't answer the question over the project -- >> when did you buy the project? >> on cvsr? >> yes, sir spent we signed a purchase agreement in november of 2010. >> how far along was the project at that time? >> the project was in the developing phase to get most of the permits and they had a letter of intent with the government in terms of 1705 financing, which is a project of this size, we were going to get involved in english by the letter of intent because we knew the private sector could not provide that size of a lone spent i understand. although i've never done business in california, or something for which i am grateful to my skin is it's not a quick process to get a developer permit and a letter of
intent for a project this size in the state of california. would that be a reasonable statement to make? >> your generalization that california is a difficult place to permit, every power plant is a true generalization i would agree with it. solar both felt dashing photovoltaic plant that doesn't use water has less issues and has no air admission, has less issues than traditional power plants but it has land-use issues. but we weren't responsible for the permitting. >> i'm not suggesting you're. i'm suggesting that somebody thought this project was going to go forward before the students program wasn't acted with 17 of five. >> well, yeah. i'm, dunbar star the development of the country they reason, i don't have a dachshund i was just the start of development before the financial crisis. it was not inconceivable the private sector to come up with a loan. but after the financial crisis there was no way the private
sector was coming up with a billion dollar loan spent thank you, mr. chairman. i hope there is a second round. >> we will have a second round. mr. rakowich, i want to be clear. other been any solar panels put on these rooftops? >> no. mr. chairman, as of right now there is no -- >> so what have you done? what's happened with this project? >> right, mr. chairman. and again first of all let me say that's almost by design. the first couple 15 to 18 months we did not project to do too much spent how much money again did you get from the department? >> total commitment is i believe $1.4 billion. >> 1.4 just waiting there.
you can use it whenever you want. god bless america. that's a pretty good deal. >> with all due respect, i think, let me just explain the way the project works. so first of all would go out and we identify utilities that are looking to sign power purchase agreements. >> have you done any construction on any part of phase one? added in anything, any construction at all in phase one of the program? >> yes. we prepared the 15 roads is southern california for solar in future spank you prepare them but no panel has been put? >> no panel. >> have you turned for a follow-up reading? >> we don't have a project at this point in time. >> okay. have you purchased any solar panels? >> we have not purchased any solar panels. >> you don't even have any, let alone put them a spirit we have not purchased any. >> i would like to end for the
record, and i'll give you a copy of this e-mail from our staff to a lawyer from bank of america will we just asked some questions regarding the project and, this project. for different questions have pdas been signed yet? has project and return for follow-up written yet? has project and, part of phase one? their reference is know to everyone one of them. and yet you still get to keep the money. this is amazing, and this is clear back, this is march will give you a copy of this. without objection i would like to enter this into the record. mr. crenshaw gen three loan guarantees you guys have gotten? >> yes. >> how much was the money i can? >> the total amount of the loan for those three projects? about $4 billion. >> you receive those sold on the merits of the project that dr. de rugy's point, nothing based
on friends in high places and political connection all based on the merits of the project? >> i believe so. >> have you been to the white house effort to discuss this issue and talk about how important these loan guarantees were? >> to discuss loan guarantee? >> have you been to the wider? >> yes i've been to the white house many times. >> out many is many times because between the bush white house and the obama white house i would say working, 15 times. >> since the 1705 program how many times have you been to the white house, this administration, how may times have you been to the white house? >> i was a six or seven times. >> who did you talk with when you at the white house? >> i was part of a large group, once meeting with president obama spent did you talk about this loan guarantee program when you met with president obama? >> we talked about the climate change. >> who else? >> vice president biden. i've spoken about the green energy standard. but many i spoke with carol
browner or with, once with valerie jarrett and i was all about the nuclear loan guarantee program spent you guys are also involved with the brightsource project as well, correct a? >> yes spent our youth mother with, we put an e-mail out to you. our youth money with this e-mail? this was brought down last during when mr. ward was here with the brightsource. the e-mail from mr. ward to mr. silva, department energy asking him to edit and proofread a letter that says brice was going to send from mr. bryson to bill daley, white house chief of staff of our youth money with his e-mail? >> no. speak were you involved in any way with his e-mail being sent to the department of energy's? >> i don't think i am copied on it. i had nothing to do with this. >> nothing at all? did you talk to the white house in the seventh is just as the
white house, did you talk to anyone there about this project? >> never. i never spoke with anyone in the white house about this project or any other renewable loan guarantee. only about the nuclear -- >> so you talk a lot about and general. do you think it's made out of the ordinary or not customary to have a company send an e-mail to the department of energy asking those folks at the department of energy, who will be responsible in determining whether you get the loan or not, do you think it's for them to ask the department of energy to edit a letter that the chairman of the board was going to send to the white house chief of staff? d. think that's unusual? >> i don't know. it's nothing that i've ever done, but whether it's unusual or not i don't know what common practice is spent keeping and the white is expected to energy projects and you don't know common practice. >> i -- >> d. think it's uncommon to get
that specific to ask a person is supposed to say dane or nay on a specific project to ask speak to i don't think i've ever person sent a letter or enough to the white house. i do have a lot of experience in this area. >> maybe you didn't have to send one. you were there authentic you could talk in person. i think the gentleman. would not go to her second round of questioning and would yield to the ranking member for five minutes. >> thank you very much, mr. chairman. although members of congress from both parties have supported 1705 loan guarantees for projects in their districts, it now appears that some of my friends in the majority have had a change of heart. in a report published in march, the majority argued that d.o.e. quote, amassed and excessively
risky loan portfolio, unquote. they are experts who do disagree with majority's assessment, recognizing the inherent risk in the emerging green technology loans, congress authorized to set aside to put 47 billion for potential losses in this view we 1705 loan guarantee program. according to several analysts, even after accounting for the collapse of solyndra and peaking power, the actual default rate on the d.o.e. to phone -- loan guarantee program ended up being a fraction of what the government actually budgeted for losses. bloomberg government also came to a different conclusion that majority, bloomberg's recent report beyond solyndra and analysis of the loan guarantee program concluded the 1705 d. we loan portfolio is quote composed predominately low risk projects, unquote.
now, on this, do you agree with the format that ormat projects are excessively risky or it is a lower risk project? [inaudible] very low risk from a technology point of view. they are similar to many megawatts utilizing the same technology. it was only about extending geothermal and not innovation. >> i understand, but the risk is low, is that what you're saying? >> very low. >> one reason why the portfolio can be considered low risk is because most of the projects that receive 1705 loan guarantees are for power generation. and d.o.e. required these companies to have long-term agreements in place with nearby
utilities to purchase the power once it was built. this means that the projects have a guaranteed income stream, which greatly limits any risk of default. now, mr. mancini, can you explain the difference between the power generation projects like the cogentrix loan guarantee and project finance deals? and do you already have agreements in place to sell power to major utilities once the projects are completed? >> we do in the case of alamosa have a long-term power purchase agreement with the public service company of colorado. to purchase the power. that is one of the requirements the deal we don't spank you couldn't if he did have some kind of agreement in place, right? >> we couldn't do -- >> it would work financially. >> it would be very difficult. very difficult. >> otherwise you would be stuck with a white elephant. >> there are very few of those objects that have succeeded.
>> an independent consultant to review the we loan programs office of the d.o.e. support of public-private partnerships between power generators and utilities in states like california ensure that loan guarantee recipients have a steady and predictable funding source. now, mr. craig, do you agree with this assessment? mr. rakowich, the the majority has document that prologis project amp has yet to start generating solar energy. that fact is disappointed but can you tell us how many taxpayers money has been drawn down by the project so far? >> zero, congressman. >> how has the project -- what was that andrew? >> none. >> no, okay. as the project amp loan guarantee designed to mitigate, how was this loan guarantee designed to mitigate the risk of taxpayer lost his? >> i would say three things. one, we are not going to move forward unless we have a long-term power purchase
agreement, which is generally a 20 year agreement, 15 to 20 agree with the utility. the second thing is that we are not going to think about, we are putting up the equity, or us and our financial partners are putting up all of the equity as well. the lender has 20% at risk that is not guaranteed. so nearly 40% of the project is at risk before the govrnment guarantee. so we are not going to put a -- >> the question here is the performance, and i think it's clear that this program is performing better than expected in financial terms. one of congress' main goal increasing the the 1705 loan guarantee program was to spur technological advances in renewable energy technology. now, do you believe your project is for an technological is? >> one can speak are used from
technological advances that the program, that is financed by 1705? [inaudible] spent are you go creating technological advance? >> not in this program. we are in other programs, but this is proven technology. >> mr. crane? >> yes. particularly the solar project is a huge technological advance spent mr. mancini speakers as i explain in my opening remarks the technologies in this project was use in the space program but never deployed in a commercial scale utility-scale project. this gave the opportunity to do that and i'm happy to report that it is operating successfully. >> okay. i just want to say, mr. chairman, that would have and i salute look at what the program actually has done. where testimony here that suggests that it could be working within the context in which it was designed. on the other hand, there are legitimate questions that are
raised by dr. de rugy about, you know, the risks involved. just in this case it looks like it might be working but i think that we still need to have some caution you. i ask unanimous consent moment ago, mr. chairman, you made public in e-mail your staff cited to alleged d.o.e. had violated the law. i have three documents which i would respectfully suggest would refute that an engineering assessment by the bank of america's independent consultant, to a facial d.o.e. documents, all these documents certify that commencement of construction ever to the allegations that have been made. and ask that these be submitted in the record, and i appreciate your consideration. >> without objection. mr. crane, i want to go back of his e-mail again because i am just flabbergasted that we actually have an e-mail with the ceo of brightsource relative to
the project is asking the department of energy to proofread a letter that their chairman of the board, now commerce secretary, is going, plans to send to the white house chief of staff. and a couple of the half other things there. send me any comments or suggestions you think we can improve this message. contained in the draft letter is the statement dear bill, referring to the white house chief of we need a commitment from the white house to quarterback long closure between omb and department of energy then march 18. later on, in the draft letter that they're asking for edit and review of, they say we need guidance and support from the whitest. this takes place in march of 2011. the loan guarantee is ultimately approved i believe on april 11, 2011. the seventh is ejected the white house, or any of them during
this timeframe, the spring of 2011? >> i would think that probably there were some. >> some prior to the april 11, 2011 approval of the loan guarantee? >> i think it would've been more before and after. >> more before than after. this project, the big picture up there, one big deal to your company, and, of course, brightsource. >> well, mr. chairman, you have to understand two things. one is this project on that basis, we were involved but it still basically right source project, number one. number two, this may seem like a big deal to you, but my focus was entirely on our nuclear project in texas which was a much bigger project and is five times larger than this project spent brightsource got billions of dollars. spent if it didn't happen, we have not invested, brightsource was the developer of this project spent but you got interested you are partner with
brightsource, correct? where pictures of it right here. >> now we are. now with hundreds of minutes of dollars invested, but as of march or april 2011 we had nothing. >> so it is important now but it wasn't important than? that's what you're saying. >> it was important to develop the project it was a brightsource. >> it was important enough to brightsource, your partner, to the department of energy check over the homework in a letter that we will send to the white house chief of staff. that was pretty important. but not important to you? >> at the time it would not have an opportunity to invest in the project we -- >> just to be clear and just for the record, if any of the 70 jet at the white house, some of them taking place in the spring 2011, you did not bring up the project, this issue at all in your visit with the whitest? >> absolutely unequivocally not. >> you did know about in the. you did know about the traveler and you didn't bring it up in any of your visits to the white house? >> that's right. >> okay. can we get the second e-mail of?
just because i want to see this. i want to let the doctor comment on this one. so this is now an e-mail from prolog is them mr. couture ben, to kimberly heim at the department of energy. and this is going the other way. this gets right to the point of when you get so close you got to greece the skids of government to get approval. but it says we've made adjustments to the members which we are necessary to accurately the situation to were talking about an intro member in the city we now have outside folks -- [inaudible] >> pardon is this which is entered into the record by mr. kucinich. same thing. glad we're thinking the same thing. and now have it going the other way around. where we have the department of energy having private sector edit and draft internal documents that are within the department of energy. the american taxpayer could see
what is going on in this program, and i believe it was your third point, doctor, in your testimony you talked about this is what happens when cronyism gets to this level and this much money is at stake. >> you. with a lot of money is a state for a company, whether it is direct cash or loan guarantee would basically give them come as mr. kelly said, lower rate than they would get on the open market. i mean, it actually ships a lot of incentives for the company itself to expand a lot of energy rather than to please the company. but to please the government or actually do beat the standards expected by the government. but i believe the reverse is true. there's a huge economic literature, it's all about the way the reverse is true, where governments design programs in order to see that some companies and some industries. so yeah, it goes both ways.
>> i find it amazing that on one hand we have a company saying hey, and it is letter for us, that our chairman is going to send to the white house chief of staff, andy we also have now the department of energy hey, private sector, it is in internal memo we're going to send folks at the department of energy. i mean, unbelievable. my time in public office i've never seen that kind of, those kind of communications going on in a loan guarantee program. all for that matter, any program. i appreciate the. i will yield not to the gentleman from pennsylvania, mr. kelly. >> thank the chairman. i know this can be uncomfortable. i don't fault you for taking advantage of a government that continues in this dependence, codependent type of a model. and it's sometimes hard to walk away from it once it is there. it's just so easy, why wouldn't we do it?
but it does come down to watch the return on investment for the people whose money is action at risk? and i think that's what the disconnect comes because people think it came from the government, it didn't anybody. but where did they can get the money and you find that it's the people who pay taxes. then you find out who's paying tax and you find that not everybody pays taxes, some of us do, some of us don't. but for those that do, where i live a lot of people still carry a little lunchbucket. by the time they get done paying for school taxes, the municipal taxes, state tax, federal taxes, there's just no money left for them to take care of their kids. and to plan the future. i think that's what the disconnect comes because was hard to believe this is free money. it's not free money. this is taxpayer money. mr. rakowich, how much money did cogentrix get? >> i'm sorry, i met with cogentrix. >> i'm sorry, i thought you were.
i thought you were. i meant mr. mancini. >> the federal loan guarantee now is $90 million. >> do you know how many permanent jobs that created? >> we created directly approximately 10 permanent jobs. >> let me ask you. not you, but you sitting at your kitchen table, and i would tell you, you know what? we just made a $90.6 million investment, and this is all about jobs. this whole initiative was about creating jobs. and here's the good news. 10 people. got jobs. do you see any reason why the american people no longer have faith in what's going on in washington, d.c.? the disconnect is a great year, it is so foreign to people who live in this area that this one actually comes out of working people's pockets. no, it's free. it's not free. this drives me absolutely nuts.
can you imagine going to the bank as i want to borrow $99, and here's the upside, i can hire 10 people with it. they would say you know what, it's good to see. please leave. i don't get this. and i will tell you, ms. bronicki, because i believe you don't know a lot of what's going on. this gentleman, mr. thompson, before he worked for you he was, he worked for mr. reed. kai anderson of cassidy and associates is an outside lobbyist for your from, did you know that? >> yes, sir. >> do you know who he worked for? [inaudible] he was harry reid's deputy chief of staff in 2005. okay, so mr. thompson worked for harry reid. mr. anderson worked for harry reid. who would that be? >> that's my son. >> he was a donor to senator reid's reelection campaign. and there's nothing wrong with this. there's nothing wrong. here's my point.
this is not to embarrass you. when we follow this, taking money from the government, there are strings attached to all this money we take him and there's repercussions. tickets to the poor people start to wonder, as i said earlier, this feeding frenzy to come out of this money money, how in the world did 25 of you get to the table and the others were left out in the cold? how did they get there and you said well, gee, the guy his work for harry reid, and the other guy work for every reid, and all of a sudden kerry breed gets involved in and all of a sudden the money starts to flow. people start to wonder, again, this is the tough part iv sitting there. the american people have a right to know how did this happen. spink if i may. >> absolutely. >> i sincerely believe that our project is one of the most fit projects for the program. it was well advanced --
[inaudible] construction has started. the financial markets were not available to provide the financing for such projects in 2010, nine. this survey accelerated the construction -- >> i have no question about that. i'm going to run out of time. i understand. yes, it was a good project for you coming. you are geothermal people. so yes, it was a good project for you. but let me ask you. and mr. cramond, brightsource, awkward collie and a, sold the ranch, project ap. where do they set himself empower that they joke nation that they generate. >> pgd spanks a wise that market so strong in california? >> it's on because california has a 33% renewable portfolio
standard. >> which means what? >> which means that by serving your i think it is 2020, 33% of the power -- >> by government mandate. so the government says you must buy this renewable energy state state government. >> okay. so the market was created by a government mandate spent which i think was endorsed by the people -- >> i understand that. it did happen if we mark. it was created by government mandate that said you is applied at this level. so the market wasn't created by a market demanded it was created by a government saying this is what your going to do. you're going to do with renewables. that's why 17 other, 1703 did address nuclear. 17 of a dozen. i understand that. go to where the money is. it's the old jerry mcguire, show me the money, i get it. but when it comes down to the government that creates the market through a mandate, that's not the same thing because at the end of the day no matter how much you subsidize, no matter what about the might of subsidize, it will not flow. if it's marketable you don't
have to subsidize a thing. so we create these markets, and then we create a business opportunity, i do not fault you for taking advantage of a government that mandate something on people they didn't want on their own. we forced it down your throat. they didn't just go and buy it because they wanted to. when we create a market is it okay now we will create them funny for you folks to go after, i did it. i get. at the end of the day every single penny came out of taxpayers money. it did not come from the government to any government spending is flat out taxes. that's all it is. that's all of the. we have disconnected ourselves with the source, the revenue source. it's hard-working american taxpayers. i yield back my time. i appreciate your patience but i've got to do. were i come from, these people are struggling to they are out of work i in the kind figure, se of them are working two, three jobs. they're trying to figure what the heck are you people done with the money and you? just doesn't make sense to the average american. >> thank the gentlemen to yield
now to mr. mulvaney. >> thank you, mr. chairman. again i appreciate the courtesy extended to me to participate today. mr. crane, i want to talk about the statement toward the end of your both written and oral testimony which i think is important where you mentioned that nrg has invested $8 billion of your own equity and the three discussed previously. i think the notes i had said 400 million of that, for example, in the california valley ranch and cvsr program. i think that's it an important, you on to say that in blunt terms we don't get repaid unless the government has been repaid. i think you hit on an important issue there because i think a lot of the frustration that you amongst the panelists today, at least the members, is a reflection of what folks back home are hearing is why are these folks getting paid when taxpayers still on. that's what they saw with fannie mae and freddie mac. that's what they saw with
celinda. they see the owners and sometimes the officers of these companies making money when the taxpayers are still on the. i want to talk with us for a second. are you telling us that there's, on the $409, there's no preferential pains, no return on equity until the debt has been repaid? >> what i'm saying, in the waterfall of payments, the debt service happens before there's any return to equity. i don't know, you know, month on month, year on year, but that has a higher priority on repayment an equity stake you said the debt service is above the equity on the waterfall. what about the repayment of the principal of the loan? >> that is interest plus principle. >> okay. you all collect fees and management consultant fees and things i would assume for the management of the project, correct? >> well, yet the operating fees, operating fees for solar potable tech projects are pretty small
because there's no moving parts. yeah, operating fees for any project go about gets it is because you have to keep the project operating during the income. >> i have no difficulty with it. is there any debt, have the owners of the company extended any debt to the cvsr program? >> no spent so just equity. >> we don't ever do that with any type of project. we are in not debt providers. >> how long will it take to repay the $1.2 billion government guaranteed loan? >> you know, congressman, i'm sorry but i don't know what the term of the repayment is on the project. i mean, usually i would say the debt is tied to the length of a power purchase agreement, and these are 20 and 25 year power purchase agreement. >> that would make sense but i don't know the specific terms of this but the ones i've seen before they would be tied to that agree. have a guaranteed flow of funds.
your debt would be very close, loan terms would be very close to the. >> usually the debt into little bit before the purchase agreement spent exactly but here's what i'm struggling with. the statement that you made in blunt terms we don't get repaid unless the government gets repaid, the taxpayers in theory going to be on the hook for something for the next 20-25 years here but you made a statement to all three panelists in august and your company is going to get all of your capital back in five years. spent you want me to explain that? >> that's what i'm asking you. >> that statement, which is later taken out of context by the new york times had to do with a solo project called life which has no department of energy loan guarantee. >> so your testimony here again today is that there will be no return on equity, and the return of equity on the cvsr program until after the government guaranteed loans are repaid in full. >> i'm not saying exactly that
because you know, no project, if you said equity were not going to be a dollar back for 20 years, there's never going to be equity in a project. what i'm saying is that the debt service under the terms of the loan will be serviced from you, before any money can come out of this. we call the waterfall. that gets paid for equity. >> i understand that debt and equity would but when you come in the debt is going to get service before this return of equity doesn't message would mean the same thing if the debt is going to be repaid in full. >> yes, that's probably correct. >> so i guess you will get repaid at least something on that equity before the taxpayers complete off the hooks because i'm sure we'll get some income, yes, before the debt is fully off the books. >> thank you, mr. chairman. thank you to all the panelists. >> mr. crane, would you taken out of context and some of these other quotes in the new york times piece, likei'm missing anything that i had my 20 years
that involved less risk of these projects? was the in context or out of context speaks no, that is in context. i deeply in context -- >> do you intend to do it as much as you get your hands on? >> keep in mind what our breakup it is time to build a nuclear power plant. i would actually say that a solar photovoltaic ground mounted in the calgary desert is about the least risky project that you can do in the power industry. >> okay. spinks and no, that was not taken out of context. >> just wanted to be clear. mr. rakowich, to your knowledge, before you got the loan guarantee conditional or final, did the d.o.e. share in the intro documents with you or your company or representative of your company's? >> i'm not sure i follow. what types of documents would you be referring to? >> any document. i put up to one e-mail where you guys got to edit a drew torbin
-- does drew torbin work for you? >> yes, he does. he works for our company. >> i understand. and as jonathan plaut work for your coming? >> no, he doesn't work for our candidate i believe he works for bank of america. >> okay. but drew torbin does. >> yes. >> you got to edit an internal memo. i want t know, division or any other other internal documents? >> i don't know. i was not involved in negotiations. ..
>> let me just show you another e-mail because we've got another one here that just astounds me. this is from mr. peter o'rourke at department of energy to jonathan plouffe who works for bank of america, drew to have bin who -- torbin who works for you all. this is very important. feel free to use the concepts that we articulate, if you don't already have this in your message. and that refers to -- can we put the next slide up? refers to project amp that
they're going to send to you that you guys can use in your presentation. so this is, i mean, let's think about the way i think an american citizen would see this. this is like the teacher telling two of the students, hey, here's what's going on on the test -- what's going to be on the test, in fact, they say that, don't tell anyone else we're giving you the answers to the exam, and you say that's fine, that's the normal course of business back and forth? >> um, well -- >> and you didn't have any knowledge of it as ceo of the company? >> i think, mr. chairman, i think as it relates to what was sent -- >> mr. crane, did you get that kind of treatment? did you get internal documents from the department of energy, if you say things this way, you're more likely to get billions of dollars in a guaranteed loan? >> i can guarantee i've never seen the internal memorandum --
>> so you didn't get it. mr. mancini? >> not that i'm aware of. >> you don't know anyone that got any southwestern document -- internal documents? >> okay. doctor, does this seem unusual to you? this is par for the course when you head down this road, i assume? >> i'm not entirely surprised. i mean, i don't know this particular case. >> yeah. what does, i mean, mr. rakowich, did you think it's a little unusual? maybe torbin may be just a great guy, he's a really nice guy, we're going to tell him the answers to the exam. >> chairman, i don't think that sending a presentation, um, as to what project amp, i mean, that is our project. so sending the presentation i don't see as being be urinal. -- unusual. >> feel free to use the concepts we articulate in your own words. so this is intellectual
property, hey, you might want to use this language when you send it back to us, higher chance ore ore -- that's the implication i draw out of it. this is why we've had several hearings on in this. you take this all in context. mr. kelly, 26 companies got taxed their money, were in this loan guarantee, 22 of them had credit ratings of double b, jupg status. most of -- junk status. a senate number had -- significant number had strong connections to the obama administration either during the obama campaign, and in the bright source case, the the chairman of the board became commerce secretary shortly after the loan got approved. it's amazing. so we see all this, and now we have es going -- e-mails going back and forth saying, hey, say it this way. and so when you put it in the
big picture, no wonder the taxpayer's saying what the heck is going on with our government? this is not the way it's supposed to work. it's so frustrating to look at this is what's going on in the department of energy where they're picking winners and losers. hundreds of companies applied, 26, 26 got the $15 billion. and those -- i mean, such a deal. such a deal. and you think this is, in your words just a little bit, you think this is customary and the way it's supposed to work? >> what i said, mr. chairman -- >> you said this -- >> with all due respect, what i said was sending a project that we're working on back and forth doesn't seem unusual to me, no. >> doesn't seem unusual that the department of energy tells you this is how you need to sate, that's not unusual? >> i couldn't read the e-mail. i don't know exactly -- >> i'll read it to you. feel free to use the concepts that we articulate this your own
words. so feel free to plagiarize, that's what it says. >> right. it's a presentation that is about our project. and so going back and forth on a presentation that ultimately we will use or somebody will use in the future just doesn't -- i don't understand the context of why this was sent, but i can tell you -- >> did you personally have any communication with the department of energy? >> i, i did not. >> you didn't talk to mr. o rock, mr. silver, any of these people -- secretary chu? >> no, sir. >> did you make any trip toss the white house? >> no, sir. >> did you talk to anyone in the administration? >> no, sir, i didn't. >> did you talk to bill daley? >> no, sir. >> mr. biden? >> no, sir. >> wow. so you got a little different treatment than mr. crane, but understand. all right. with that, i would yield to the gentleman, the ranking member from ohio. >> thank you very much, mr. chairman. i want to go back to the e-mail
that you discussed. here again it goes right to bank of america because the only party to this e-mail that has not provided public testimony regarding its involvement in the loan program is bank of america. now, the impact and import of this particular memo which you've cited as a matter of concern we really don't understand it until we get bank of america's perspective. so i would just like to ask my friend if there's a way that you and i could work together to see if bank of america and, for that matter, goldman sachs who's on another program, that the guys at the top, that they be invited to come in to explain their point of view about this. i mean, is there -- could we see if we could work together. would you consider --
>> definitely consider that, and i appreciate the ranking member bringing it up. i think in light of what we've uncovered here today, that is something we need to think about. >> i want to also say in listening to this discussion and, you know, my friend, mr. kelly, has a way of continuing to hammer home about the benefits that are going to some at the exclusion of others. that's a valid question, always is in this town. as you were talking, one of the things that occurred to me about in this particular model in this discussion we're having just to kind of let's look at it from a different level, this is all about centralization of power. literally. you know, we could have a different model, we could be decentralizing power, we could be investing in decentralization of power, get more people involved in manufacturing, let's
say microtechnologies, for example. but when you've got a centralized government and a centralization of power and business part, you put those things together, there's a different philosophy at work here. and that's something that i just wanted to -- that's not the subject of this hearing, but i just wanted to put that out there as an ongoing concern that i have because inevitably people's utility rates under one model are likely to be higher than there are under another model. now, i just want to say that when congress created this 1705 program which is the subject of this hearing, it, as i mentioned earlier, it appropriated $2.47 billion to pay credit subsidy costs for the energy projects and that this program became a partnership between the government and the private sector. and the committee held a hearing where we learned that the 1705 guarantee, loan guarantee portfolio's low risk. projects will likely achieve a degree of success within this
particular model. now, um, there are some who feel, well, the 1705 portfolio's a bunch of companies on the verge of bankruptcy. that doesn't appear to be the case. it appears to be a collection of projects with solid private and public sector backing, and i would like to hear from my witnesses on why they believe their respective projects will benefit their bottom line, the environment, but most importantly -- and it's the question mr. kelly keeps raising, and it's a valid question -- how do the taxpayers benefit? i'm interested. so let's go mr. mancini. your company was able to build this solar project in southern colorado. you've obtained about a $90 million loan guarantee from doe, clean energy's being sold to a major colorado public facility. tell me how this is a win/win
for your company, the environment, your taxpayers. is it? tell the committee. >> ranking member kucinich. just a point of information before i answer the question. i just want to clarify that i am a managing director of goldman sachs, and if there are any questions that you'd like to present to goldman sachs, i'd be happy to the hear those questions. so that would be unusual to draw attention to myself, but i think for the record i need to clarify what my role is. i am not the ceo, obviously, of goldman sachs, but be happy to answer any questions i can. to answer the question with respect to the project that we funded or together with the government, what we did is advance the technology and took it from i would call it a context in which it was being applied, you know, in the space program and put it in a different context to prove that that technology could be applied on a utility scale, commercial scale project to produce green
power for the citizens of colorado or citizens anywhere in the country. so one of the benefits was to prove the hypothesis that this particular type of technology could, in fact, be deployed commercially. >> okay. i just want to thank you. and i just want to respond to you calling to our attention that you're a managing director, and that's in the commodities? >> correct. managing director in the commodities business unit. >> okay. we want to, we want to talk to the person that runs goldman sachs. we need -- you don't run the whole company. you're one -- >> i do not, but one comment that i do think is very important to make that in respect of the doe loan program, there was no political favor, there was no -- >> you know what? thank you for saying that. you've just said that for the
record. um, thank you. mr. chairman. >> mr. mancini, let me ask you this. if the gentleman just for one second -- if the 1705 program had not been in place, would goldman have, goldman sachs, would you have funded, would you have put capital at risk in the cogentrix, in the project? >> if the 1705 program had not been available -- >> just be clear, you're a wholly-owned subsidiary of goldman sachs. if this, i mean, i know it's hypothetical. but if that money wasn't there, would this have been a worthy project? would goldman say, you know what? we believe in this, we're going to put up the cash? would you guys have done it? >> just remember, mr. chairman, our first stop was to no less than ten commercial banks to see if we could get the funding, including goldman sachs, from a debt perspective -- >> so the answer is, no? >> beg your pardon? >> so the answer is no?
you wouldn't have done it? >> we wouldn't have done the project. the cost of capital would have been too expensive. >> okay. so i think that sort of proves our point. it's okay to put the taxpayer money at risk. are you guys, is goldman a major investor in eminex company? are you guys an investor in that company as well? >> my understanding is we own 3% and do not have any board seat. >> and what about excel energy? do you have a direct financial interest in that company or an indirect financial be interest in that company? >> we do not. we -- there are funds that are managed by gold match sacks' -- goldman sachs' asset management which is much like fidelity or vanguard that puts together a portfolio of securities for investors in the mutual fund for which we earn a fee that's based not on the returns of any particular company within that portfolio, but just based on the
raw dollar amounts that are vested across -- >> but would it be fair to say an indirect relationship? a fund you manage which does have a direct relationship with excel energy. >> i'd say it's very tenuous, frankly. >> okay. but there's some interest there. >> not by goldman sachs. >> i just want to ask this. the loan arrangement, the 90 million you got from the department of energy, did that also in that agreement include the fact that cogentrix needed to buy electricity -- or excel would buy electricity from cojentrix and -- >> well, excel owns or controls public service of colorado, public service of colorado sells that electricity at no profit to its customers. there is no markup to that electricity because it is regulated in a specific way in respect of this project that does not allow them to pass through any additional costs or markup --
>> but the question was the agreement, the loan agreement between the department of energy and cogentrix included the details that, or part of that relationship was excel and cogentrix have a relationship, correct? >> the relationship is a power purchase agreement, and xl is a parent be company to -- >> okay. >> but we don't have any relationship directly. >> but certainly with -- >> they're the panel be provider. >> and that's in the agreement. >> correct. >> and you have the financial interests, a direct financial interest. >> sure. had nothing to do with the selection. public service of colorado required us to use a certain type of technology, eminex was one of four companies -- >> oh. >> our engineers then evaluated all four of those companies, and
based on the technology and the evaluation -- >> did you have a financial interest in the others? >> and the cost -- >> just answer -- >> no, not to my knowledge. >> so it did work out that there were four possibilities based on what you just said and, oh, by the way, the one that was selected is the one goldman had the financial interest in. >> only because it provided the best technology at the lowest cost which -- >> but certainly benefits goldman. >> how it benefits goldman is almost inconsequential, quite honestly. because be it has a 3% interest doesn't mean that it's -- >> so it's inconsequential that the company that was chosen of the four possibilities is the one, the only one that has, that goldman has a financial interest in. that's inconsequential? >> that ignores the fact, mr. chairman -- >> particularly, you've got to go back to the first point, particularly when cogentrix is a wholly-owned subsidiary of
goldman sachs. $90 million taxpayer dollars and part of the deal says, oh, by the way, four companies you can choose from the agreement says you're going to pick the one goldman has the financial interest in, that's a pretty good deal for goldman all the way around, isn't it? particularly when you said that we wouldn't finance this, banks wouldn't do do it, but we can put the taxpayers on the hook for, and we're going to make a lot of money based on what mr. crane said earlier, you put panels in the desert, this is a great deal for everybody dependent the rate payers and the taxpayers. >> with all due respect, mr. chairman, the process we went through in order to select a panel manufacturer was blessed by the independent engineers of doe, was also required -- >> whoa, whoa, whoa, whoa. you just said the independent folks at doe? if there's one thing we've proven here today f there's one thing that's completely clear,
it's not independent. we've got e-mails going back and forth, edit this for us, this is a letter we're going to send to the white house chief of staff. hey, here's the answers to the exam, you can paraphrase, plagiarize, send it back to us. if there's one thing we've proven, it's not independent. >> the engineers that are advising doe are not our engineers, so they had to make an independent judgment that was not our judgment that, in fact, they agreed that amonex was the better technology at the lowest cost to the tax -- sorry, to the rate payers. and now, at the end of the day it was also blessed as the lowest cost provider. so to suggest that there was some -- >> well, let me ask you this. is it -- so you would have preferred that, well, it's certainly a benefit that amonex was selected by the is so-called independent engineers? >> could you say that again?
>> it's certainly better for goldman that amonex was selected by the independent engineers? >> to suggest that we would put $116 million of our equity capital into a project because a 3% interest -- >> not suggesting that. what i'm suggesting is the deal's pretty good, and you've got to go back to the first point. you're a wholly-owned subsidiary of goldman sachss. you sit on the board of goldman -- >> would the gentleman yield? >> be happy to yield. >> i just want to associate myself with your line of questioning. thank you. >> what you are suggesting is that goldman sachs and cogentrix would put $116 million of its equity at risk in order to benefit in some way through a 3% interest -- >> i'm just suggesting that there is this close knit relationship up and down the rhine, and there's -- line, and there's this cozy relationship between the department and folks who are getting a loan -- that's
what i'm suggesting. i'm not saying bad thing you did this or bad that it worked out this way, i'm just pointing out this is what's involved here, and this is why we're having the hearings, and this is what the american taxpayers are saying this is not what we're supposed to be doing. this is not the way the system is supposed to work. >> mr. chairman, this depiction is incorrect. i'm sorry. to suggest that we have an interest in xl energy that somehow is benefiting goldman sachs is just not correct. we don't -- >> i think the focus of my questioning, though, once you pointed that out to me, the focus of my questioning wasn't on xl. i accept that point. i'm not coming down the left-hand side, i'm coming down the right-hand side. >> if we're making a decision -- >> i'll concede that. >> if we're making a decision to put as much as $116 million at risk for a tenuous and minimal return that might, might accrue to a company in which we own 3%, that would be completely irrational on the part of goldman sachs, cogentrix and all of its constituencies.
>> my point is it at least raises some concern in light of what we've seen with the way the department of energy dealt with prologis, the sharing of e-mails, in light of the fact that mr. crane has been to the white house seven different times, in light of the fact that we've got letters being drafted that are going to go to the white house chief of staff from the chairman of the board of bright source. i mean, at some point you've got to say where does this all end? what really took place in here? no wonder a whole bunch of these companies didn't get a chance because the ones that did were so close with the government, we see why the projects got approved. >> mr. chairman, i understand why you've raised some of the questions you've raised about other people on the panel, i understand that. i don't come to any conclusions myself with respect to any of those, but i can only tell you that with respect to the one loan that we applied for, received there was, had nothing to do with any relationships with anyone in the administration, the white house. it was done, it was done on its
merits -- >> what's, how much, how much money, what's the dollar amount of the interest you have in amonex, do you know? >> it's less than $10 million, i believe. >> okay. i mean, it's still real money, most definitely. >> well, but in relation, i guess my point is in relationship to $116 million that we're putting on the line -- >> 9%. >> sorry? >> pretty significant. 10 million out of 116 is still pretty significant. >> it would be, i think, frankly, it would be completely imprudent for us to risk $116 million to protect 10. so i, you know, with all due respect -- >> i'm not arguing that fact. all i'm saying is if you can get one of the four you have to have an interest in, the all the better. you'll concede that, right? >> if it happens by coincidence to be the case, sure. >> it's not by coincidence. >> well, it's completely by coincidence. >> you just told me the experts said it was the right thing to
do. >> all i'm saying is we had people not only our own engineers who were evaluating the technology and the cost, but the engineers that were advising the doe and public service of colorado itself all had to bless the same thing. >> okay. i thank the gentleman. yield now for our final round of questioning to the gentleman from pennsylvania. >> is that a general sigh of relief from the panel? [laughter] i know this is uncomfortable for you. mr. mancini, i understand when you said we would never risk $116 million on such an imprudent project. i mean, and i get that. >> i said we wouldn't risk $116 million to protect 10 million. >> okay, all right. how about the american taxpayers putting $15 billion at risk, was that being prudent? because i'm going to shift very quickly. there's an old adage, it's not what you know, it's who you. and, obviously, there's another
part of that, it's who knows you. so you may know a lot, and you may know some people, but the real defining answer to this is when that phone call goes to somebody that says i need help, or i need you to weigh in on this, some people say, john, i'm not in, john, i'm on another call. i'm just saying that for these 25 companies that were able to get through this feeding frenzy somebody obviously appreciated the fact and knew who was on the other end of the phone. so having said that, ms. de de y this whole program -- if i understood it correctly, and i don't take fault with any of these people for taking advantage of a program that was out there, very low rates, and why would you pay it back ahead of time? my gosh, that'd be stupid. you don't pay loans you don't owe a lot on. i mean, everybody gets that. the ones you owe the most on,
your credit cards, some of those ones that are at 18%, you want to lower that principal in a hurry. but when you don't owe anything, there's no big number on it, i you said -- i understand why they don't do it. at the end of the day, we were led to believe that if we invested all this money, there was going to be a return on this investment, and the return that we were going to get people who were sitting at home unable to find a job a job. and this great opportunity that was out there was going to create these jobs. what was the number of jobs that was supposed to be created? >> originally, um, i think the claim made by the department of energy was that investing in green technology would bring five million -- >> five million jobs. five million. do we know exactly what the number is? >> well, when i looked yesterday -- >> i mean, not the game numbers, not when you talk about a guy -- >> no, so according to the department of energy permanent jobs -- >> yes. >> -- through the 1705 it comes down, and the permanent one, it
comes down to 2,388 jobs. >> so we invested -- what was the total amount of we invested? >> $16, roughly $16 billion? >> that's with a b, billion. >> yeah. so it's an exposure for taxpayer of 6.7 million, but really, i mean, this number is relatively meaningless. i mean, think about it this way, um, we can, we can -- this is the taxpayers' exposure per job, but the reality is if the company defaults, right? there are no jobs created, this is what we saw with solyndra where, in fact, you know, 538 million will have to be repaid by taxpayers one way or the other, and in the end there were zero jobs created. >> so they get whip sawed. they get it in both ends. >> yeah. >> yeah. so i'm just trying to understand because, to me, this is not a democrat/republican situation. this is where we took american
taxpayer money, and we put it down on the green. not the red or the black, but the green. and we spun the wheel and said, you know what? i bet we're going to win, and i bet we're going to create five million jobs. so we put all that money and said put it on the green because i know we're going to win. and at the end of the day, what did the american taxpayers win? >> i think it comes down to the ability of the american government to create jobs, and it can't. i mean, it can, obviously, pay for some jobs, but to create sustainable jobs that will sustain themselves once the money, the government money is gone, the government can't do this. >> stable jobs only come from the private sector. >> exactly. the private sector is the one that can actually sustain jobs and create economic growth for that matter. and the private sector has been, also, pretty good at even leading the way on green energy. >> sure. well, and, you know, you know why. but this has been the most irresponsible waste of taxpayer money that i have seen in my lifetime, and i've been around
for a little bit now. to me, it's incredible that we can sit back and say, mission accomplished. this is ridiculous, what we've done to the american taxpayer and then continue to ask them keep funding this, by the way, because i'm sure somewhere at the end, there's a pot of gold at the end of the rainbow. >> if i may ask something. i don't know whether it's the most irresponsible thing. i think the government does a lot of -- >> well, this is the one we're talking about today. >> but more importantly, there is something i don't quite understand is how we can reconcile the idea that these projects are low risks and at the same time these projects could not have found funding for themselves. i don't -- i mean, if there are actually low risk, if one of the condition for the company to get money is to actually have secured a source, a customer, a secure customer for the next 20 years, i mean, it seems like a
pretty safe bet. and why wouldn't a private company go ahead and fund this project? moreover, i find it surprising that while some of the companies involved have had a hard time maybe finding funding in capital while the recession was going on and while european banks were in trouble, it does seem that it's also the same time where everyone in america is hurting, and it seems somewhat irresponsible to be asking tack payers then to -- taxpayers then to jump in to take that risk. >> well, you can actually do that when it's not your own money that's at risk. when it's your money, it's a much more difficult risk to take. >> but, i mean, i do not understand. if it's really low risk, i mean, i'm willing to -- >> well, you make a good point. it is hard to understand. it doesn't make sense. it's not common sense to the
average guy who goes out there every day that has to pay their own bills out of their own pocket. when they have their own skin in the game, when they have to -- when their nose is the one getting bloodied, they know the difference. and whenever you can take money from somewheres other than out of your checkbook, that's an easy roll of the dice. when it's your own money that you had to earn, it's a much tougher bet to make. we've just made a very, very easy bet using taxpayer dollars. chairman, i appreciate the opportunity to be here today, and i really appreciate you all being here. listen, i don't discredit you for doing what you did. it makes sense. it makes sense. it makes sense to you. unfortunately, it doesn't make sense to taxpayers whose money was wagered. i don't know if it's difficult to sit here and listen to us, but i represent 705,687 people in western pennsylvania, and they're not all republicans.
you a ought to try and work with our approval rating. it's very difficult. people have lost confidence, and the reason they've lost confidence, because we have shown them time and time again we will risk their money anytime we have a chance. so thank you for being here. mr. chairman, thank you very much. >> i thank the gentleman and want to thank our ranking member, mostly thank our witnesses. do you want to say anything? >> yeah, just briefly. you know, within the closed system of the legislation that created 1705, we can make the argument, well, the program within that system and the way it was designed that it's been successful. but i think that this committee has asked the right questions in raising, in raising the question about who the winners and losers are here. and when i heard the gentlelady speak about the fact that if so many businesses out there are not getting access to capital, i know and members of this committee know that the federal
reserve famously was giving money to big banks, and the big banks weren't turning around and loaning it to people. people in my district who had great credit ratings, who'd been in business for 30 years or more, mr. chairman, and people who were stalwarts in their business communities. their credit dried up. so, you know, we cannot be unmindful of the fact that we're designing systems here which do pick winners and losers. and, you know, and i will go again to my friend mr. kelly, that has to be something we have to pay attention to. and when we get to some of the largest companies in america who have been able to get advantages that smaller companies couldn't, those are really important questions that are raised. with all due respect to the gentleman who probably know more about putting finance deals together for energy than anybody, these are questions this committee has to raise.
because there's a lot of people out there asking, hey, why not me? how come i didn't get in on this? how come they did, i didn't? what's the connections? you know, and in this time in washington where there's such suspicion on both sides of the aisle about where the money's coming from, why it's going there, why somebody gets a contract, why somebody doesn't get a contract notwithstanding mr. mancini's comments about, well, there's no influence that was used here. listen, goldman sachs is synonymous with influence over the government. and that's what we all feel here. so it's not like some big moment when you say, well, there was no influence. i heard giggles up here. with no insult to you, it's just that's how we seem to figure this out. and, you know, you don't have to be matt taibi who has studied goldman sachs pretty carefully to understand that goldman sachs has a reputation around here of being able to have massive
influence. so you're going to have to forgive the members of this committee for raising that question back at ya. so have a lovely day, thank you. [laughter] >> i thank the gentleman and want to thank our witnesses. i know it's not always the best experience, but you all did a great job, we appreciate you taking the time to be here and the work you're doing, and we will adjourn the committee. [inaudible conversations] >> the u.s. senate this week has been considering the 2012 farm bill. the legislation would reduce agriculture spending by $24 billion over a decade. and it would end direct cash payments to farmers, instead creating a new insurance program to pay farmers if crop prices fall below a certain level.
we're expecting a vote on final passage of the farm bill today in the senate. after that the senate is expected to move on to flood insurance. that program expires at the end of next month. live coverage of the u.s. senate, as always, here on c-span2. >> the supreme court ends its current term next week to take a summer recess. the high court has yet to issue a decision in the constitutional challenge to the president's health care law. the court doesn't announce in advance when it will be issuing opinions, but they usually come on mondays and thursdays. in the event of a decision this morning, we'll have reaction from the court and capitol hill live on c-span3 starting at 10 a.m. eastern. >> how do you approach book interviews differently than news reporting interviews? >> i think of the book interviews as gathering history. i think of interviewing when i'm working for the news side as
gathering contemporary information. >> how difficult is it to remain impartial in your reporting and not get caught up in the hype of one campaign or another? >> i'm going to try to as best as i can give people as full an understanding of what is happening in this campaign. it's not that difficult to put your biases to the side. >> how has social media changed your line of work in terms of reporting and getting your news information? >> twitter, in particular, is now a primary news source for anybody who covers politics and anybody who pays attention to politics. twitter didn't exist four years ago for all practical purposes. >> sunday night, purdue university student interview "the washington post"'s dan balz on the newspaper business, covering presidential elections what's newsworthy and the rise of social media. sunday at 8 on c-span. >> the head of the white house office on science and technology
yesterday testified before the house science committee. he outlined the administration's plans for math and science education, clean energy and the space program. texas congressman ralph hall chairs the science committee. [inaudible conversations] >> okay. the committee on science, space and technology will come to order. and i'll say good morning and welcome to today's hearing entitled office of science and technology policy examining priorities and effectiveness of the nation's science policies. in front of you are packets containing the written testimony, and thank you for your testimony ahead of time, biography and truth in testimony disclosure of today's witness, dr. john holdren. we'll have our opening
statements. i'll begin with my opening statement. dr. holdren, thank you for joining us today, and your role as the president's science adviser and as director of the office of science and technology, you have the president's ear, and that's very important. as such, you have a real far-reaching influence on this administration's direction in science and technology. probably for this committee not a more important position on the hill. we may not always agree with the advice that the director provides to the president, but science and technology have played a very vital role in the making of this nation, and it's going to continue to fulfill that role in the future. and as such, i doubt you'd find anyone here who would challenge the need for science and need for technology advice in this white house or in any white house. throughout the history that advice has come through both formal and informal message.
we know today the office is a result of the national science and technology policy organization and priorities act of 1976. which firmly created both the office and established the roles of the director. the house committee on science and technology was instrumental in the passage of this act, and it's our responsibility to make sure that the office continues to function in a way that is beneficial to most american citizens. and while directors historically have joined us annually to review the administration's budget request, we've -- and have appeared before us on specific issues from time to time, this is the first time this committee has met to focus primarily on oversight of ostp since it was create inside the statute. in addition to reviewing its responsibilities, operations and management, we'll also look to the function and shaping our nation's policy. it should come as no surprise that i remain concerned about a number of the administration's
science and technology policy issues ranging from an unprecedented emphasis on clean energy at the expense of other priorities to a larger focus on applied research at the expense of basic scientific research, to the lack of a clearly-identified and compelling long-term mission for human space flight. further, there are other areas still awaiting action from ostp and the administration. these include transparency and data access issues, a position on the transfer of the joint polar satellite systems from noaa to nasa a position statement and a strategic plan for s.t.e.m. education. dr. holdren, i know you take your role seriously, and as the house committee responsible for science, space and technology, we also take our oversight role seriously. today we look forward to receiving your testimony and learning about the current organization and priorities of ostp and the administration as part of this committee's oversight responsibilities. i thank you, and i yield back my
time. at this time i recognize mrs. johnson for her opening statement. >> thank you very much, mr. chairman, and good morning. we are pleased to have of this second hearing with dr. holdren to the committee. as you know, every year we invite the director of the office of science and technology policy to appear before the committee to help us understand and not just this year's budget, but others as well. we live in an increasingly complex world, and the -- sorry. challenges we face will be both impacted by and, hopefully, alleviated by science and technology. as americans, we should celebrate the fact that a highly respected scientist such as
dr. holdren has the ear of the president and is truly part of his inner circle of advisers on matters of science and technology. we in congress also can benefit from good advice on matters of science and technology policy, and i'm looking forward to the testimony today. the truth is that the ostp has been asked to do a lot by both congress and the president. in addition to our more visible initiatives, i know that you have to carry out necessary interagency coordination, a job that probably goes underappreciated and undervalued by all of us. the work of this ostp staff helps to minimize unnecessary duplication in research and development programs across the government and insure that significant research gaps are addressed. dr. holdren, you have been asked
to testify about the structure, function and funding of your office as well as the two hats you wear as both science adviser to the president and director of the office of science and technology policy. you face many challenges, some of which you inherited such as the noaa satellite program and others that are more recent such as the arm-twisting you probably had to do to get agencies to complete their scientific integrity policies. i think we forget sometimes that your actual authority is limited and that much of what you accomplish is through your leadership, persuasion and persistence. as you know, i care deeply about the need to insure that we remain competitive in a challenging world economy as well as improve the quality of life of all of our citizens. research and innovation are
essential ingredients of any effort to meet these two goals. as is s.t.e.m. education. you have a number of initiatives underway related to s.t.e.m. education, and i would like to hear how those are faring and any issues that you are facing. with respect to research and innovation, i would like to hear about your efforts to promote innovation and to move new technologies toward commercialization. i know that the administration has a number of initiatives underway in that regard such as the start-up america initiative, and i'd like to get your assessment on how well these initiatives are working and what additional steps need, that may be needed. and finally, in addition to hearing about your key priorities and goals for your office i'd like to hear what you might need from congress, whether it's related to a general function of your office
or to a specific goal or task. you have an important responsibility, and we want you to succeed. dr. holdren, i look forward to your testimony, and i yield back the balance of my time. >> thank you, ms. johnson. and at this time if there are others who have opening statements, they'll be added to the record. and at this time i'd like to introduce our witness. dr. john holdren is assistant to the president for science and technology, director of the white house office of science and technology policy and co-chair of the president's council of advisers on science and technology. prior to joining the administration, he taught at harvard and was director of the woods hole research center chairman, as our witness should know, spoken testimony's limited to five minutes, but you're a very important and valuable witness, we'd be a little more
lenient with that, with you, if you need such. and i say that, and if i didn't say it, ms. johnson would insist on it. so it's easier for me just to take that position too. so we're going to be fair with you, is what i'm trying to tell you. after that the members are going to have five minutes each to ask questions, and the chair is able to provide some flexibility, as i've said, if you're our only witness today, doctor. i thank you for your testimony. reminding members of the committee that rules limit our questions to five minutes, i surely will adhere to that. at this time i'll open the round of questions, and the chair recognizes himself for that -- >> [inaudible] >> yeah. i will. i'll do that. we'll recognize you at the this time, sir. while i look for my testimony. >> well, chairman hall, ranking member johnson, members of the committee, i'm pleased to be here with you today to discuss the organization that i lead in
the executive office of the president, namely the office of science and technology policy. as you know, science, technology and innovation have been at the core of the american success story since the days of the founding fathers. advances in agonemy, electrification, mechanized transportation, wireless communication among others have each, in their time, brought waves of economic growth and generated new opportunities, industries and jobs while also raising policy challenges. it was in recognition of the importance of these domains and challenges that congress, in 1976, created ostp to advise the president on the scientific engineering and technological aspects of the issues before him and to help coordinate, lead and develop budgets for federal r&d programs. today ostp's work is accomplished by a staff of about 100 people spread across four divisions and the director's office. almost 90% of these are science and technology professionals,
many be of them, many of them detailed to us from agencies. this diversity of talent is essential given the scope of the intellectual terrain that we cover and the wide range of our oversight, coordination and support functions which include running the national science technology council and the major interagency initiatives that fall under it. for example, the u.s. global change research program and the national nanotechnology initiative as well as support being the president's council of advisers on science and technology in the development of its reports for the president. i've submitted for the record a detailed summary of ostp's activities, and i will highlight just a few of these. first, reflecting the administration's strong focus on jobs and the economy, ostp has been active in efforts to leverage science and technology for economic growth. we partnered with the council of economic advisers and the national economic council to develop the administration's strategy for american
innovation. and we launched such job-focused initiatives at start-up america focused on small businesses and entrepreneurs, the advanced manufacturing partnership which brings together universities, industry and others to invest in emerging technologies that have the potential to create high quality domestic manufacturing jobs and most recently u.s. ignite aimed at accelerating availability to u.s. users of ultra-fast internet and new products and services based on it. second, in support of the administration goal that the united states lead the world in clean energy technology, we have prioritized budgetary support for basic and applied research in this important domain and have pushed the development of advanced materials in part through the genome initiative which is another public/private partnership combining the comparative advantages of both sectors. third, ostp has very actively supported science, technology, engineering and math education.
we work with the president and the domestic policy council to launch educate to innovate, a public/private partnership to improve k-12 s.t.e.m. education that has attracted more than $700 million in corporate and philanthropic commitments to work in classrooms across the country to improve instruction in science and mathematics. and change the equation, a nonprofit organization that is mobilizing the business community to improve s.t.e.m. education across the united states. and we've been aggressively addressing s.t.e.m. education tasks specified in the america competes reauthorization act including completion of a comprehensive inventory of federal s.t.e.m. education programs. fourth, i want to mention ostp's leading roles with other white house offices in the implementation of the president's open government initiative. under the leadership of u.s. chief technology officer todd park, we have been opening the workings of government to the american people and focusing heavily on making government
data a driver of private sector innovation and job creation. in closing, let me simply say that with continuing support from our partners in congress, ostp is working every day to insure that the policies and proposals emanating from the executive branch are informed by the most up-to-date and objective insights about the relevant science and technology. and to strengthen the u.s. science technology and innovation enterprise and the benefits to the nation that flow from it. i look forward to continuing to work with this committee, and i'll be pleased to answer any questions that the members may have. thank you. >> thank you, sir. i'll start out with some questions for you. ostp released a fact sheet highlighting some of the president's energy priorities. the opening sentence of that fact sheet states that, quote, we now face a make or break moment for the middle class and those trying to reach it, unquote. however, it's unclear whether
the president's energy agenda is actually good for the middle class the administration is working to advance these policies, policies to restrict oil and gas exploration and production and reject the keystone pipeline which would enhance domestic energy security. an avalanche of epa regulations on coal plants, on refineries, on automobiles and numerous other industries that ultimately will raise energy prices for all americans and a clean energy standard that would mandate americans buy electricity from more expensive and less reliable sources such as wind and solar power which are both good, but not as reliable. how does a regulated any-cost approach to policy benefit the middle class and the overall american commitment, not just the middle class, but all of us? explain that to us, if you would, sir. >> well, first of all, mr. chairman, the president and the administration have what the president has described as an
all-of-the-above energy strategy in which development of our domestic sources of oil and gas and coal play an important part, nuclear energy plays an important part, renewable energy -- which you've mentioned -- plays an important part and increasing energy efficiency plays an important part. we recognize we need all of these energy options to secure our future, and we are working to enable all of them and lift all of them to their high potential. we do not have a policy of regulation no matter what the cost. in fact, regulations are reviewed very carefully in light of the science evidence that is available before they are put forward, and i think we've been doing a good job in this administration of only putting forward regulations that are strongly based in solid, in solid science. it is certainly our intention to provide an energy future in which the united states imports
less energy, therefore, pays less to other countries for its imported energy and relies on a wide diversity of domestic energy sources to provide the affordable and reliable energy supply that our economy need, that our consumers need including, of course, the middle class. >> well, i don't totally agree with you there, and i think some of his indications evidence a disdain for energy. he's certainly declared war on agriculture early in his, and got around to energy. we have enough energy and enough energy access to be selling energy rather than buying it. i think it's kind of a sad situation when we're in the situation we're in here. in july or august, i accept
your, what you, the statement you made, i just don't agree with it. in july and august, nasa's commercial crew program is going to select the next round of companies for the third phase of domestic, of developments known as commercial crew integrated capability program. nasa plans to give $300 million-$500 million to two, possibly three companies instud of more typical government -- instead of more typical government contracts. don't design safety requirements. with regard to the use of space act agreements on the commercial crew program, how can we be assured that nasa's developing safe systems if it's prohibited from levying any design requirements, prohibited from demanding performance tests from the companies? >> before i turn to that nasa question, let me just mention,
mr. chairman, that our energy imports have been sharply declining under this administration. we are moving in exactly the direction that you also endorse which is moving toward importing less, and i think that's very beneficial. on the nasa question, it's my understanding that nasa has, in fact, been able to apply it international space station visiting vehicle requirements to the cargo transportation development efforts that have been taking place. the contracts that will be awarded in the next phase of commercial cargo and commercial crew will also very clearly allow nasa to specify safety requirements and to oversee them. so i'm certainly confident, the president is confident that we will continue to maintain nasa oversight of safety in these operations. >> i sincerely hope so, but my
time's expired. i now recognize ms. johnson for five minutes. >> you forgot to look to see who's over here. it's woolsey. >> i'm sorry. i make about a five minute speech about ms. woolsey. we're going to lose her, and i'm going to miss her. recognize you, and if ms. johnson was here, i'd recognize her. >> thank you very much, mr. chairman. >> [inaudible] >> yes, you do. more discerning about your women. [laughter] so, dr. holdren, um, thank you for all you do. we put a lot of importance on your office, and we expect a lot, and we get a lot. how is the united states stacking up as compared to the rest of the world in our support for science and technology and the policies that we put in place? and feel free to tell us where
we could do better. >> well, first of all, i would say that the united states continues to lead the world in science, engineering and innovation across a very wide array of crucial fields of fundamental research and applied research. the united states leads the world. we remain by far the largest funder of research and development in the world. the sum of our expenditures on r&d in the public and private sector together is over $400 billion a year, that's in the vicinity of 30% of world, all of the world's expenditures on r and d. we continue as well to lead the world in space, although sometimes the contrary is asserted. our planetary exploration programs have absolutely no peer. we have missions on the way to or at seven out of the eight officially designated planets