tv Capitol Hill Hearings CSPAN May 16, 2012 8:00pm-1:00am EDT
i'll let you. ms. speier: let's talk about the solution to protect americans from volatile gas prices and to kick our dependence on foreign oil. that becomes a secret. by every focus, if we kick our gents on foreign -- our dependence on foreign oil we'll be so much better off. in 2005, america's dependence on foreign oil peablings at about 65%, then dropped in 2010 to 49% and then last year dropped to 45%. 2010 marked the first time u.s. dependence on foreign oil fell below 50% in 13 years. our dependence on foreign oil is few at the lowest level in 16 years. at this rate, nrning information administration predicts the u.s. will slash its dependence on foreign oil to as low as 36% in the year 2035.
. 70% of consumption in the united states, the lion's share of that, 45% of total consumption was in passenger vehicles and light-duty trucks. what do we do about that gas guzzling that is going on? the thing we do is to look at how we can change how many miles to the gallon we get. and two, -- and to the president's credit, his administration has put in place these new standards, known to all of us as cafe standards that will double the u.s. efficiency of fleet of automobiles averaging a fleet-wide average of 54.5 miles per gallon by the year 2025.
what does that do once we get there in 2025? that means we as consumers will save $1.7 trillion at the pump over the life of the program. a family that purchases a new vehicle in 2025 will save $8,200 in fuel costs when compared with a similar vehicle in 2010. so the life of the program, the standard will save 12 billion barrels of oil and eliminate 6 billion metric tons of carbon dioxide pollution. the solutions are there for us. the solutions are we move to these cafe standards and address the issues around speculation and we keep the robust doing that is going on in this country right now so we can continue to reduce our dependence on foreign oil. mr. garamendi: i took a look at that before we began this hour
and i go, oh, my, do i have to wait until 2025 to buy that vehicle? not really. there are electric vehicles that are available today that get not 54 gallons per mile but use electricity only. you can buy those, unfortunately for me in my district where saturday run-around the district is 600 miles doesn't make sense yet, but it's coming. the battery technology is improving for automobiles and store that energy or take down that energy at night. this is part of the electric grid and the changes that are occurring in the electric grid all across this nation, given the low price of natural gas today, just over $21,000 b.t.u.'s. we are seeing the electric utility industry shifting from coal to natural gas and as they
do that shift, we get an enormous reduction in the carbon emissions, which is good for the environment and good for the climate change issue and simultaneously, we are then able to see the path to an electric vehicle or hybrid plug-in. all very good. biofouls will be part of that -- bio fouls will be part of that also. there haven't been an increase. the standards have been in place and president obama came in and said we need to move to conservation and the result is the incredible savings. i don't want to wait until 2025. i have a couple of more things i will pick up along the way. since we are on the gasoline issue. you and i go back to our
district every weekend and a month ago, two months ago, the wage was the price of gasoline and i was doing town halls and i know you were also. i was doing research where gasoline is and what it is being used for and what the cost is. and i came upon a statistic from the energy information institute that is absolutely surprising to me. and the talk on the radio and on television and the talk radio and talk television was that we have this enormous shortage of gasoline that the threat of a war in iran was responsible for driving it up and somehow problems in nigeria or venezuela or wherever were somehow shorting the market and that gasoline was in short supply. but the information, the statistics were exactly the
opposite. there was a glut of gasoline in the united states. so much so, get this -- so much so that the oil industry, chevron, exxon, b.p., all of the rest were exporting 28 million gallons of gasoline a day. and at the same time they were exporting, they driving the price up towards $5 a gallon. what's this all about? you are telling me we have a shortage? if we have a shortage, why are you exporting? from the information we have been able to obtain, it appears that this export continues to this day, 28 million gallons a day at the same time the industry is saying we are in short supply. they are creating it to the deficit and to the harm of the
american traveling public, who has to buy that gasoline. now, one other thing and check me on this, i was trying to recall all of the information this morning, that in the last quarter of 2011 and the first quarter of this year, the united states for the first time -- help me here -- 60 years, was a net exporter of oil, a net exporter. we had achieved energy independence. we were exporting more than we were importing for the last quarter of last year and the first quarter of this year. i don't know if that's going to continue, but it flies right in the face of what the oil industry was telling us as the fake, false crisis of the spring occurred. my guess is it was speculation. my guess it was greed on the
part of the oil industry and my solution is to end the subsidies, bring that money back and use it on the green technologies and conservation. my solution is to enforce the dodd-frank laws and to make certain that the speculators are not robbing the american people day in and day out. those are two things we can do. and as you said earlier, we will continue to produce energy in the united states and we'll make it in america. i thank you so much. i do have another meeting and do have to run. it's good to get the information out there and thank you for bringing us together tonight. ms. speier: thank you for your great passion for making it in america, which should be underscored, because one of the great things that happens in my district is a lot of innovation. and tefla which is an electric
car company which is beeleding it right there in frmont has a showin my district and a gentleman came in to drive the roadster. mr. garamendi: goes very fast. ms. speier: he took it for a little spin and says i want to buy it. and salesperson said you are the first person who has come in here and literally bought it just after a test drive. and the gentleman, the purchaser said, well, my neighbor on one side and my neighbor on the other side has already bought one. the funny thing about that story is not with keeping up with the joneses, but in terms of the grid having three electric cars on the same block charging overnight is going to create a
little inaddition -- indifficult gegs. that is the problem we are going to get. mr. garamendi: your story caught me. and the grid, we need to have a smart grid. and this is one of the things that is in contention here. this is about energy research. now we need to understand how can we make that grid smart enough and robust enough that we will be able to charge on any given block one, two, three, four, five, six homes at night. to do that, we need to have research and understanding not only how to produce the energy that reduces the carbon emissions, but distribute that power and when it's going to be needed. that's called the smart grid. now, to do that requires research. it requires us to invest in research to understand how the grid works, how we can improve
and improve efficiency in the grid and the power be distributed when it is needed. that takes money sm the federal government has provided that research money in the budget we are debating here now -- not debating it, it passed, the current blueprint reduces the energy research in the united states. so it may be some time if our republican colleagues have the way about energy research before those three people will be able to plug those three things in at the same time. ms. speier: hopefully it will be sooner than later. mr. garamendi: thank you so much. ms. speier: i think at this point we have covered all the issues we wanted to cover during this special order tonight and i wanted to leave my colleagues with this message. again, this was quoted in "usa
today," stigroup analysts declared, energy independence in the united states is not a pipe dream. the u.s. is already the world's fastest-growing oil and natural gas producer, countying the output, north america is the new middle east. we have a lot of new things happening in the oil and gas industry. and with that, i yield back. the speaker pro tempore: under the speaker's announced policy of january 5, 2011, the gentleman from illinois, mr. hultgren is recognized as the designee of the majrt leader. mr. hultgren: thank you mr. speaker. mr. speaker, while, it is with
mixed feelings that i come to this body tonight and many of my colleagues will join me to remember someone who had had a huge impact, not only on this city and this nation, but on our world, a gentleman who had a very personal impact on my life who passed away on april 21, 2012, charles wfrpblt colson. he was a very i will tell gent man, a very well spoken man, a passionate man who served people and looked for ways to honor them, recognizing the value of every single person. his life dramatically changed through a circumstance that he went through by going through to prison. and i'm going to pull out the information here. we were honored to have a service today, memorial service
at the national cathedral ral. he was worn on october 16, 1931, in boston, massachusetts and graduated from brown university and served in the marine corps and went to law school at brown and went on to practice law and at a very young age in 1969 while he was under 40, he was slected by president nixon to be special counsel to the president and served from 1969 to 1973. during that time he was known as a very tough guy, he was known as richard nixon's hatchets man and was very intell ent and understood politics and policy and how to get things done, very driven, focused and tough. and used his tough upbringing in boston and sharp intellect to be a huge impact for president
nixon. he was also in that time involved with watergate and through that, he felt that he was called to be honest with his involvement in there and pled guilty and entered to a plea of obstruction of justice and was sent enced to prison. and he examined what he had done and why he had done it and what life was all about. through a writer that he had read a book given to him, a book by a great author and great their, c.s. lewis "mere crist tanity." . through that book that chuck came to see his own feelings, his own sin, his need for a savior and his need for a change. and it was really in the friend's driveway as they were
talking that he heard his friend's testimony of what jesus christ had meant to his friend and the flood gates opened up and he understood the fact of his need for a savior, the fact that he needed to turn his life around that he was going to have to pay a heavy price for his involvement in wear gate and going to have to -- watergate and go to prison for a long period of time. but it was in that night in that driveway that he gave his life to christ. . from that time in the 1970's, until he died in 2012, he was a faithful christian. he never forgot that service that time in prison while he was there and seing the conditions that prisoners suffer under, the fact that we are all of incredible value,
not because of what we've done, not because of what we know, not because of how much money we can earn, but because of how we have been created and the sacrifice that's been given for each and every one of us he saw that and never forgot that. so through this time, we're going to talk about much of his life since that time of going to prison and coming out of prison as he came out of prison, he had opportunities where he could have gone immediately back into the private sector after being one of the chief people in the white house, he had many connections, could have had a seven-figure income coming out of prison but he decided not to do that. instead, he decided to start a ministry to fellow inmates and it was from that start that literally hundreds and hundreds of thousands of inmates, millions of inmates around the world have been impacted by the ministry of chuck colson and prison ministries and many other ministries that have come out of that.
angel tree is another one i'll talk about that serve the victims of crime we don't talk about very often, children of inmates. unintended victims. angel tree provides gifts to kids whose parents are in prison. wonderful ministry that's provided gifts to millions of young children around the world. i am so honored tonight to be able to recognize, to honor, and to share this time with some good friends of mine and talk about someone who had a huge impact on my life, chuck colson. do you want to say a few words? i'll hand it over to my good friend, steve pearce in faw minutes here, but let me talk about the impact and my keck. i had known about chuck colson for the past 25 or 30 years through many of his books. he's written well over 25 books, he was a speaker around the world, he had a weekly
radio show, "break point," talking ability what was going on in the world but through all his books, all his speak, every time he was talk, there was a connection, he cared for people, he loved people. one of my favorite stories i hear over and over again about chuck is that he would travel around the world and travel into the worst of the worst prisons, he would go in and meet with prisoners, often times the warden wouldn't even go into some of these areas in meeting with prisoners, the wardens would be afraid yet chuck colson would go in, unarmed, without guards, meet with the prisoners, talk with them, touch them, hug them and interact with them and let them know he was going to continue to be thinking about them, praying for them, thinking about them and he would be back. that made a huge impact on my life. reading his books, he talked about what is our role in
government. how should we choose the -- view the challenges we see as christians, how should we be involved in government he talked clearly about that, respect of government but also the importance of everybody from all faiths to be involved in government, recognize that this is our responsibility as citizens to be engaged and involved in the political process. i had learned -- learned much about chuck kohlson fru through his read -- colson through his readings, through his speaking, he started a program called thesen turin program, it's a year--- centurion program, it's a year-long program of seminars talking about how to be involved in our country, to be involved in our government, to make an impact in our communities. he was involved with dozens of books we read in a year, going through what impacts our
culture, looking at movies, looking at music, looking at every single sector. we would come from all over the country, out to washington, d.c., three times during that year to spend a long weekend together where chuck colson personally led those seminars with speakers from around the country coming to train men and women from all over the nation to be more effective in their communities, to be passionate about using their gifts to impact others for good. and i was privileged to be selected to be part of the centurion program in 2009 and went through that year-long process, little did i know at that time honestly that i would have the opportunity to serve in congress. this is before i even considered the idea of running for congress. but it was through that program and much that i learned that i was brought to starting to think about this, to pray about it, to talk to my wife, to talk to my family, to talk to my kids about how important this is and what a pivotal time in
our nation this is right now. it was through the impact chuck kohlson had on my life that i decided to run for congress. i was so excited to have chuck colson here in the canon caucus room to meet with members of congress and make the connection again. i spent so much time with him in that year but hadn't spent must have time -- spent much time with him since i was elected, he came up and hugged me, saying i am so prud of you. he said he wanted me to continue to be faithful in all, we talked about how we were hopefully going to work together for many years to come. unfortunately, with his untimely death, it was a very sudden death where he was speaking before a group of people and had a dizzy attack and within a short period of time had blood clot in his brain that had an impact there and over weeks, they tried to
do everything they could to save him and weren't able to. but unfortunately, we won't be able to continue to work with him but his legacy lives on in me and so many others, literally, millions of others around the world that he touched. that's why it's such a privilege for us to honor him tonight, the direct impact he had on us and before that chance i had to get to know him more personally, part of the impact he had was the studies i was doing, i was solved in our state legislature iny. my wife and i had our fourth child, trying to think of a good name for our new son. we decided to we would name him colson, we call him cole but his name is colson. such a privilege and a reminder as i'm with my now 8-year-old little boy, colson of the legacy he has and the big shoe he is has to fill and the power his name means to me of a man who had a huge impact on my
life. we will take this time over the next minutes to honor a man that we could spend days talking about but again i'm so privileged to of -- privileged to have my colleagues here tonight. i turn it over to my fend in new mexico, steve pearce. mr. pearce: thank you for bringing this issue before the house. it's rare that a person can impact your life in a very strong way. it is almost never that a person can impact your life in a very strong way on different ends of the spectrum. in 197, i graduate -- in 1970 agraduated from college, i had joined the air force rotc to avoid going to vietnam in the middle of my cliege career but as an rotc graduate, i had the obligation to go to pilot training, attended pilot
training, went overseas, assigned to c-0130's. we were stationed at clark air force base in the philippines but most of our missions were in vietnam. for the next year and a half, that's where i was. on one particular mission, around 1971 or 1972, i was a co-pilot flying into cambodia. now at that time, we were supposedly not going into cambodia, we were supposedly not going into laos, but we were in and out several trips that day. that evening, when i got back to the p.o.q. and to the quarters there to the air force base we were stationed at at that time for two weeks, i was interested to see that president nixon was on tv and the cameras zoomed in very close to him and he described that american soldiers were not
in or around cambodia. that that mission was not one that we as soldiers were fulfilling. now, having just been in and out of cambodia the entire day, they struck me unusual that a president would say things that were completely untrue that i knew to be uncrew. in my heart, i began to believe that he could have said i think the american people have a right to know. he could have said it's secret. that's classified information. but he came out with the camera looking him square in the face and said, we were not there. now maybe he did not know, but when i got back to the u.s. and had found out about watergate, that was beginning to unravel, the idea of who to vote for in those 1972 elections was
ever-present on my mind. his opponent, there was no chance i would vote for him. his opponent was eugene mccarthy. i would not vote for him. i ended up filling my ballot out that neither man is qualified or deserve this is office and did not vote for president that year. simply because of my personal experience. then watching this whole problem of the watergate, chuck colson, those guys that were inside the plumbers, began to give me a sense that this was a very bad point in my life and mr. colson was a part of that group that was willing to mislead a nation, willing to say things that weren't true. at the end of the day, president nixon, as you know, stepped down, gave up his office, because of misdeeds that the small group pulled together. now with that background that i
knew chuck colson for most of my life, then in 2003, when i arrived here at the capitol, being first elected to the house of representatives, i started going to just a very small lecture series and it was hosted by a gentleman named chuck colson. it didn't take long to make the association. but he was bringing in some of the best christian world view thinkers in the entire country. i was able to experience mr. colson in a far different way than that remote acquaintance i had made in the early 1970's. and this way, he was one of the most compelling thinkers in the country. it was him that said that he lived in the dark until he saw the light. it was him that committed himself to a different view of the world, one that said that
we must have redemption, we must have a ceyor that has no hope for us as human beings if we are not to deal be those problems each one of us faces in our lives. as he began to develop his insights and began to be one of the premiere organizers of the christian world view, brinning in literary people from around him, he established his pillars for glorifying god through the works that we do. those pillars are, number one, prepare well. number two, keep an eye on the horizon rather than up close to you. number three, engage and enlist others. number four, run assessments. number five, seek the abiding fruit not just that that is temporary. and finally, have guidelines that you have applied. it is in those principles of
glorifying god that mr. colson really developed a presence that affected the world and affected my life significantly. he began to compel those of us attending this lecture series in this house of representatives in one of the rooms beneath us to compel us to enlist those around us. to be a light that shines out to others. to let our lives be different, to let our lies be the equivalent, so that those around us will know that they have embraced a lie. it was mr. colson who told me the most traumatic thing, his perception was, and i believe it still, the greatest problem facing america, he said, is truth. . we don't know the truth.
if we don't know the truth, can we see the fragments of society becoming loose. i hear my own daughter and grandchildren say, which side is right? they are all saying different things. when we, as a nation, walk away from the concept of truth. when we as elected officials fail to honor our obligations to speak the truth as we know it. when our courts declare that there is no truth, then the nation truly does suffer. even though that extraordinarily clear. at that point, i began to be compelled that i should be honest and transparent in my own faith, not that i would go out and be interrupting people, thrusting myself into their consciousness but look and see that there is something
different. they would say, maybe, maybe we can trust that viewpoint. and so it is with sincere appreciation to to my friend who is honoring chuck colson with this time tonight that the nation has lost one of the better thirst, who has guided us along the path, who gave us a wake-up call saying, we must, must find that salvation, we must find that way back when things have gone wrong. and he was speaking from his experience of gone so desperately wrong and being uplifted into the white house in this country and having stumbled so badly. he could speak with experience saying, we all have to come back. there are things that every
single one of us slip into that we eventually want to change course. so through his example, through his words, through his values, through his ideas that i know there are many here in this congress who lived a different life because of those ideas. he came to new mexico a couple of years ago. they had a large, large conference on the weekend and again, i remember the same clarity, same professionalism, the same looking toward the horizon there at that conference there in new mexico as we heard in this building here, he was a constant, he was refreshing to speak so openly about his problems. he was never able to let them loose, never get that stain off of him, but he embraced.
that's who he was and how he was different that he had lived in the dark until he had seen the light. each one of us, if we were to make those same understandings and give those same acknowledgements, i believe we'd live better, more transparent lives with truth being a greater part of that life and i think the nation would be better off for us living as it is for him having lived. we mourn his passing. but we also glorify god that he was placed into our midst, that he might truly shine the light of truth into the darkness that he found around him. i yield back to my friend and stay around to hear what else we have. but thank you very much. mr. hultgren: i thank my colleague from new mexico. and i yield to my good friend
from north carolina, mike mcintyre. inini share with these dear friends marking the passing in the glory of chuck colson. we knew him as a dear friend and christian brother, radio comment tator and challenged us all to think more of our world view. we have lost an uncommon leader, and a reminder of the beauty of second chances in life. while some will remember mr. colson for his role in the watergate scandal, i will remember him with the perseverance which he advocated for the least of these in our society. those that were seen as help less. through his work with prison fellowship, to prisoners and former prisoners and prisoner families and through his books,
he touched thousands of lives and advocated tirelessly for programs that would not only address the physical needs of our prisons but the spiritual needs as well. his daily radio show "breakpoint" which he would share commentary on the life of christ and issues of the day was such a challenge and inspiration to me that as a young lawyer in my hometown, i actually put copies of his commentary out on the coffee table so that those clients and prospective clients who came to our law office would take time to hear from this lawyer, chuck colson, whose life had been transformed by the experiences he had gone through. when i think about his insights it's because they were so challenging and so clear in their which is come. his books challenge you to think deeply about your own calling in
life. what was god calling you to do and how could you take even the worst of experiences such as he went, i remember him zriping looking out the south lawn of the white house thinking he was one door down from the president in the neatly manicured lawn, i remember chuck describing that experience and thinking, you know, i've made it. but then chuck colson went from the white house to the very depths of understanding what it meant to be in prison. instead of letting that ruin his life after the watergate scandal, he came out of that with his life being changed. his great book "born again" was a best seller in the 1970's when i was in college. my own father who passed into glory last year, read that book, that along with other experiences that happened to my own father, that book "born
again" told a story that my dad could identify with and helped to change his life. having heard chuck speak where my dad made his own christian commitment and hearing chuck speak at other events at coral ridge ministries in florida and being with chuck so many times on capitol hill, being part of the lecture series, that i still remember he organized here on capitol hill and when the the members of congress came and challenged us to go beyond the politics of the issue. and then, in his monthly newsletter jee jubilee," he would have -- i ripped that out and put it in a file because his thoughts were challenging in terms of our own world view. i also had the opportunity to get to know chuck colson and count him as a brother in christ
and as a friend, participating not only in the lecture classes here on capitol hill but when he rewrote the book, he rewrote quote god in politics" and how to deal with the tough times in our political world. so much so that my wife asked me for our 25th wedding anniversary, could we be in the centurion program, where he had 100 citizens around this nation participate. and spend an entire year studying crist tan world view on issues -- christian world view from health care, law and government, to issues on religion itself and challenging
us to study the christian world view and to think how we deal with those issues as christians in the every day world. with those 100 citizens across the country, my wife and i spent a year studying under chuck colson's guidance and wept to three different seminars that he had. what an inspiration this man was because he just didn't teach, he just didn't talk but he walked the walk and changed lives by god's power in the process. i know some of you with us today so often we share the night before the national prayer breakfast before we led the spiritual heritage tours here at the capitol, that if we made a regular habit to go to chuck's annual prison fellow ship dinner he had the night before the
national prayer breakfast. and we looked forward to that as being central to the celebration of what the national prayer breakfast was about because we knew chuck was having his annual dinner usually honoring a great realous leader before we had our tour back here at the capitol. he talked about his experience as a united states marine at camp leg union on the edge of our congressional district and talked about the practical way that faith can change your life. that's the great legacy i know chuck colson would be pleased with today. we are talking about a man who is not only a great author and speaker but a man who changesed lives and made a difference. thank you very much. mr. hultgren: thank you so much, mike. i want to yield to robert
aderholt from alabama. mr. aderholt: thank you. and i rise this evening along with my colleagues to honor the life and legacy of chuck colson. many people remember chuck colson as the hatchet man for president nixon and also the first member of the administration under richard nixon to go to prison. but chuck colson is probably known better as a central figure in the christian community since his conversion to be a follower of jesus christ. some at the time of his conversion may have said it was a jailhouse conversion. however, if you knew and you looked at the life of chuck colson and saw the life that he led following his release from federal maximum prison camp in alabama, you would come to a far
different conclusion. chuck colson emerged from prison with a new mission and that mission was to mobilize the christian church, to minister prisoners. this was perhaps his greatest contributions to the church and to the world. chuck colson was somehow who rose to high places in the eyes of the world. during his -- all the time during his time in washington and his political career. but it actually wasn't until chuck colson hit rock bomb that really his life was -- bottom that he was in need of a savior and powerless to earn god's favor that his life turned around. if he were with us here tonight, i think chuck would say that
placing his trust in christ, recognizing that christ paid the penalty, was the best decision that he ever made in his life. and i can say these things about chuck colson, because i had the opportunity to get to know him personally over the last several years and honored to call him a friend. chuck colson made many friends over his life and, of course, he will be missed greatly by so many around the world and of course to patty and his children, he will be sorely missed. mr. speaker, i feel sure that chuck has heard the words. well done, my good and faithful servant. i thank you for the time you yielded to me to honor chuck colson and i yield back. mr. hultgren: thank you for your words. it's my privilege to recognize good friend from iowa, steve king. mr. king: i rise to also to
offer my most appreciatetive words for the life and gift to all of us. it was the life of chuck colson and a lot of us got to know chuck colson as he came before our conference. republican study committee on occasion and profess his conversion and listen talk to him and speak about his conversion and accepted jesus christ as his personal savior and a new direction in life, a direction in life that has lasted for 40 years. a man at the opiniona call of power and found himself in prison for eight months and out of that prison, he came back and hit bottom and was launched not as the power of the world, not this world power but center of the power and his spirit within
those who wept through the prison fellowship and those who accepted jesus as their savior and i have met with the prisoners who were part of the fellowship effort. the rate by memory was only 8% >> and they gave hope in the very heart of the place where chuck colson had known despair. and the testing turned him into a man who was a gift to this country and the entire world. i remember a prayer i offered for years and years throughout the foreign crisis, the difficulties of the 1990's. i don't know if chuck colson ever offered that prayer but i think he would agree with me there was a time that he was tested and a time that he went
through that test in the power and tested him for 40 years and chuck colson is a gift to america and a gift to the world and i thought i read an article about him that was useful and formative and the light emanated. you knew he understood and wrote eloquently about the depth of his faith and the power of redemption and this quote was written about him. i should note the author and i will, because it's. chuck spent the last 40 years of his life, dazzled by his own redemption. he knew it was a gift. it was implausible that a person
as chuck colson could be a recipient of that gift of grace. and not under a bushel basket. light that shined across this whole country and shown into this united states congress over and over again. he was a core for the values of our faith. core for the values of our morality and brought our thoughts together on the meaning of our service, our service here in this congress and our service to the world and i think he gave hope to many in despair, many of those who served time in prison for giving hope and inspiration faith and salvation and the inspiration he was. his life dazzled by his own redemption or dazzled by the life of chuck colson.
mr. gohmert: i first read about chuck colson after the watergate event occurred and all the events surrounding it and i was in law school when i read his book "born again." sounded like this was a brilliant man who really and truly would have a conversion experience. life had been materially changed. but then again, there are those who as a judge, would get in
trouble and grab a bible and say i'm changed, so, go easy on me, things like this, but this appeared quite genuine. and we will be known by our fruits. incredible fruits this man produced. amazing. over the years, i stayed in touch -- he didn't know me personally during those years, but i listened to his sermons, his lectures, that tells you how far back it goes. they were cassettes and his c.d.'s and lectures and sermons and would read his books and thank god he was so prolific and was moved to write extraordinary books. in fact, i came to realize with
this kind of brilliance and others have pointed this out but struck me back in the 1980's, this is a modern-day apostle paul. he has that kind of intellect, that kind of ability, and yet is able to discuss anything with anybody on any level, but his life is a living, breathing testimonial. . stephen curtis chapman used in chuck colson's own royce in hetch and the real world, when you hear chuck ose voice sare these things, chuck said, i meet millions who tell me think feel the moralized by the decay around us. we're suppose -- where is the hope, the hope that each of us has is not in who governs us or
what laws are passed or what great twhings do as a nation. our hope colson said is in the power of god working through the hearts of people and that's where our hope is in this country. that's where our hope is in life. as he pointed out on more than one occasion our hope, the kingdom of god will not arrive on air force one and any hope of that happening is just misplaced. mir days as a judge -- my days as a judge, i still have a brother, about nine years younger, a baptist pastor near richmond. bill had acquired chuck colson's new novel called "gideon's torch" and as a man
who worked in the white house, to have him write a novel, which as you bread -- as you read it, bretlessly, you realize, these things could easily happen. every one of them. just as he spells out. it was an incredible book. when i met chuck colson, i asked him are you going to write any other novels? that was just a fantastic novel. and he said mitigating circumstance publisher tells me people are not buying my fiction they want my nonfiction and i want god to use me however he can use me and if it's more productive, more helpful to wite monofiction, i'll write nonfiction. he also said writing "gideon's torch," a novel, was more difficult than writing the nonfiction which he does. i'm not sure that it's still in print but i would hope that after his passing it would have, there would be a resurgence of requests and
people would get that book and greatly grow and benefit from it. i wanted to share a couple of things from his book god and government, he came to the hill to provide this to many of us and as my friends here know, one of the benefits of being in congress, and there are plenty of things that aren't benefit, but one fen sit is becoming friends with people you have as heroes and chuck colson was one of my heroes. he was someone i truly looked up to. and i've -- and i benefited from. even before he knew me he was a mentor. but pauge 69, he says, whether or not god's existence can be proved, the evidence can be rationally probed and weighed. lewis, talking about c.s. lewis, does so compellingly and he cites moral law as a key piece of evidence. clearly it is not man who has
perpetuated the precepts and values that survive through the centuries and across cultures. indeerked he has done his best to destroy them. the nature of the law restrains man and thus its very survival presupposes a stronger force behind it, god. or consider the most readily observable physical evidence, the nature of the universe, one cannot look at the stars, planets and galaxies millions of light years away, all fixed in perfect harmony without asking, who orders them? for centuries it was accepted that god was behind the universe because otherwise the purpose of life would be inexplicable. this traditional supposition was unchallenged until the 18th century age of reason when enlightenment thinkers announced with relief that the
origins of the universe were now sign tiffingly explainable. but in the past few decades, science has completely reversed itself on the question of the origin of the universe. after maintaining for centuries the physical universe is eternal and therefore needs no creator, science today has uncovered dramatic new evidence that the universe did have an ultimate origin. that it began at a finite time in the past, just as the bible teaches. chuck colson will be missed but thank god and thank chuck colson that he has left us so much in the way of wisdom that we can draw from in the days ahead. we will be remembering his family and all those who loved and missed chuck in our prayers and with that, i appreciate being yielded to on behalf of
chuck colson. thank you very much. >> thank you, congressman gohmert, there were many who wanted to be here and weren't able to, our colleague mike pence of indiana, he wasn't able to be here but he wrote a letter i'll enter into the record as soon as we're finished here tonight. many others also for the last couple of weeks have paid tribute to the life of chuck colson. mr. hultgren: i'd like to pay tribute to them, reverend billy graham, evangelist, said that chuck colson a former prisoner himself, has had a tremendous ministry, reaching into prisons and jails, when i get to heaven and see chuck again, i believe i'll see many, many people there whose lives have been transformed by him.
that was reverend billy graham. i do think it is amazing to look at the history of the impact and really the decisions that chuck colson made that we talked about before he wept to prison, his conversionmark were skeptical about that, many thought it was a ploy to get a lighter sentence, clearly it wasn't when you look at the fruits that came afterwards. i want to go over the prison fellowship, 1976, watergate crook pounds prison fellowship. in 1974, the watergate scandal sent chuck colson to prison. a new christian he faced challenges and ads veryities that tested his faith and self-respect. paroled in 1975, he could have opted to close that book on that dark time and move on with his life as inconspicuously as possible but he knew that god wanted him to hold on to his ties to prison and continue to
identify with his fellow prisoner despite the skepticism and scorn of his critics. so in 1976 with little more than a vision and the support of friends he began a prison fellowship to proclaim the las vegas and power of jesus christ. in 1977, the next year, after the founding, prison fellowship goes behind bars, at first, through the support of the director of the federal bureau of prisons, prison fellowship began transporting dozens of christian prisoners out of prison for intensive training for discipleship training seminars, they were returned to prison to lead. but in 1977 there was a problem, a -- an official said
if your prison is so good, bring it to the prisons. they did that paved the way for hundreds of thousands of prisoners across the country to receive biblically based teaching through in-prison seminars and bible study thovers past 33 years. that first in-prison event showed the importance of training local people to go inside the prisons and build relationships with inmates. today they rely on a volunteer network of well over 20,000 volunteers. 1989, britain catches the vision. in 19 2, ex-bank robber reaches out to prisoners' kids and starts angel tree. the same year that chuck started prison fellowship a former bank robber named mary kay beard was released from prison in alabama and as in chuck's life, god graciously transformed the shame of prison into a golden opportunity for ministry. mary k. organized angel tree, a
ministry to provide gifts to prisoners' children on behalf of the incarcerated parents. beginning with 556 children that first year, angel tree has since exploded into a geyser of ministry opportunities, reaching more than 400,000 american children of prisoners every single year and their families with the transforming message of jesus christ. over six million children have reeved gifts from angel -- received gifts from angel trees, from their parents, donated from somebody else, in the name of their parents. again, the loss -- lost victim oftentimes of crime. in 1983 justice fellowship hits the stage. as prison fellowship was expanding, it saw firsthand all the signs of a justice system in chaos. overcrowded and violent prisons, neglected crime victims, communities shattered by crime. in 1983 justice fellowship was formed to promote biblical standards of justice in our nation's justice system. justice fellowship volunteers successfully implemented reforms
across the country, vic testimony offender reconciliation programs, alternatives to incarceration for nonviolent offenders and more. in 1995 former california legislator and ex-prisoner patent knowland took the helm and has spear headed efforts to pass the religious land use and institutionalized persons act of 2000, the prison rape elimination act of 2003 and the second chance act of 2007. in 1992 operation starting line sweeps north carolina. 1991, north carolina secretary of correction aaron johnson was pondering the condition of his prisons and saw only one solution. spiritual transformation. in an unprecedented, he invited prison fellowship into every prison in north carolina to lead a contemporary revision of an old-time revival meeting. so in the fall of 1992, using teams of professional athletes, musicians, comedians and powerhouse speakers, prison fellowships campaigns swept
through all of north carolina's 90-plus prisons, sharing the life-changing message of jesus christ. since north carolina's similar event have spread to sprissen all across the country and in 1999 it joined other organizations to launch operation starting line, now in affiliations of 37 ministries committed to prison evangelism. and in 1997, a new kind of prison minute industry is born. interchange freedom initiative was founded, a valued-based re-entry program founded upon the teachers of christ, with the full endorsement of then governor george w. bush, in texas they partnered to launch a program in houston. interchange freedom initiative imbureauses its inmates, all volunteer participates, in spiritual educational, vocational and lives skills training from a christian perspective. today it is active in both men's and women's prisons in five states. arkansas, kansas, minnesota,
missouri and texas and many other states are seeing the value of this, of really turning around recidivism. that we've got to provide all of this for our inmates, for them to really have true life change. after god parted the jordan river allowing the israelites to cross into our land, to a new home, he commanded them to erect a memorial of stones. this would be the -- today we saw the stones as a reminder of god's provision. the reason remains the same to. remember the hand of the lord is powerful. that was from joshua 4: 25. since this time, prison fell o'ship has continued to minister around the world. the chuck colson halls other activities. i've already talked about the sent tour onprogram, the impact it had on our lives. 100 citizens each year going through the centurion program. he also started the colson
center for christian world view which had a huge impact and has been directly involved in breakpoint which is a weekly radio program that's on. he's also awarded 15 honorary doctorate degrees and in 1993 chuck colson was awarded the tempton pryce prize for progress in religious. this is a very prestigious award. it's given to a person who has made an exceptional contribution to affirming life's spiritual dimension. with the templeton prize, it is a $1 million cash award. chuck colson could have taken that, could have spent it on his family. instead he took it and donated it to prison ministry, to impact prisoners' lives. he also continued to donate throughout his entire life, all of the royalties that he received from his books, along with royalties from speaking. in 2008 president bush honored chuck colson with the citizens medal, the president's citizens medal. so again, tonight we have taken
just a few minutes to honor a man who had a huge impact on our lives, many of us in congress have been impacted by him, through his writings, through his teachers, through our friendship with him. he's also had a huge impact on prisoners around the world and the plight of prisoners and recognizing that all human life is valuable and needs to be respected and honored and treated with that respect that it deserves. from the service today there was a couple of different things and i want to close with this, i know i just have a few minutes left. but there was a couple different readings that were done at the service and i would like to close with this. first, one of the readings was from flip evens chapter three, said, and this is a very
important passage for chuck colson. whatever gains i had, these i have come to regard as loss because of christ. i regard everything as lost because of the surpassing value of knowing christ, jesus, my lord. for his sake i have suffered the loss of all things and i regard them as relish in that i may gain christ and be found in him. not having righteousness of my own that comes from the law but the one that comes through faith in christ. the righteousness from god based on faith. i want to know christ and the power of hises remain reaction and the sharing of -- resurrection and the sharing of his sufferings if somehow i may maintain the resurrection from the dead. i press on to make it my own because christ jesus had made me his own. my friend steve king had talked about this radical transformation in his life and this verse pointed to that radical transformation where he could have had everything in this world, was right there and saw how fleeting that was.
could have had money and resources when he got out of prison, a career in law, where so many other things, but instead decided to give back to prisoners and to others as well. many would ask, why would doha? there was another passage that was read today. this was read by one of his grandchildren and it said, this is from matthew 25, and this was, jesus said, then the king will say to those on his right hand, come, you that are blessed by my father, inherit the kick dam prepared for you -- kingdom prepared for you for you were hang are you -- hungry and you gave me food, i was thirty and you gave me something to -- thirsty and you give me something to drink. i was in prince and you visited me. then the righteous will answer him. when was it that we saw you hungry and gave you food or thirsty and gave you something to drink? and when was it that we saw you a stranger and welcomed you in or saw you in prison and visited you? and the king will answer to them, truly i tell you, just as you did it for one of the least of those who are members of my
family, you did it to me. then he will say to those on his left hand, you are the you a acursed, depart for me. for i was hungry and you gave me no food. i was thirsty and you gave me nothing to drink -- drink. i was a stranger and you did not welcome me, naked, and you did not give me clothing, sick and in prison, and you did not visit me. then we will also an, lord, when was it that we saw you hungry or thirsty or a stranger or naked or sick or in prison and didn't take care of you? and then he will answer them, truly i tell you, just as you did tonight in do it to one of the least of these, you did not do it to me. chuck colson saw what his god had done for him, the incredible power is of his redemption and transformation that happened in his life and wanted to share that with those of greatest need. he saw that as the weakest, the poorest, those in prison. he was also dramatically impacted by his grandson max.
max is diagnosed with autism. and through max, again, chuck saw the incredible value of every single life and chuck was a hard driver, a type-a personality to the maximum but he learned from his grandson, max, patience and understanding and love and so i am so grateful again for the relationship that i've been able to build with chuck colson and with his family. we will miss him so dealer. i want to end this time again by reading from one of chuck colson's books and i think this is so powerful. this again was part of the ceremony today, the memorial service over at the national cathedral. that was from chuck colson's book, it's him talking in his book, "loving god," and it's coating -- quoting from easter, 1980. as i sat on the platform, and this is chuck colson talking, as i sat on the platform waiting my turn at the pulpit, my mind began to drift back in time to scholarships, to honors earned, cases argued and won, great
decisions made from lofty government offices, my life had been the great american dream fulfilled. but all at once i realized that it was not my success god had used to enable me to help those in prison or in hundreds of others like it. my life of success was not what made this morning so glorious. all my achievements meant nothing in god's economy. no, the real legacy of my life was my biggest failure. that i was an ex-convict. my greatest humiliation, being sent to prison, was the beginning of god's greatest use of might have life -- use of my life. he chose the one thing in which i could not glory for his glory. confronted with his staggering truth, i discovered in those few moments that my world was turned upside down. i understood with a jolt that i had -- jolt what i had been looking at, my life backwards. but now i could see. only when i lost everything, i thought made chuck colson a
great guy, had i found the true self god intended me to be and the true purpose in my life. it is not what we do that matters but what a sovereign god chooses to do through us. god doesn't want our success, he wants us. he doesn't demand our achievements, he demands our obedience. the kingdom is god is a kingdom of paradox. where through the ugly defeat of the cross a holy god is utterly glorified. victory comes through defeat. healing through brokenness. finding self through losing self. chuck colson truly was one of my heroes. someone i'm going to miss greatly. someone that impacted my family. i will think of him all the time when i look at my own son, colson, named after chuck colson, but i want to thank my friends for joining me tonight to honor this great man, honor this great life and be challenged together to follow the example that he left for us. thank you, chuck, we'll never forget you. i yield back. the speaker pro tempore: the
gentleman yields back. under the speaker's announced policy of january 5, 2011, the chair recognizes the gentleman from california, mr. rohrabacher, for 30 minutes. mr. rohrabacher: thank you very much. mr. speaker, first let me suggest that i join with my colleagues in honoring the memory of chuck colson, a man who also meant a lot to me, as an individual and those of us who come from california and remember richard nixon coming out there and remember the great work that chuck colson did for our prison community in california, we're very grateful for that. and he taught us really the true meaning of christian compassion and i personally was a beneficiary of that knowledge and that spirit that he helped us understand and development within our open hearts. so i would -- our own hearts. so i would like to join my colleagues in that. but today i rise to call attention to the hundreds of millions of public dollars we have spent and continue to spend in the form of foreign aid to the people's republic of china.
better known as communist china to those of us who have spent years trying to fight that oppressive regime. our national debt is over $15.7 trillion and it growing -- and is growing. $1.5 there will more every year than we are spending, $1.5 trillion more than we're taking in. and 43 cents out of every dollar we spend is borrowed money and communist china is the single largest foreign holder of united states debt. the interest we pay on this ever-growing debt is increasingly squeezing out spending on other wort while programs. why then -- worth while programs. why then are we borrowing money from the chinese communist government to be repaid, of course, with interest and then using that borrowed money to finance programs in which we are
giving money to these various programs that goes to china? the country from whom we are borrowing? remember, the government of this aid recipient considers the united states its enemy. they are happy to loan us the money and they are happy that we are stupid enough to give it back to them in terms of aid and, yes, other type of programs, including giving it back to them in investments. we are strengthening the government that considers us an enemy and as we look into the situation, we know that they see the u.s. as their enemy, just as japan saw us as their enemy before world war ii, the japanese mill tarrists, just as nazi germany saw the american people as their enemy, and just as the communist governments
that threatened the world for over four decades after world war ii, just as they saw the united states as their enemy. . we owe the enemy of vicious regimes that threaten the freedom of the world. we can be proud of that. the communist chinese don't like us and that's why they consider us their enemy. they are the world's largest human rights abuser and smashes those that advocate freedom of the press, freedom of religion, those who suggest that the chinese government should be accountable to its people are arrested and thrown into jail or murdered. in arrests, chinese practitioners, gong is a chinese religious movement that stresses yoga and meditation. beijing has these devout and
passive people, practitioners in a simple yoga religion that is meditation, and these people are arrested and they are thrown into prison where they are murdered and then the chinese government, after murdering these people for the religious convictions sells their organs and body parts. it doesn't get much more ghoulish than this. on the international scene, china is responsible for promoting and facilitating the proliferation of nuclear technology between north korea, pakistan, iran and others. china is responsible for empowering the junta that imprisoned chi for years and aligned it is with venezuela and other regimes that are tyrants in their own country and
threaten the security of their neighbors and that of the united states. china's aggressive foreign policy and hostile actions are threatening the sovreignty of japan and the phillipines. it is communist china that has stolen and is currently stealing most of our prized military and commercial secrets. china has stolen the designs for every within of our nuclear warheads. the chinese cyber spice have stolen all of our trade trade secrets and the money we have put in to invest in research and development, they steal and utilize. no wonder their rockets are so far ahead where they took the technology from us. they stole it from us. they have infected our critical electronic technology infrastructure with malicious viruses and then they break into our classified systems.
it is china which has embarked on the most significant arms buildup since the cold war and i ask who do they think is their enemy? the united states of america. while we, not only become susceptible to them, not only do we become -- put ourselves in an inferior position by borrowing money from them, but we also end up giving that money back to them in aid programs and i would like to talk about that tonight, the fact of how can we possibly borrow money from a country that looks at us as their enemy and at the same time, we are becoming vulnerable, we then increase our investment in the private sector in that country and also we have spent hundreds of millions of dollars in aid programs to the communist
chinese regime and with that in mind, i ask the congressional research service to assemble a list of programs that the congress funds that go directly to supporting development and the economy of china. it is a partial list, because there are so many programs that after weeks of work, they could not even find them all. this list i'm about to read is of projects they have funded and have been funded over the last three years when the obama -- at the same time, while the obama administration was funding $1.5 trillion more annually than we're taking in. while we're spending more than we are taking in by $1.5 trillion, we are spending on programs that are going to china and it's china who is lending us the money in order to spend that extra $1 trillion. this is an insane policy.
and this spending on china is ongoing. i'm just giving you the facts from the last three years and it is ongoing. to make sure we all understand exactly where we are spending or sending our taxpayer money, i'm going to read a list of programs that we have funded in china and ask as we're going through this list after every time -- couldn't we have spent this money better in the united states or wouldn't it have been better not to borrow it in the first place and have this $1 trillion in the last three years. every one of these things that i read, ask yourself that question. why -- is this in the best interest of the united states? is it in the best interest of our children, who are put more in debt by borrowing and giving it to china and having to pay the interest. they are going to have to pay
off the loan and the tonight china in the future. here is a partial list. and i will round off the figures. why -- and many of these deal with quote, environment. why are we trying to make the environment in china better so that the people of china can basically outcompete us in our business dealings? that should be part of the cost of production in china. but, no, we are picking up that cost. not only that, our people are investing in china and building their factories. why did the e.p.a. give, for example, $141,000 to the institute of environment and sustainable development in agriculture to reduce greenhouse gases in china, in china? why did the e.p.a. give $125,000 to the eastern research group that reduces greenhouse gases in china? why did the national science foundation give $63,000 to
sienna college for studying in china? and some of these will be repeats because we did this -- this is over a three-year period, because we have several programs over the years where we're giving money to the same group in china and that spending continues, let me add. why did the e.p.a. give $150,000 to china for coal information institute for reducing greenhouse gases? why did the e.p.a. give $100,000 to kihou international corporation center for environmental protection for reducing greenhouse gases, that's in china, of course? why did the e.p.a. give almost $300,000 to the ministry of environment protection in china for reducing health risks? don't we have health risks in the united states? don't we have needs of our own? why are we giving this money to china. why the e.p.a. give 150,000 to a
university of building scientists for environmental governance in china? why did usaid give the asia foundation almost $2 million, $1.7 million, to build environmental governance in china? why did usaid give half a million dollars to american bar association to build environmental governance in china? don't we have some things in the united states where we could use $500,000 grant so our local communities? couldn't they use some help? instead, we sent it to china. but first of course, we board it from china. we have to repay china and the interest in order to give it to them. why did usaid give $3,000 to the university of massachusetts to improve the quality of judicial education in china? we are giving them $300,000 in
order to improve judicial education in china. why did they give $200,000 to the university of pacific to enhance the rule of law in china? why did usaid give $55,000 to an n.g.o. to be the administrator of china program evaluations? did usaid give $2 million to limerock international institute for agriculture for sustainable livelihoods in china? i guess we don't need any help in our farm belt. i guess our farmers don't need help in california where they are going broke because the water has been cut off to them in order to protect some delta smelt. our guys are going crazy and going broke. our farmers, but, we're going to find $2 million borrowed from china in order to give back to china in order to aid the institute of china so they can
have sustainable livelihoods in china. why did usaid give $2 million for sustainable livelihoods in china? you think americans need sustainable livelihoods. why did usaid give $2 million to the university of sustainable to study greenhouse gases? we have to make sure we pay china's environmental expenses otherwise they won't accept global government. why did usaid give $749,000 to the i.c.f. international to reduce greenhouse gases? why did usaid give $500,000 to the asia foundation for humanitarian assistance to china? why did the usaid give $10,000 to texas agriculture experience for biological control of forest
insects in china? did our forests not need this? why are we borrowing money when we can't afford to do these things in our cope truntry -- country? why did u.s.d.a. give money for climate chake. we are paying them to adapt to climate change. and they will join the global government which they are trying to force on us. we are under a mountain of debt, our children, in order to pay for their adapttation to climate change. that, of course, not to say that the united states, our farmers or any other industry doesn't need to adapt to the different changes that go on in the climate even if they are natural changes. why did the department of energy give $2.5 million to the university of michigan to the u.s. clean energy china research
center? we shouldn't be developing research? we borrow money from china in order to spend it in china and pay interest on that debt and pay back the debt? our children will be doing that. why did the department of energy give $2.5 million to the west virginia university for a clean energy research center, a research center, perhaps the same research center, but the next year. that makes it $5 million that we have given to that research center in china. why did the department of energy give $1.2 million to west virginia's university for long-term environmental and economic impacts of coal lid question fix in china? that is $1.2 million spent through the west virginia university. don't we have coal environmental studies going on in the united
states that could use that money for research to make sure that our coal burns more cleanly and effectively here rather than giving that money and information to china's benefit and borrow it from them, in order to give it to them. why did the department of energy give $5.3 million to brook haven national laboratory in the nuclear project in china? that is over $5 million. why did the department of energy give $387 -- $5 million to this nuclear facility. and let me just note that in my district, we have a problem with a nuclear power plant that is going through some very serious problems right now. they could have used that $5 million to help us correct the problems. but no, we borrowed the money from china to give it back to them to solve their problems, while our children will be forced to pay that debt off. we get no benefit out of it
except a load of debt on our children. why did the department of energy give $400,000 to the state university of albanny to study climate change in china? . . again, using climate change as a vehicle to give them money that we are borrowing from them in the first place, which we will then have to repay. why did the department of energy give $256,000 to the institute for research at the dana bay nuclear power project? again, another $250,000 to this nuclear project, could have been the next year, because this is over a three-year period, of some of these, it's not anywhere near all of them over the three-year period, but all of these are taken from a list over
that three-year period. yes, we could have used some of that money to make sure we didn't have a problem in our own districts. why did the department of energy give $210,000 to rutgers state university for site science for atmospheric measurements for a mobile facility in china? why are we doing that? why are we providing them that type of foundation, the scientific foundation? so that they can prosper and they won't have to spend their resources paying for that type of scientific infrastructure. why does the department of energy give $135,000 to the university of maryland for climate effects of aerosols in china? there you go. aerosols. an issue from way back then, which some of us think was not entirely reported. but now we're still giving almost $150,000 to check out
aerosols in china, for their benefit. why does the department of energy give over $500,000 to the university of houston for a proposal to measure mixing at the nuclear experiment in china? again, over a half a million dollars while we're having trouble with our own nuclear program. we should be developing our own new generation of nuclear power which will be safe and we can do it but we don't have the money to do it. why? we're giving millions of dollars to china and to others that should go in to developing our own new technology here. of course, we're borrowing the money from china in order to give it to them which leaves our children in debt. and they'll have to pay it all off with interest. why did the department of energy give $70,000 to colorado state university for climate effects of aerosols? in china? why did the department of energy give $19,000 to pennsylvania state university for factors
influencing energy use and carbon emissions in china? isn't that nice that we gave the university of pennsylvania money to study this for china so they will have the information in china and be able to use it for their benefit? rather than studying things in the united states to help us so we can do better here? why did the e.p.a. give over $500,000, $550,000, to be exact, yeah, $550,000, to the virginia institute to reduce greenhouse gases in china? why did the e.p.a. give almost a half a million dollars to the research triangle institute to reduce greenhouse gases in china? these are re-- this is basically making equipment more efficient. why aren't we making our equipment more efficient? the chinese should buy it from us rather than having us having to locate oul our manufacturing plants in china? yeah, let them buy it from us. how about that? give our own people jobs rather than borrowing money so they can
have the technology and we are going in debt so they can have the technology and our children will have to pay the debt back with interest and they will sell us the equipment, the chinese will sell it to us in a generation. why did the e.p.a. give $300,000 to the energy and environmental development research center to reduce greenhouse gases in china? why did the e.p.a. give almost $250,000 to research triangle again, probably second year of their grant, to reduce greenhouse gases in china? why did the e.p.a. give almost $200,000 to the china university of petroleum in beijing to reduce greenhouse gases? china? can't any of our people use this research money to help our countries and our technology become cleaner and more efficient? no, we're giving it to china and then they will sell that technology back to us after they manufacture it years ahead of us. because we subsidize their r&d. why do the e.p.a. give almost $200,000 to the china urban
construction design and research academy, to reduce greenhouse gases in china? again, here we are spending money to help them design houses in china. wonderful. none of our designsers need any help. why did the e.p.a. give almost $300,000 to the research, eastern research group to reduce greenhouse gases in china? why did the e.p.a. give over $100,000 to china to reduce green how gass? why did the e.p.a. give $1 10,000, again, to international cooperation center for environmental protection to reduce greenhouse gases in china? do we have no need for this money in the united states? does our equipment not need to be more efficient? should we not be investigating putting money into development of cleaner energy sources here? all this money we're giving away, we could be developing clean energy sources, if knot nothing else, the new generation of nuclear power plants which is
starving for research money, no, we're giving it to china. why did the e.p.a. give almost $100,000 to china university of petroleum in beijing to reduce greenhouse gases in china? why did the e.p.a. give $200,000 to the california state university to reduce greenhouse gases in china? why did the e.p.a. give $85,000 to the i.c.f. international to build climate change management capacity in china? why did the e.p.a. give $135,000 to information institute to reduce greenhouse gases in china? why did the e.p.a. give over $50,000 to advanced resources international to reduce greenhouse gases in china? why did the e.p.a. give $31,000 to the energy and environmental development research center for biogas development? and each and every one of these items i'm talking about is an
item where we spent money out of the federal budget, took it out of the taxpayers' pockets or actually we borrowed it from china and then left them with the debt in their pocket, the i.o.u. in their pocket, and gave to china, rather than taking that money, those resources and spending it in the united states to develop a technology here, and like i say, i've been struggling for years to get the new generation of nuclear power developed, that technology developed here, and it has been starved. it has not been given what it needs and giving away these hundreds of millions of dollars to the chinese which we of course are borrowing and in the end we will pay them, we will pay them for the technology because they will be sending the manufactured items here. why did the e.p.a. give $35,000 to china association of rural energy industry to reduce greenhouse gases in china? why did the e.p.a. give almost $800,000 to the china state environmental protection
administration to reduce transboundary air pollution? well, that's great. we have to pay for everybody's air pollution in the world. the -- we're borrowing money from china but we have to pay for their reduction of transboundary air pollution. why did the e.p.a. give almost $200,000 to the chinese ministry of environmental protection to build environmental management capacity? why did the e.p.a. give $120,000 to an environmental protection bureau for water pollution management? now there's something we don't need any money for around our country. water pollution. i live in a coastal district. we could use that money for water pollution. we've got sewer pipes and water purification systems that need to be upgraded. but no, we're borrowing money from china to give to china, rather than having that money spent in the united states. why did the national science foundation give $62,000 to the
college for physics in china? we're not spending the money here to develop our own clean nuclear energy. why did you say give management systems international almost $500,000 to improve environmental governance in china? why did they give the law schools, get this, $1,725,000 for improved environmental governance in china? why did you said give an institute for sustainability communities half a million dollars to save energy and reduce greenhouse gases in china? don't we have any put? can't we put this in structures in the united states? why did usaid give them that money for china? why did usaid give the american bar association $500,000 for environmental governance in china? why did usaid give the
massachusetts -- university of massachusetts $420,000 for environmental governance in china? why did usaid give organizations for economic cooperation and development $150,000 for development assistance in china? why did usaid give management systems international $50,000 for development assistance? why did usaid give the rockefeller advisors $2 million for sustainable livelihoods in china? don't we have people in the united states who need money like that? don't we have people here who need a sustainable livelihood? why are we giving it to china? and borrowing it from them in order to give it to them and leaving our kids in debt? why did usaid give rockefeller advisors $400,000 for sustainable livelihoods in china? why did the usda give the university of science and technology of china $150u50,000 for research? don't our universities need money for research, for things we can use here in the united states, to make our life better?
why did the usda give s.b. group consultants $25,000 for education in china? why did the usda management give management and engineering technologies international $40,000 to improve forest health in china? we don't need any help in our forests here, do we? why did the usda give yang xiu university $36,000 to improve biological controls in china? why did the usda give management and engineering technologies international $8,000 for administering purposes in china? why did the usza -- usda state university almost $400,000 for biomass research in china think? happen to know american companies that -- and people who are investing in biomass research. why are we giving almost $400,000 to help the chinese in biomass research which will compete with our own companies that are trying to develop this
very important and unique energy source which by the way for the environmentalists who are watching, who think that i may be making light of climate change, i support biomass and other clean energy programs that make sense. this makes sense. our companies are investing in it and yet we're giving money to china, borrowing money from china in order to give it to them, to do biomass research, to compete with our own people and put them out of business. why did usda give -- -- give $325,000 for administrative purposes for environmental programs in china? why did usaid give the institute of sustainability communities, get into this, another $500,000 to save energy and reduce greenhouse gases in china? don't we have any need for our communities to do things in a sustainable way in the united states? no. they don't have that money now.
it's in china. we borrowed it from china to give to them. and now we're going to have to -- to have to pay the bill back after we have give continue to them. why did usaid give $105,000 for china? why did usaid give the american bar association $500,000 for environmental government? this list goes on, mr. chairman. and i would suggest -- i put the rest of these into the congressional record. at this point. and i will end my remarks tonight by suggesting that what we are doing is insane. america will never survive with such a mindset of these giveaway, mind-boggling giveaway programs where we're giving money, we're giving this type of support to a country and a government that's totalitarian, that kills christians and other religious people, who hates the united states, are our biggest potential enemy.
that's not the chinese people, it's the chinese government. and the chinese dictatorship has covered today and the reasons these policies go on is they have cover from some of our most powerful corporations. we are permitted corporations to set up manufacturing facilities in china and now they need to stay in the good graces of the chinese government and when i come up and say things like this, corporations in the united states trying to provide cover for the thigh cheese -- the chinese dictatorship, we should not be providing aid to the chinese, we should not be encouraging our corporations to go there and become vulnerable to the chinese in order for a quick profit. so i would suggest that over the last 10 years, since most favored trading status has been given to china, we have put america in a very vulnerable spot and we have at the very least, we should reassess our
relationship with china, but at the very least cut off any aid programs that go to this communist regime this totalitarian regime that looks at us as their enemy. i would now -- i reserve -- or i yield back the balance of my time. the speaker pro tempore: the gentleman yields back. . . the speaker pro tempore: pursuant to clause 12-a, the
on energy department loan guarantees. later, a house financial- services subcommittee examines regulations aimed at financial companies deemed too big to fail. at this house oversight hearing, republicans criticized the loan guarantee program for alternative energy programs. the program backed a loan to bankrupt solyndra. the hearing books and do some of the other companies receiving loans under the energy department program. hearing testimony from those companies ceos. this is two and a half hours. >> let me thank all of our witnesses for being here.
you know how this works. we have to listen to a bunch of speeches before we get to your testimony. bear with us. before we do opening statements, i would ask consent that our colleague from mr. south carolina be allowed to participate in today's hearing. without objection. we will start with opening statements. we anticipate the chairman and ranking member joining us. president obama's 2009 stimulus directed nearly $90 billion of taxpayer funds for green initiatives. the president told the american people that green jobs would be a major force not just for environmental conservation but for economic recovery as well. the president said we will harness the sun and wind and soils to fuel our cars and what our factories. we will create millions of green jobs to help us compete in the global economy. these efforts have wasted vast
amounts of taxpayer money and failed to achieve the stated goals. today's hearing seeks to ensure that the american people know how their money is being spent. four of the company's testify today cumulatively received $5 billion in loan guarantees from the department of energy. one-third of the entire loan guarantee portfolio. i want to thank each of these companies are testifying today. we appreciate -- appreciate you being here. we hope all of these companies succeed. the best way to get cheap energy to american consumers is to let the market forces work, not to allow bureaucrats in washington to select who wins and loses. i also want to thank our other witnesses, especially mr. nelson. he has shown that billions of taxpayer dollars are not necessary to advance screen
technology. when taxpayers last -- lost money over solyndra, the obama administration said it was one bad apple. it is becoming increasingly clear that solyndra was the tip of the iceberg in a sea of taxpayer risk. this administration takes liberties with the american people's money based on the assumption that government knows best. today is about understanding what happens when the federal government tries to play venture capitalist. i yield to mr. kucinich. >> to give very much. good morning. -- thank you very much. good morning. i'm grateful for today's hearing. i think a will serve to dispel some misconceptions about the department of energy's loan guarantee program and president obama's energy agenda. energy independence is critical to america's future. congress created the loan guarantee program in 2009 to
support innovative energy projects that involve more risks than typical for a project financing. my friends in the majority would have to believe that the well- publicized bankruptcy's of solyndra threatened to take the department of energy's entire loan program portfolio. but in reality, the portfolio program is doing better than congress expected. when congress created the 17 05 program, we appropriated about $2.7 billion as an insurance fund to cover potential losses. that means congress prepared for losses to reach about 15% of total loan guarantees provided by the program. actual losses are about 3% in reality. the department of energy's rigorous in due diligence process for choosing among applicants resulted in safer
choices. my friends on the other side of the aisle have singled out for scrutiny federal support for renewable energy technologies. they have not raised questions about the last 100 years of subsidies to promote the development of fossil fuel technology. i have not heard of any committee investigation into subsidies for the nuclear energy industry either. even though in february 2010, a single nuclear project received $8.33 billion and subsidies. investing in energy is critical for our economic growth and future draft creek -- creation. if we fail to support, these technologies, our country will fall behind countries like germany and china. if anything, we do not do enough for renewable energy.
especially when compared to support for oil and gas i have a chart i would like to put up if we can do that. there we go. this chart is attached to my statement and shows how much greater is the ongoing support for the oil and gas industry compared with renewable energy. what i am wondering is why my friends have devoted four hearings to criticize renewable energy companies to have received federal support that congress intended in a well- managed program that has returned better results than congress anticipated. we should help preserve the technology that will only become more important in the future. with that, i want to thank my friend for calling this hearing in the yield back the balance of my time. thank you. >> anyone wish to make an opening statement on the
majority side? our chairman is not yet with us. we will proceed with members to have seven days to submit opening statements for the record. we now want to welcome our panel of witnesses. mr. james nelson as the president and ceo of solard 3d. also gregory kats, president of capital-e. brian fairbank, ceo of nevada geothermal power. mr. john woolard is the president and ceo of brightsource energy. if he would stand and raise your right hand. get this done here. do you swear the testimony you're about to give will be the truth, the whole truth and nothing but the truth?
if so, answer affirmative. let the record show that all witnesses and to the in the affirmative. thank you all for being here. you guys understand the rules. you have five minutes. we will be a little lenient but close to five as you can read we do want to get the questions and the goal is to try to get out of here by noon if we can. i have something i have to be two at 12:00. so we will go right down the line. we will go right down the line. we will start with mr. nelson. he will get your five minutes. you are recognized. >> thank you. green energy policy includes two parts -- support for basic resource but developing new green and technologies and making loan guarantees to promote the adoption of grain energy technologies.
supporting research is an important role of government but the loan guarantee program is wasteful because it does not work. having spent most of my career developing strategy for companies large and small, i have learned one important thing -- it is economics, not government policy that drives behavior. it is economics, not government policy that will drive enthusiastic adoption of grain energy. my company is in santa barbara. we are creating technology that will reduce the cost of solar energy by about 50%. our objective is similar to that of the ill-fated solyndra. arkansas manner of execution is very different. -- however, our manner of execution is very different. we're not dependent or depending on government funding. we do not expect such a report will be necessary to facilitate
commercialization of our new technology. our strategy will be to partner with the company that has been known how to manufacture products similar to ours. our engineering approach has been to design a product with existing equipment in mind. the least our facilities and are able to play the university of california for the lease -- use of labs to design our new technology. these measures keep our capital costs low. we keep our staff lean and hiring keep personnel for full- time work and then use consultants to keep our operating costs low. by contrast, solyndra's unique technology attracted a $535 million loan guarantee but there were many problems that happened as a result of their strategy. they had used all new machines. they build a brand-new 300,000 square foot facility, complete
with whistling robot. it was clear their operations were failing. was reported that bonuses were paid to the executives despite the poor performance. there -- department of energy's loan guarantees to solyndra was an embarrassing example of the current system. the investment was scrutinized and rejected by nearby silicon valley venture capitalists. organizations abundantly more qualified to identify good investments than government committees. there was no urgent need to have solyndra rush the product to market. the decision does not stand up to reason. the bureaucrats reporting the financial aid will be holding to their political supervisors who promised americans they're going to fix the u.s. economy by creating millions of green jobs, something that could not possibly happen in any time
frame were the of consideration during the price of their failure was felt by the american people. the current level of development are company has a much better chance than solyndra ever did at creating dream became changing technology. in the end, we will become commercial for less than $10 million with the hope of creating a technology that will change the landscape of solar energy. it will be an example of the amazing american economic system at work. government has a legitimate role in supporting basic research. the program that rewards small touches of money for basic research and development in our canada of energy will receive $250 million in funding this year. it is only half a block lost on the solyndra project alone. this program can and should be expanded. its objective is to find
innovative technologies that will improve the economics of alternative energy which is ultimately the only path to widespread adoption of clean energy. the loan guarantee private program should be retired permanently. the path to commercialization requires discipline and grit. it is really heated and often in a heated by government involvement. our government should trust the free-market forces that made america great. our country's investment in renewable power must help us become more globally competitive. the job creation and other ancillary goals are byproducts of renewable energy growth that the most important reason to invest is to get control of and reduce the costs of power generation in our country. the desire for more jobs and employment is a political and social desire, not a business designer. i have a simple review of the
zero websites that reveals $16.6 billion have been put out in guarantees in these programs. it has treated 2400 jobs. $6.3 million per permanent job. it is not an economic program. businesses are not made successful by more jobs. people get more jobs by being more competitive in the free enterprise system and by preparing themselves to get employed and to be better than the existing candidates. renewable energy should be the same. by being great and productive, we need to produce the best prices for the lowest price in the world. that means we need to get better operationally through discipline and the grip of the free enterprise system. >> thank you. we appreciate that. >> thank you very much.
thank you for the opportunity to speak on this important issue today. there are several questions. does a program meet the financial productive as? does it meet our failed to meet additional objectives, including strengthening the competitiveness? there are three parts to the doe. one was established in the obama administration. section 17 05 of the loan program was established to the 2009 investment and recovery telerate employment. -- acclerate employment.
loan guarantees are established to finance projects would otherwise not get funding. the 1705 loan guarantee covers project defaults or partial defaults. the faults in solyndra and began are more likely to net out to about 300-$400 million. this is roughly 2% of the amount guaranteed. if there are no more losses, the program would have to be reviewed as a resounding success. why is it easy in hindsight to criticize the program? the only fair basis for judging success or failure is whether the program achieved its financial objectives. a review of the loan portfolio
suggests total defaults are ultimately likely to be in the range of 400-$600 million, or about one-quarter of the amount projected and budgeted based on a reasonable assessment of the profile. they can only rationally beats reviewed as a big success. there are other objectives regarding security. the army and navy have programs and reducing energy use our military bases with the navy targeting at the% of its bases with zero net consumption by 2020 at a combination of renewable energy and efficiency. not just about the fence but security. -- defense but security.
the wind and solar innovation were largely developed here in the u.s. our major competitors, including china and germany, howff purchases rapidly expanding the size and strength of their domestic with corporations. today, only one of each is located in the u.s. we should be deeply concerned about the security implications of the u.s. losing its global competitive praetorship in these critical industries. broad public support and renewable energy reflects this understanding. china and germany are are investing gand weakening the u.s. wind industries.
this undermines u.s. competitiveness and security. the security and financial issues, there are still set on unused. faults in the program today have been far below projected. expect overtime the total of only one quarter of what is budgeted. the clear the financial success of employment benefits stemming shaded by this program demonstrates that the doe of its loan guarantee efforts and provide loan guarantees support for clean energy companies. the loan guarantee program provides clean investment and growth. it trenton's growth creation and the strength of u.s. clean
energy is. -- energies. but china and energy are doing us. the undermines u.s. competitiveness and security. if the u.s. military is -- the doe is 85% of its fund that is available to back u.s. clean energy and projects. given the success of this program today, based on rational measures of financial performance and other measures including security and competitiveness, the largest risk is that doe its loan program. failing to make additional loan guarantees and to expand u.s. strength and grenoble's in clean energy, competitiveness and
security would be a failure. the only beneficiaries would be china and our other international competitors. >> thank you. >> craig witsoe, president and ceo, abound solar inc. >> please make sure that your microphone is on. thank you. >> craig witsoe, president and ceo, abound solar inc. we have a facility in colorado, as well as a factory. we have a plant site in indiana. it would be our second u.s. factory. our story is very much th americaan . early funding came from the national science foundation, as
well as the renewable energy lab. >> please let back over. -- slide that over so we d on't have a hum. thank you. >> this technology invented allows fabrication of all critical semiconductor lasers into one continuous piece of equipment. catskill, this can be produced and lower costs per locked. -- per lot. solar also uses this. general electric announced it would use this technology of choice as well in colorado. >> i will interrupt this for one
second. please grab mr. kats mic. we will try that so we do not have a hum. >> is that better? >> i think so. >> i think i had a bad microphone. all three of these companies are american firms. they have much older technology used by chinese companies. they are using tech to dominate our markets. they were invented in america in 1954. many believe that america can still win in the long run with new technologies. within recent weeks, it h solicitedas to collaborate to
help accelerate u.s. against an for this critical -- accelerate . in 2009, it also apply for additional funding to expand and upgrade our capacity through this program. the review lasted nearly two years. it involves several third-party consultants. it was finalized in 2010. today, it has drawn about $70 million. funds were used to complete an startup two production lines in colorado. with these funds, our company has the significant progress. when nearly doubled our efficiency in the panels. it has not done any additional
funds since august 2011. it does not plan to draw down any more funds. a as maybou progressnd since last year -- abound has progress since last year. we believe that at scale, we have a reported $34 billion in subsidies behind china. extreme price actions like chinese companies believed to be selling solar panels behind their cost. instead of matching chinese press levels, which would have cost us a loss, we made it very difficult decision and that was to shut down our current generation model production in order to accelerate the development of another manufacturing company. instead of matching chinese
price levels, which would have cost us to sell our paddles at a lost, we made a very difficult decision. we shut down our current module generation. well this was very difficult and it resulted in the elimination of many full-time jobs, this is a very competitive next generation model. our progress has been made possible by 300 million private investments and 70 million drawdown from the loan. the to china dominates the global solar market using low- cost in labor. this american invention has turned the chinese industry, we believe the u.s. can still win in the future by developing new technologies. at scale, our solar panels can
be built by american workers with good paying jobs at lower costs and competing with chinese panels. today, start of technology companies come at a significant risk. we know that. the recent aggressive pricing from china detecting companies like ours. even with long term superior technology, this had made the solar market very difficult for us and other suppliers. the technology advances we have made our critical elements to the u.s. the giddy a competitive position in the markets. we're working of the next generation model. we continue to advance u.s. technology to help turn american invention to american industry. >> thank you. mr. fairbanks. >> good morning, mr. chairman
and the rest of the members of the committee. how is my microphone? i've been here to speak with you about the many good things occurring at blue mountain, both in terms of what is occurring at the power plant and also in the nevada region and beyond. these positive things are a result of the hard work of the nevada power and the blue mountain employees. the dedication of trusting lenders and of course the assistance of the department of energy section loan guarantees17 programs05 . -- 1705 loan gaurantee program. i am brian fairbank, president and ceo, nevada geothermal power inc.
my geothermal experience has taken me around the world and has included by of example participation and the discovery of the year thermageothermal. extensive experience with dealing with parklands in nevada. i thought it would be good to explain why did we are optimistic about its future as a clean and reliable source of energy in the u.s. it has a unique resource of
renewable energy. it is a product of heat generated and stored in the earth. kurt's core is continually producing enormous amounts of heat. is continually producing an ounce of heats. the heat is in the crust. there is shallow magna chambers, similar to what we see in volcanoes. rock and water is sometimes heated to a very high temperature. surface manifestations of the, energy come from shallow, hot springs. we are familiar with some of the examples of geothermal energy, such as blocking a.
mount st. helens comes to mind. advances in technology allow us to harness the heat stored in the rock and water and converted to electrical power to power our cities without any of the pollution or negative side effects caused by other sources of energy. this is not a simple task. it is one that we are committed to. our power plants are operating nonstop, up 365 days per year. other sources of natural energy such as wind, solar, and hydroelectric power all operate at lower capacities. because our plans require no fuel to operate, they are affected by fluctuations in prices. the do not produce any harmful emissions. to give a very small footprint. -- they give a very small
footprint. we have dedicated individuals who are two experts in their fields. they have experience in energy and in the geothermal community. they are universally respected for their commitment. relating to this morning and the loan guarantee, an additional is covering nine sections of land for a total of 17 square miles. our leases include the production rights and surface rights necessary for the power the lease plants. did not have any competing plans in the area. the good mountain of geothermal resources represents the first
new discovery of g a thermal in the u.s. in 20 years. blue mountain is one of the sights in nevada. it is held by the loan guarantee program. the facility is operating capacity is sufficient for the remaining term. the taxpayer dollars has gone to the john hancock loan. we continue to work actively with independent engineers to understand and utilize the geothermal resource at blue mountain. remain bullish on the future of geothermal potential by working on a plan to new number s.jection' these growth plans are only
possible because of what has been put into place by the hard work of nevada geothermal power employees and the financial support of our lenders and the loan guarantee put in place by the department of energy. thank you for the opportunity to speak with you. i am enormously proud of our accomplishments of the blue mountain, site. we look forward to many hours reasons. i would be happy to answer any questions that the subcommittee might have. >> thank you. >> thank you for the opportunity to appear before the board. first solar is the lowest cost manufacturer in the industry. it is one of the largest solar manufacturers in the world and a global leader in constricting utilities for power plants. we produce six gigawatts of
solar panels. we are headquartered in arizona. we have centers located in ohio. we have over 1800 associates in the u.s. last year alone, we spent more than $1 billion with u.s. suppliers in 35 states from everything from glass to still components. we traded on the nasdaq. solar success reflects the struggle over the past to the decades. our technology was developed in the early 1990's in partnership with the renewable resource laboratory. we had partnered with capital
denturists to go further. -- venturists to go further. your problems that were typical of a startup company. -- we dealt with problems that were typical of a startup company. we skilled our annual production volume from 22 over 1,100 megawatts. we expanded our work force from 200 to much more than that. we establish ourselves as a global industry leader. in 2008, we decided to expand beyond manufacturing and selling solar modules and to become the first company to have large power plants for the utility market.
we're generally considered too to the--. we implemented a number of programs and initiatives to reduce costs and improve plant reliability. but now over 2 gigawatts of power plants completed during construction, we have demonstrated our ability to meet the standards of the utility industry. our advanced technology and innovative design has now allowed deductions and accelerated production cycle. our plan and monitoring capabilities have been goodbye consistently delivering on our promise. we are one of the most reliable
in the business. these accomplishments have enabled us to launch a major initiative to expand into new markets across the globe without the need for expensive solar subsidies. our success story came too close to eending. the economic downturn in 2009 to present hire market for clean energy. the timely action by congress and by the treasury department and by the department of energy loan program, they help to ensure liquidity and foster the development of more robust, private projects. these initiatives were a lifeline and a bridge to the
future. for the, we are sincerely grateful. because ofmonths, our successful expansion in the utility market, remain financially strong and a position to execute in the current market environment. i am aware that questions have arisen regarding the loan guarantee program, including questions about personal eggs implicatioimplications. i would like to thank the committee for the opportunity today. i welcome the chance to answer your questions. >> thank you, mr. ahearn. >> john woolard, president and
ceo, brightsource energy inc. olumed uce higher va steam. to out the day. we generate power similar to the traditional power plants like coal or natural gas. we agree high-temperature steam to generate electricity. our technology has been tested and proven in the till to the satisfaction of several independent firms. our partners and investors include some the best in the company. in a good private equity firms, chevron, and google energy as
private investors. we employ more than 400 people at our oakland offices. we have one of the largest in the u.s. first, i am pleased to report that the project is on schedule and within budget. we expect to deliver power to decree by early next year. by early next year. -- by the project will cost about $2.2 billion to build and that trend 92 megawatts to produce energy for hundreds of homes each year. megawatts to produce a-- 2 hundred9 of home2 each year. -- 292 megawatts to produce
energy for hundreds of homes each year. the project will have impressive earnings. it will provide permanent jobs for the plan. the project will also generate $300 million in state and local tax revenue through out its lifetime. large energy for to structure projects typically include funds that they need ffor construction. these equity investors have collectively committed $598 million to the project company. under the guaranteed loan, it has contracts with two of the largest utilities in california. tickets sell all of the company's money for to do five years.
we first applied for a pre-loan guarantee in december 2006. in april 2011, four and a half years after we apply, our loan guarantee transactions closed. during that time, we had independent review by world- class engineering and legal firms. the loan guarantee programs and an important role in the market, allowing our project to achieve meaningful skills, to drive down costs, delegate our company. created the necessary conditions. going forward, we expect to finance all of our future projects commercially. we are proud of our company. i appreciate the opportunity to address the committee and any questions you have. thank you. >> i thank the gentleman. i thank you all of you for your testimony today.
the agree that this program is working and has worked well? yes or no? >> i believe the project works very well. >> do you think it worked well in your case? you said that the department of energy reprocess was extremely thorough. do you think it worked well in your case? how much money to get, by the way? >> i fully agree with that statement. >> do you believe that you receive the loan guarantee that there was any political influence at all? or was it completely based on the merits of the project? >> i believe it was completely on the merits of the project. we started application in 2006. we went through a four year
period. >> this is where i am confused. you said that it was a very thorough process and there's no political influence. but then here is an e-mail between you and someone who can decide things. there was a part of the message that said, please do not distribute this. i do not want to know what we are doing with taxpayer money. i've tried to put off communication with people on the hill. so, now you say that it is a very thorough process, but in this e-mail when your turn to get the money, you see the credibility is thin. which is it? >> i never said that it was fat. >> this is not the timing. it is about credibility.
>> it is very much about timing. we invested quite a bit of money at our company and moving this forward. the transaction had been contemplated in september of 2009. >> let's move to the second thing. he said it was completely based on the merits of the project. can you see the be print on their backs last paragraph. can you read that first sentence for me? >> also talk directly to obama about the program's challenges. >> who is that? the head of the electorate? pge. >> ande ceo of og
the name obama is in there. he is the man of the -- president of united states. you said that there was no political influence. but this e-mail has you mentioning the president of the united states. again, which is it? was the review throw and thoughtful? was in a credibility and was it all based on politics? a guy you know pretty well communicated to you directly talked directly to the president of the united states. >> mr. chairman, with all due respect -- >> i'm trying to clear up the
confusion. >> i'd like to help. i believe that he was saying that maybe had a lot of projects under this program. i believe a significant portion of his projects was dependent on this. >> the key is that you thought it was important enough to set in an e-mail to the guy who is in charge of making a decision- one month at the this is not you got approved. this is amazing to me. it is amazing. it is another e-mail from you to the executive director of the loan guarantee program. the chairman of your board is planning to see you are asking the guy to proofread and e- mail-- that your chairman is went to sent the white house chief of staff. you say that there is the
political involvement? this is amazing. this is not some kid asking the mom to proofread their homework. this is the taxpayers' dollars. you asked him to proofread it by someone who was going to make the decision. you decide to the minutes ago that there was the political involvement in the decision to give your company does much money a taxpayers dollars? >> i believe everything we did was fully on its merits. it is a solid project. >> did it is customary for a company to be able to say to someone who is going to decide whether to approve your not, can previous letter? that is unbelievable. -- proofread this letter?
mr. chief white house chief of staff. we need this. unbelievable. the me put in one marketing. i know that i am out of time. putting the what he said to us two months ago. -- put up what he said to us two months ago. did that in any way influence your decision? you have any connection to right source? he said, no. did the white house every call you about or talk to you about this? the secretary said, no. i think we need to have the
secretary back in here. his response to those direct questions certainly does not square with e-mails we got in a batch of 30,000 documents. >> can the gentleman yield? >> we will invite the secretary back, along with letters to the administration asking to waive the normal presidential exclusion of conversation. it is clear there was a direct conversation leading to a form of favoritism for brightsource. we will ask the president to give us the records of those conversations. >> thank you, chairman. this is the first time we have had a direct link to the warehouse. >> to my knowledge, this discovery is the first. -- to the white house. >> to my knowledge, this
discovery is the first. like to replace the opening statement to the director. i want to include clarification to the ranking members. the gentleman from ohio is a long-term friend. i think we can shed light on the fact that those ratios is stated affectively, including the fact that the industry only receives a 6% credit were any other manufacturer such as those in your district receives a 9% credit. they get 3% less than any other manufacturer in america. i believe we can provide additional charges that would fairly reflect other views. >> reserving the right to object, i would be happy to
resubmit that. we will then of course engage in a dialogue for the record where we'll respond to what you are submitting. i withdraw any objection. >> i look forward to it. thank you. >> can i ask one last question before yielding to the gentleman. i want to be clear for the record, you stick by the statement he said a few minutes ago that there were no political influence or exercise in the decision by the department of energy to grant you $1.6 billion in the loan guarantee? >> yes, sir. the project is judged on its merits. >> thank you. >> i do not often share the concerns and objections of my colleagues on these kinds of matters. the opening statement made it very clear i have a different point of view.
but i have to say, this issue a potential political influence on these loans ought to be looked at. that is why i will submit to the record a letter to secretary arnold thator bill arnold c supports this long. >> my former governor was author of those mandates that created the very opportunity for these businesses to have a 20-year guaranteed with coerced forcing a public utilities, whether it pandora or not. -- panned out or not.
>>, asked why did he supported the same brightsource company that president obama supported? we may have one of those extraordinary moments where we have leaders on both sides of the aisle that agree and support a project that should have been supported. >> it in the gentleman would yield, i would personally, my dear friend governor schwarzenegger to honor us with his presence. >> that would be great. you have the letter there. i would like to go to my questions. i probably have about five minutes based on the clock. >> the clock should be reset to 6 minutes. >> thank you. see how democrats and
republicans can get along? [laughter] the committee identified many cases where the department of energy disregarded their own taxpayers protection and ignored lending standards and eligibility requirements, and and as a result amassed seven risky portfolio. ourmberg recently studieda program. the title is titled " beyond solyndra." i asked that it be placed on the record. who is correct? the department of energy
announced a risky portfolio, or is it full of low risk projects? can we put it on the monitors? i need brief answers. i have a lot of questions to go through. please give me answer. >> i think it is right in the fall rate. all defaults come in as one- quarter of what was budgeted. that is the bottom line. >> the slide shows. what is the difference between risk-associated with power generation projects as opposed to benefaction projects? >> power generation projects are typically based on long-term contracts with utility or some other entity, were as a manufacturer it is the entire risk because it goes into the company. some companies have long term projects.
sometimes they do not. they are very low risk. you have long-term agreements to buy the power generated from the fund assets. >> as i understand it, it is considered low risk because most of the projects that received loan guarantees are for power generation and the department of energy require this. this means that the project has a guaranteed income stream which greatly limits. is that true? >> exactly. >> you have agreements in place to sell power once the projects are completed. >> yes, sir. >> you did that because the department of energy required it. you have those agreements before you received any loan guarantee. >> the loan guarantee depended on that purchase. >> some ask why did the garvin should do anything that will cause taxpayers' dollars.
-- why the government should do anything that will cost taxpayers dollars. >> these are projects that would otherwise unable to get funding if we did not have this. >> would be possible for us to spur renewable technology without incurring any losses? >> no. those would get private-sector funding. >> you have about 50% of the total loan guarantees. many people like to point to solyndra to discredit the entire program. i will ask the staff to put up the slide show and projected losses compared to much slew mahler actual losses. if congress -- slower actual losses.
>> it is a venture capitalist. as an investor, it is very clear that we make portfolio investments. you that it will succeed. what is impressive about this program is how few have failed. the actual defaults are about 2%. that is by the time that you expected results to come through. only one-quarter of the defaults were budgeted. by any reasonable measure, this has been a very successful program that should be extended and expanded. >> do expect the default rate to exceed 50% threshold that congress itself anticipated? >> no. it will be much less than that. >> you expected to be about a quarter? >> correct. >> the program is performing better than expected. but how is a program conforming
in terms of policy? it is spurring technological advances or not? >> absolutely. these are break through technologies. this is a strategic objective. >> what do you say? >> the projects that we are currently building would not have been financed. >> how is your project performing in terms of policy? >> yes, it is performing. >> thank you. it seems to me that my colleagues on the other side of the aisle seat to believe the federal government should not invest in clean energy technologies. one expects my friends to be pro-business, but on this committee, we seem to have some confusion about that.
what is the risk of doing nothing? what would it mean for your industry and economy? >> you make the chinese very happy in the u.s. military very unhappy. >> i think i differ on some points. >> i am out of time. >> i believe that we would lose u.s. competitiveness worldwide. >> thank you. >> i thank the gentleman. but which is it? i am confused. these companies are so wonderful. this is apple pie. yet you could not get funding in the private sector. it cannot be that this is wonderful, but we need the taxpayers' money and political influence to make sure that we get the money.
i am confused again. is the standard only that a couple of companies will fail? is not the standard that we want? -- is that the standard that we want? >> without this, we would not be able to be competitive. >> the gentleman from tennessee. >> thank you, mr. chairman. i thank the witnesses today. and maybe the only one in congress to come out and testify that the results are better than we thought they would be or in other words, we're not feeling as bad as we expected. i look at this from the standpoint of the taxpayers, as we all should. you started your testimony.
it sounds like your company is a solid company. >> yes thing, sir, it is. >> doing well? ok. without the taxpayers how, if you do not think the company would be doing well? >> i think we would be doing well without help. >> ok. you said that the company has traded on the nasdaq. >> yes. >> how did it shrink last year -- rank last year in comparison to other companies? >> i do not understand. if you are referring to the stock price, it climbed, along with industry. >> in 2008, it traded over 300 shares. it traded at $17? >> yes.
does the surprise you? >> i do not know the statistics on that front. >> you are the chairman of the board? >> yes. >> to the executives have a lot of confidence in the company performance? >> yes. they all do. we have built a strong company. we have a great platform. >> in 2008, the know how much money the executives pulled out of the company? were the selling their own stock? >> no, i do not know. >> to bring $1 million. i think yourself pulled up roughly 4 million. -- $2.1 million. i think yourself pulled up
roughly $4 million. when you see the company is doing well, your executives clearly did not have the confidence. they were pulling out their own money. but you think it is ok for the taxpayers to invest in this? >> with all due respect, i disagree with that statement that the executives were not confident. we still have a lot of money invested. we are focused and are growing. we are fundamentally strong. i disagree. >> attended dollars per share for the executives, i guess it was just good timing -- $300 per share for the executives, i guess it was good timing. >> i believe the transactions were fully disclosed. >> ok. let's move on.
the loan guarantees would enable your company to build a manufacturing plant and create new jobs. >> and no, we did not. >> could you put up a slide, please? does that look familiar? >> yes. >> with that incinerate that they were pressuring them to move forward on this project to -- >> not all. these projects were evaluated independently on their own merits. the manufacturing facility, which we hope to build at some point, was in no way connected to the applications or the project. >> you are saying that was not used to entice the department of energy to approve this? you did not promise that it would create new jobs? >> we did not promise.
it was not part of the process. the loans were evaluated specifically on each project. >> the plan is not producing solar panels. they're not dodget are saying that they did not promise that? >> they did not promise that. >> i yield back. >> i thank the chairman. one of the things that i think comes into play when we have these hearings is that there is a question of respect. we have the utmost respect for you. i also want to to understand that the most basic responsibility i have in serving congress is respecting the hardworking american tax dollars the fundy's. i get confused sometimes.
who are we looking out for? coming from the private sector, i have never had the luxury of having the government underwrite loans for me. i always had to provide my own capital. i had to provide everything from the private sector comes from yourself. that is what concerns me. i have to tell you, your balance -- can we put up the slide? slide 17 maybe. let me ask you about the performance of their company. you talk about how will your company is doing. i am looking at how it traded act through a dollars per share in the beginning and now it has dropped. i am questioning your confidence. why would sell so much of your
own stock? why would to cash in on it? >> let me give you the reasons why i think it is fundamentally strong. >> do not give me that. look at the chart. you're not fundamentally strong. in the marketplace, you are doing a terrible job. whenever you sell your own shares of stock, and the people who are on your board sell their shares of stock, august and sold a lot of stocks. you're getting the heck out of the situation. what i would really liked is to have american taxpayers' dollars into my company.
i am going to cash out. i am going to take my money and run. i'm gonna ask these hard-working americans to just keep funneling money in. because somewhere out there this dream will come true. the hopes and dreams of the company that someday, this is a hockey stick, send it will go charts. but i will take my cash and run now. i want everyone else to continue to fund this project because you know what, did this will be great. i cannot believe that we sit here and listen to this and the question that comes up is, who in the world is funding these projects? it is not the department of energy. this is not our money. this is hardworking american taxpayers' money. i am sick and tired of hearing this respect for clean energy.
wh you are getting all this money in axing -- asking taxpayers to go in deeper and deeper,en what message is that some them? -- what message does that send them? >> i began this company with sweat and tears. >> i have to tell you, this is disappointing. you pulled out millions of dollars. is that right? >> if i may -- >> not right now. >> i do not have the numbers. >> i do have the numbers. i do have the numbers. sit here and listen to this. week after week, month after month, when iowa called, when i see people paying as much as they pay for a gallon of milk
and working two jobs to put clothes on their backs, when i see people worried about finding a job next year, the respect needs to be there for the american tax people. i did not have respect for chief executives who take the money and run and ask the american people to continue to fund their company. you tell me that you guys are doing well? i do not know why definition you are looking that up in. i do not know what dictionary you are using. we need a horrible decision in continuing to do that. i apologize for not yielding back to you. it is hard to you back when i have to go back and watch people who cannot make the car payments and we find out that we are down an open hole.
they ask the taxpayers to put more money in. >> i will ask the gentleman to yield. >> my time is up. >> i share your passion for what happens with taxpayer dollars. i think what would be helpful is we could have a witness response for a couple of minutes and explain your position on this and address concerns that congressman kelly has raised. >> thank you very much. >> the doe loans were not made for private corporate capital funding. these were made for three projects that they were
supplying products to better owned by a sophisticated investors with utilities. these are projects not funding of four solar. this is not the same kind of situation that solyndra or these manufacturing loans. the corporate funding provided by equity funding would initially came through our venture capital companies starting in 1999, we took the risk that we are talking about should be taken by venture- capital and not taxpayers. we took that risk. we read able to bring the company public. -- we were able to bring the company public. it is a very normal thing for venture capitalists once they make a company public to sell stock over time, get the proceeds to recycle back.
that is what happens. the sales by other people on the team have no reflection on our conviction and belief in the country. on the fundamentals of the country, look. we have $3.5 billion of revenue this year. net income of around $350 million. operating tax flow of around $1 billion this year. we have multi-year visibility and demand that will continue to drive strong profits. we are now expanding into emerging markets with out the need for subsidies taking what we demonstrated. it is their exports and other markets. what happened is subject to all kinds beyond our control. not the least of which are short interest investments. i cannot control that.
they are very sad. >> i understand. you are selling 700,000 shares. i get it. believe me. i get it. venture-capital lists will take one that is underwritten. -- will take the risks that is underwritten. this is a loan from the d.o.e. that is free money. it is free money. it is. you do not have to qualify the same way i do. i have put up my own collateral. i do not want to get this stuff. i just came from disney world. there is a fantasy world down there, too. you actually have to pay your way there. when you tell me that as a ceo that if steve jobs or bill gates had done that, what would
people think? i would like to get back in. these guys are not [inaudible] what was the reason for you at selling 700,000 shares and a three-day period? why don't you buy it back now backs it passed -- back now? it has to be a real bargain. >> that the ranking member is ready, i can go to mr. melanion go back. >> thank you very much. >> this is for our loan guarantee recipients. each of your companies receive loan guarantees for projects. there currently advancing. it is legitimate for members of congress and the taxpayers to ask what you're doing with the money. i am sure you would agree with me. in each of you articulate why
you believe that a loan guarantee provided by the government to your broadcast is a good bet? what are the taxpayers getting in return for their investment? i do not want people to look at this on c-span and think they're not getting something out of it. would you try to answer that? >> i would be happy to. in the case of for solar, there are three loans that have been made in california that are owned by sophisticated energy companies. they have been investment-grade rated. the taxpayers will receive a return of all of that money. it will make a profit in addition to that that totals roughly $1 billion. the finding is allowing for roughly 1200 construction jobs over the life of the projects. it is further enabling the
energy in the u.s. to continue to grow and become profitable and export oriented, which will in turn create more jobs. this will prove to be a very prudent and timely thing. >> it has a multiplier effect? >> yes, it does. >> can you answer that question? >> we received $98.5 million loan from john hancock. there was a job criteria. we could treat a sick given it -- we could create is against about a new jobs and allow them to create a debt financing. we borrowed money to construct the plant on a mezzanine level. we use a good part of the money
to put in place senior debt financing and replace them in the mezzanine debt. >> they filed a mandate when they created the loan guarantee program. each of the projects has some risks associated with it. can you explain why it is so difficult to find financing in the private sector when bringing innovative technology to scale? >> sure. we received this on their capital. we then brought corporate investors in including british petroleum and others. as we look at scaling up, we risk everything with a demonstration facility. we agree that from a 6 megawatt facility to a 38 megawatt facility for chevron. then it goes to the large scale
power plants. to do it at the size and scale, it the loan guarantee enabled that transition. what the project is doing, we have a $1.6 billion loan guarantee of a $2 billion project. behind this, there are 10 more projects that we have contractual power purchases to build. that will be $10 billion. this will be able to transition to commercial financing. that is very important. >> would you have been able to do what you said without the guarantee? >> we would have done it at a skill that allowed this to commercial -- we would not have been able to do it at a scale that allowed us to commercialize. >> it is easy to demonize but a lot of time we do not hear the
other side. the taxpayer gets the benefits. the government is working with private industry. we always talk about creating jobs. all three of you talked about jobs being created. you also talked about innovation. am i right? >> yes, quite a bit of innovation. >> in what sense? >> we built projects in the 1980's that used older technology. we are able to move to a higher performance technology because of this program. >> thank you very much. i asked my opening statement be admitted into the record. >> thank you. >> the gentleman from south carolina is recognized. >> thank you for the opportunity to be here.
thank you for allowing me to participate. i will be honest with you. this hearing has been very difficult for me to sit and watch as somebody who comes from the private sector. it is not easy for me to sit here and what you did been things that would normally not be any of our business. what you do with your investing capital in the company you built a what he might do to take care of your family and reward yourself for the work that you put in, it should be none of our business. i guess we want it to be none of our business. we recognize the fact that you're not here today because of what you do. it is not because of what stopped you sold. you are here because you have asked us to be your. you brought this on yourself. i hate to tell you that. it goes beyond the loan program. we would be foolish to think
that representatives have spent time walking up and down the halls of these buildings for the last decade asking us to make people buy what you sell. we have requirements to purchase a certain amount from a noble resources. you asked us to do that. you asked us to come in and say you have to buy what these people are selling. i am sympathetic to mr. kelly to like the federal government to tell people they have to buy cars from him. he did not get to do that. when i was building houses, i did not get that. when i was rolling burritos at a restaurant, no one said that people had to come and buy my product. the loan program is on top of that. this is lost on a lot to people.
ordinarily under the old program, you would have to pay the credit subsidy costs. under the stimulus program, you did not even have to pay that. the taxpayers had to pay that. this is not even there under the 17 05 program. it is a free program. that is why we are here. we're not here because we don't like you or we don't need to be successful. quite the contrary. we want you to grow. it not only benefits you but every one of your employees. they probably have a retirement program that buys that stock. you have to be here today when asked us to get involved. you asked us to make people buy what you sell. i urge you to consider this. the next time you come walking up and down the hall, it is to be great if we took that from 10
or 15 to 25 or 35%. wouldn't it be great if we had more vehicles? i am tired of people coming to the government as part of their business plan. we can figure out a way to make the government buy our stuff. that will really help us. conversely, if we could make the government make what our competitors sell illegal, even better. we see that every single day. quite frankly, i am sick of it. i wish you would compete. i wish that we would compete on our merits. i do what you're saying. you're down to 73 cents a kilowatt hours. tremendous success. stop asking us to do this. as bad as i feel for what you have to go through explaining to stock purchases, you brought every single bit of it on yourself. we know it.
we distilled out our financial disclosures. we have to tell everybody in the country every single year. we choose to do that to ourself. what you have endured today and will indoor, it will give -- will endure, it will get worse, you brought upon yourself. i know that is not going to be my line of reasoning. i appreciate the opportunity. >> thank you. we have with us mr. nelson who did exactly what the gentleman described. his company is succeeding and we applaud that. >> thank you. on september 2, 2010, your name appears as the ceo of a bright source along with peter darby as
the chairman of pg&e at a fund- raiser for friends of harry reid. do you remember that? >> yes. >> the senate majority leader was pretty important to you. >> also has some projects in nevada as well. >> when was the last time you spoke to the secretary of commerce? >> it would have been before he was appointed secretary of commerce. >> it was during the time that he is the chairman? >> he was chairman of our company until he was nominated at commerce. >> my understanding is it takes awhile to get vetted and
nominated. it does not happen overnight. when he was the chairman and, you were the president. he wrote his e-mail to mr. daley two months before he got the job. it wasn't he essentially lobbying for your organization as the person they were looking at and lobbying for you? >> we basically decided that was not appropriate. >> were there other e-mails that were sent during that time to the white house or others? >> there is nothing to my knowledge. >> this is just a draft? >> exactly. we decided that it was not appropriate. addition, we were very
careful with every organization that john worked with. he was very careful from that perspective. >> the secretary is the founder of the natural resources defense council, right? that group, while he was heading up public utility, that group participate in losses that drive of the cost of lawsuits. >> they are involved in a lot of siting issues. >> it is amazing the drive up the cost of conventional energy through a series of lawsuits and utilities get paid a mark up on what ever their costs are even if they are driven up by organizations that are founded with people who are insiders. i do find it interesting that he is now supposed to be in charge of making america competitive
but in fact has driven up the cost. for that matter, each of you on the panel. your company would not exist if not for the loans and the mandate. is that correct? >> at least as we know it. >> it would be fair to say that we would not be doing as much business in the united states. we would be working in other jurisdictions and countries more heavily without the loans. >> would you say the same thing, that your malaysia factor would still be selling in europe? >> we would still be a successful company, but we would not be in the sound financial condition we are in. we would not have successfully inserted the u.s. utility market. we would be a smaller company with about this.
>> if not for a waiver as to be carcinogens -- the carcinogens, that you would not even be in the european union at all? you needed a waiver? >> that is not true. the product is not carcinogenic. >> if needed a waiver in the european union for yo? >> it didn't? >> you did not rely on a single study? >> we did not. >> it was in heavily relied on? >> i don't remember paying for one or that a single study would have been relied on. what that is referring to is the european commission undertaking analysis about how to regulate all the various sub technologies.
the question did come into play. there were several comparable groups in europe that had done surtees. we also find studies. >> studies or a steady? -- or a study? thank you. i hope there will be a second round. >> there will. from new hampshire is ready to go. >> thank you all for being here today. i want to talk about your loan guarantee. my understanding is that it was about $98.5 million. is that accurate? >> that is correct. >> can you tell me what it means
when a facility is placed in service and online? >> that means the power plant is up and running and operating at at least 20% of its capacity. >> ok. can you tell me when the blue mountain project was placed in service? >> october 2009. >> when did nevada geothermal receive the loan guarantee? >> we received the loan guarantee on september 3, 2010. >> a full year after you were on line and operational? >> that is correct. the process was 10 or 11 months. >> what was the reason that you wanted a loan guarantee? >> we were wanting to have a
permanent financing. we actually had worked with john hancock to work on a loan from john hancock. they made the application to d.o.e. >> did you have an existing line or loan from john hancock? >> no, sir. >> what money did you use to get this online? >> we actually had a facility on commercial terms with a senior investment bank in new york to construct the project. they withdrew that commitment through the summer of 2008. we needed to scramble to obtain a mezzanine debt loan which was
$180 million facility at the time. we thought about the bridge loan. we would be borrowing $17 million. did the we thought we would go back to the things for the remainder of the money. -- then we thought we would go back to the bank for the remainder of the money. none of these things for operating. we ended up borrowing $180 million. that is how we built the plant. that was not in any way permanent financing. it was a really thought of as a bridge loan. it had an interest rates. it was backed by the daily loan guarantee to take a portion of that loan. we also had not finished our work. we had built the plant.
that was only a portion of the project. we have not finished our work on the well-heeled. a portion were to be used to finish the well field. >> you have financing at a high interest rate. you cannot get through normal channels of bank loans. >> we may or may not have been able to get their its. >> that is around the time of the banking crisis. we were forced into the loan. they were given a limited notice to proceed. if we had not declared the rest of the money to finish the plant, we would not have been able to hold schedule. we would not have been able to hold the costs so that the contractor had guaranteed a delivery time.
>> you did have that financing in place. the plant was operation back in october 2009. why would you then get a loan in september 2010? it sounds like a bailout of your business plan. quits it was not a bailout. it is putting in place senior debt financing which is one of the goals of the program. >> could you get that financing anywhere else? >> we utilize the the program that was there. >> could you get from the private sector? >> it is possible we might have been able to. it is speculative. >> did you try tax? >> we went to the market.
my recollection was for commercial bankers. john hancock made the best proposal. we went with john hancock to see if we cannot put together a commercial loan. this program was available. it was a great assistance for them to be able to do that. i do not know if john hancock would have done without the loan guarantee. they might. the d.o.e. loan guarantee help them make their decision. we are not involved with that. we were not the applicant. we were the recipients of the john hancock money.
>> you have the plans in place. you file the application. you say that you have had an opportunity in the private sector but for what ever reason you opted not to utilize those loans, probably because this will is a better rate. he repaid existing dollars. the point of this is the stimulus whether you agree or disagree, the point was to create jobs. this was repaying an existing loan for an existing plan. >> it is operating at 22 megawatts at the time that we receive the loan. we had placed it in service. it was not operating at its full capacity. it has been very transparent in the application to pay down the
facility. a portion was to finish this. >> i do not see a number of jobs. i do not see it as a good practice for the department of energy to use taxpayer subsidized loans to provide to an entity that party has an existing facility. that is my personal point of view. i do not think taxpayers want d.o.e. providing taxpayer loans to a company to pay back a loan on the existing facility. my time has expired. i appreciate it. i yield back. >> i did not hear a question there. >> just following up on the
statements, i share his situation. if d.o.e. has said we will give you money but you cannot pay back your own associated parent company, you would have celtic and the money. money flowed to a loan repayments to yourself as part byit and is prohibited d.o.e.. d.o.e. obviously did it. they did so many things that were wrong. i just want to make sure the record is clear. when i asked about your strong support for senator reid and we these letters earlier, there is a political influence, i was not implying there is anything wrong in its contributions.
it is not the money. i want to make it clear that senator reid was very important to you as he was to others. i want to make sure i get your statement correct. the city and multiple studies. isn't it true -- the city had multiple studies. isn't it true that we were lying on the team, that is multiple studies done by one person. isn't that true? your support for your risk which is our research proves unpersuasive, essentially this carcinogen -- you have to convince the commission insisted it were a big part of how you convinced them. is this a more accurate
statements that there are multiple studies t? >> i need to break that down. i do not think that is true. >> did they receive money from your company? >> not to my knowledge. >> were you almost completely reliant on his studies? >> i would say no. >> the fact that your own power point shows it was at risk -- >> i do not know the context of the slide. >> it was made by you folks and delivered under our discovery. >> a we got it from a whistle- blower. are you saying you do not believe it is yours? >> not at all.
i am not sure what it means in that context. i would be happy to give you more. >> we would be happy to more of these. whistleblowers says you were relying completely on this individual. what we're seeing is that your -- that you are needing this to work. i'd been wanting to asking this for a long time ever since they berated ford and chrysler. what kind of jet did you fly in on? >> i flew in yesterday on a challenger. >> 6 04? >> 300. >> one of the super minis. it was a nonstop flight? >> yes.
>> i just think that if you're so concerned -- and i know it is more efficient than the big birds. is a really environmentally sensitive? >> for solar did not pay for that. the first solar had nothing to do with that. do you use your solar panels for the energy they produce? >> is it true the made the decision not to come into california? >> we lifted the number of places. >> you world of california, the very place that has the mandate that helped many of your company succeeds. we mandate that we buy your much higher cost spirited rise
of the repair costs. it makes manufacturing at in california undesirable. i see you are an ohio which is a low pass energy area. you are in arizona. and they even use coal for some of their electricity. is it fair to say that energy costs determines where you manufacturers? >> i would say it would be one of the factors. >> what did you in malaysia? >> wanted to have a base of manufacturing in asia. when we assessed the risk return to various asian locations, we thought malaysia was a moderate risk. >> these figures are correct.
malaysia, 1680. it sounds like you are not then american company. to have a small presence in ohio and arizona. we put a lot of money for you to manufacture in other countries. the loan program made possible for you to have overseas jobs. iis a reasonably correct? -- is that reasonably correct? >> i would disagree with the characterization. >> adjust the numbers. >> in sheer numbers, most are outside the u.s. >> jobs created with loan guarantees basically not american. >> all those jobs are american. >> those jobs would not be there except for the loans.
>> the manufacturing offshore and the hub of our business is here. >> i want to thank my friend from california for his defense of american manufacturing. it seems that the majority is raising a new point of view with respect to use of corporate jets. >> he have worn me down over the years. >> i am glad you pointed out that senator reid did not do anything wrong here. i have unanimous consent the record of contributions to pd and any -- pg&e through analysts
and members of congress are included in this list. i would ask any member of the committee wants to join me which would end all corporate corporations. any of you want to join index ? >> i assume you mean pac money and not corporate? >> all private money. >> thank you. >> in a january 4 e-mail to the official, you reference the fact that "a large group in nyse had the ability to execute, there is a sizable group of investment
banks' trading a letter about the status of the program and the inability to get loans through." did this investment group have their own money invested in the project to? ? by with a frustrated? >> it was private sector money that was coming in as the highest at risk player of money. was slow.ss d.o.e. e it took a lot longer than had ever been expected. >> why did they send a letter to the secretary? they came down. they talked directly to everybody, anybody who would listen to them.
the program was not executing. >> you have a reason to be critical of d.o.e. being too bureau? >> the theme was that it's a very long time. >> the mall also says "they talked directly to obama about the challenges and the bad situation. " i assume that this refers to peter darby, former ceo of pg&e? didn't california passed a law to begin purchasing renewable energy and as much as 33% of any utility energy needed to be renewable by 2020? >> it has been increased.
>> isn't the case that pursuing a purchaser was imperative? >> they could not meet the standard. >> what would happen if they continued to carry it out? also mimic, bright star was awarded a conditional commitment ultimate -- ultimately, a bright star was awarded a conditional commitment. do you believe your d.o.e. alone was awarded on the merits of? >> i believe it is all done on
its merits. it is a very thorough process. >> it refers to the first solar loan scheme. in march 2011, the governor praised the project, stating the presence in arizona has been a great engine in driving the sector for words. senator mccain praised it. do you believe your application was awarded on its merits? >> yes. each underwent a very rigorous process. >> they sent nearly five letters in support of green technology
projects. do you believe these numbers were requesting special treatment of your company? >> i think they were doing what they were told. >> do you think they were awarded on merit? >> i know we used been loan to build our technology. >> on the merit? >> ps. >-- yes. >> i do not know. i do not see it. we should invite -- yes.
it would be good to have the private equity people. >> if we could put back of the e-mail that the ranking member decided january 4, 2010. do you have any communications or you referenced conversations with the presence of the united states? >> no. >> do you have any? >> no. >> you read this paragraph and you apply directly to obama about the programs challenges and the bad situation and put him in. if you believe this is then?
i'm trying to put up communications on the hill. if that is not political influence, i do not know what is. how did you do it? two hours, how did you make it? >> there are private citizens to see the future and have committed the management team. >> he is making it. you decided to compete for this available dollar. do you think it is an unavailable -- on their advantage to talk directly to the white house we do you think it is an unfair -- do you think
it is an unfair advantage to talk directly to the white house? did you ask the people at the department of energy if they would proofread a letter that you're chairman of the board was thinking about sending to the white house chief of staff? >> no. >> did you have a letter that you ask them to proofread before year chairman said it to the white house chief of staff? >> we did not do anything like that. >> did you ask them to proofread anything you were thinking about sending to the white house chief of staff? >> not to my knowledge. >> do you think that put you at a competitive disadvantage when you're trying to secure this. >> it would not have mattered. this was a regressive thing.
>> it raises a concern that in deciding conversations with the united states and course on a people making the decision. >> we've received bipartisan support. >> that is not my question. do you think correspondence from potential competitors where they had conversations with the president, do you think that raises some concerns? >> i do not want to get involved. >> do you think a taxpayer would put the company at a little bit of a disadvantage? >> i can only comment on a fair process. >> do you only think it puts you -- do you think it did you
at a disadvantage? >> i do not. >> that is an even better answer. we should not have had this to the program -- goofy program going on in the first place. i did not expect that. that is even better. >> i do not blame either of these gentlemen who i have a lot of respect for for working with in the rules to get every vantage they can. >> what happens in the course of applying for this process? what took place that led you and your company to believe it was okay to ask the people who are deciding can you edit this
because we want to send this to the whitermean house chief of staff? >> i do not remember exactly what transpired. it is not appropriate to send. we wanted to make sure every been was clearly done on its merits. that was the goal. >> i just want to be clear. when an e-mail to the senior advisor uses this kind of language, not mr. darby, darby at pd and he talked directly to obama, when you use that language, -- pg&e talked
directly to obama, when used that language, this is casual. we talked to obama. it sounds like this was pretty common. he had a relationship with the white house we did you have a relationship with the white house. >> it is important to read the language there. he was talking about the program. it was not getting loans out pip. >> to the other e-mail, the jackie asked him to proofread, whose decision was a not to send that -- the e-mail that you asked him to proofread, whose decision was that not to send it? >> we decided it is not
appropriate. >> do you see any concern or confusion when you look at how the secretary of education responded to my questions to months ago -- two months ago where i asked him directly if it had any influence on your decision? do you think there is any concern or confusion there? >> i have no basis to believe it actually happens. i would look into it. >> i yield.
>> going back to the memo, the paragraph reads the also talked directly to obama about the program challenges. is this memo talking about the bad situation darby is put in or the bad situation president obama was put in? >> p d and e was in a bad situation. -- pg&e was in a bad situation. there was a public report out here .
thank you. >> you have announced your intention to follow up a hearing. you are committed to inviting governor schwarzenegger. i would ask you to invite wall street investors who wrote the secretary in the former ceo of pg&e and ask them why they believe in this project. >> i will take it up. >> thank you very much. i have been listening to you very carefully. i believe that all of you are honorable people. trying to carry out the business in a very competitive world.
i am convinced that i would feel like i'm being beat up on for trying to do for what is best for your businesses. while we're sitting here going through this, there are people throughout the united states that both parties claim they want to see become employed. you're trying to get a job. part of the stimulus bill was to get folks employed. i do not give a dam what anybody says. i wish we have more jobs. one of the things that was also to do was to provide investments needed to increase
economic efficiencies and science and help and to invest and environmental protection that will provide long-term economic benefits. of one of the things that we wanted to do was be innovative. i have said that while the good economic problems, we have to be innovative. this is what the united states is all about. that is why we are the country that we are. you said you believe these guys. these are great guys. that is what you're saying. guys beingat competitive. i want to ask you with regard to
the stimulus and jobs, any talk about that with regard to accompany? about that with regard to your company? >> we have built something here that has ever been done anywhere in the world. in order to build solar plant of that magnitude, we had to solve a lot of problems that have never been solved before. even though they're not completely constructed, we have people coming from all over the world to see what we have done. we have begun discussions with potential customers and markets all over the world. as the markets take shape, the innovation in job creation in the u.s. for our business in value will accelerate. the creation of goods and services into the countries to meet their power needs will begin to open up and grown
massively. it will get off the roof top into big scale power plants. it can only be done in the market place for solving problems. that is the big piece. a great is an average of 12 under construction jobs. it is not trivial. it kept our supply chain in the west running in a stable fashion. it will for several years. the future i think is the export and allows us to break into new markets. >> i often say our children are being sent into a future we will
never see. the things you're talking about are the things will have spinoff into a time when we are probably dead. is this a fair statement? >> absolutely. there are lots of affects to this. with our success, we have put down the marketplace. you have a new wave of our indy -- r & d to try and beast first solar. that is the motto that a lot of them have.
it is a global marketplace. the hub of the activity and innovation will always be in the united states. >> in terms of innovation? talking all this stuff here today. the big picture is innovation and jobs. how does the united states stay competitive? we hear a lot of talk, but we do not always walk the walk. you are the guys on the front line. in the trenches. but having to make difficult decisions -- in the trenches having to make difficult decisions. i am glad that you are here. what we're talking, the chinese
are just moving rapidly. i want to make sure we are staying focused. the united states of being number one. i do not want it to be no. 2. i cannot want to be no. 3. sometimes we get mired in stuff that distracts us and mired in a culture of mediocrity in failure. we need think we need to be carl with that. i think my time is up, unfortunately . it >> mr. nelson, d want to be number one? >> yes. >> the e-mail you had sent and you ask him to take a look at and you said you did not send it to the white house chief of staff? do you remember that you did not send that the amount? >> i would not have sent it. it would have been from a john.
to the best of my knowledge, i do not think he sent it. >> to the best of your knowledge you think he did not send it. did you communicate with the white house in some other fashion? did you send them another letter? did you meet with them about this issue? >> i have never met with mr. obama. >> did he discuss this on a phone call with the white house chief of staff? mr. bryson? >> to the best of my knowledge. >> i apologize. i have been in chairing a hearing for veterans affairs, making sure that the heroes of this country who have served our country are getting what they
need. our hearing today was on prosthetic devices. i apologize for not being here. i want to talk for a few minutes, a few weeks in march, the secretary talked to us about the loan guarantee program and he praised the note work being done by the department of energy's . the secretary put out a memo with scientific integrity. he laid out a commendable frame work and he stated that the department's mission relies on objectives and accessible scientific information. the department of energy is committed to ensuring a culture of scientific integrity. i think we agreed that is a laudable goal. in november 2011, there was a letter from chairman issa.
he explained the awareness of the risks associated with color right. in that letter, a professor was cited. my understanding, and i am a nurse and i have spent most of my professional career in health care, cadmeium could pose a serious public health risks if not handled properly. mr. ahearn, did you or first solar ever pay the professor or any organization with him, or that he was affiliated with, for research? that is a yes or a note. -- no. >> the answer would be yes as
you phrase to the question. going to screen you're see a slide from a first to solar power. presentation related to the use of cadmium. is this the right side? the highlighted portions states that a risk for a first solar its reliance on the research of the professor. my question to you, did you or anyone influence or recommend specific research in any fashion? that is a yes or a note. -- a no. >> the answer is yes but it is incomplete without explanation. the professor was charged by the department of energy with
assessing the environmental health and safety of the technology. before we invested, and even after, brookhaven conducted their own independent assessment of the cadmium use. at some point after that, they formed a life cycle study center. we contributed money. i am not sure the entity. not to its influence on any of their specific programs or research. >> perhaps you could comment on the risk, we are almost completely reliant on his team.
>> this might relates to the european activities. in the u.s., the independent assessment of around cadmium had been done by brookhaven. in europe, at one point there had not been any comparable independent government agencies to assess cadmium telluride. we wanted to broaden the research and interests to the relative agencies in conducting these kinds of assessments. i believe that is what this is referring to. >> did you or anyone request that this research undertaken by the professor be kept confidential? >> not to my knowledge. >> on the screen you will see another slide.
make this quick. it is related to a brisk matrix stating successful future studies established cadmean -- cadmium outcomes. it sounds to me like you are trying to state goals for your company and you're trying to compromise the object of the of scientific reports. that is of concern to us and. given this evidence, the department of energy's dedication to relying on objective information seems to have a compromise. i would ask whether you agree or disagree. >> i disagree. these are dated in 2006. if you permit me to explain, i can explain those. the issue in europe, what will
competitors likely do relative to first to solar tax we have the lowest cost technology. our area of vulnerability would have been the use of cadmium. how do you anticipate a competitive attack and get the community engaged to to get it recognized as a proper technology? it was back in that earlier time frame. >> i want to thank the gentle lady. i promised you guys we would be out by 12:00. we're going to be close. we have two left. i want to thank all of our witnesses for being here and making the trip and sacrifice to come here and testify. i think it has been a good hearing. we plan to follow up and get
clarifications to his statements under oath back in march. i want to thank our witnesses. mr. kelly. make >> in the spirit of trying to stay on time, i was listening to the ranking members comments about the integrity of the panel. what we are here for today is to look into whether or not taxpayer money was spent wisely. i might agree it may not be any of your faults that these things did not go like he wanted but i would question whether it is a failure in government meddling where it does not belong, trying to invest in the private sector when we have an example in mr. nelson what free enterprise cannot do if you leave it alone. for all of the taxpayers, i am
sure they are not pleased with the way that the federal government invested their money in this case. clearly, not shame on you, shame on us for not doing our homework better, loaning money where the risk was very high. i would wonder, if you have to invest all of the money out of your own pocket, whether you would have taken the same path. that is a question on the you can answer. trying to reduce this deficit and the spending problem. we are asking to take more of the taxpayer's money. i would challenge if people would agree the federal government needs another dime of taxpayer money until it can learn to manage it better.
that is one man's opinion. thank you for joining us. i yield back. >> thank you, a doctor. mr. woolard, was there any political influence, and have been some of the questions. let me go to slide #9. this is from natalie, the team is at the white house and the vice president's office at 10:00. why add to the white house and vp meeting? >> i believe the -- >> this is march 8, 2011. >> whenever we had correspondence on the hill, we
talked about a policy about broader policy issues. >> you can see why, it comes up as there is no political influence. we are not trying to go that way but we are going to meet with the vice president but this is just a briefing. >> we met with lindsey gramm and others. >> i understand that. people come to my office, too. their concern was the respect shown to you folks. i know this is like getting a root canal without novocain. it comes down to, this is taxpayer money. general motors has gone through more scrutiny than anybody. i get a hold on the sales for a will never take a car for your because you guys got a bailout.
you go through that stuff all the time. i looked at your resume and background, you are pretty smart when it comes to investing. what happened at the end of the summer of 2011 when all of a sudden the shares for the company started to go off a cliff. >> the issue was the subsidy programs for solar began to shrink drastically. as a function of the fiscal problems and a variety of dynamics. that was coupled with a massive oversupply of chinese panels. the market started to dry up. that impacted all of the industry stocks across the board. >> all of them were tumbling.
subsidies -- we do not have enough money to do what they have been finding. the same thing is going to happen here, doing what we should be doing. >> that is right. i agree with your overall. that we have to be in markets that are not subsidy-dependent. we had a some time and ability to lower our cost but we need to move now into markets that do not require these types of subsidies, which is what we are doing. >> i am from western pennsylvania and i know what is going on. looking at all the fossils' their abundant and affordable and accessible. we are watching that go away. i would have gotten rid of my stocks then, too. usually when you get of loan guarantees you are going to be
o.k. but if you see the market tanking, you say, you know what, it is time for me to get the heck out of here. i understand why you did that. you are a smart investor. mr. nelson, one justification for the loan is there was not enough private capital. what do you guys know that nobody else knows? why didn't you go after the low hanging fruit that was out there? >> i believe it is economics, not government policy that is going to drive adoption of green energy. our point is to reduce the cost of green energy so it is affordable for people. that is our approach. we do not rely on government funding. we have plenty of private funding to do what we need to do. when anticipate our product will be competitive so it will be
demanding to accept us as a partner. >> i looked at your background, you are venture-capital lists. you are with bain for a little while. you understand about making companies could again. >> my wife would say, a little bit. >> there is an old saying, if it is not market-ready, no amount of subsidies will help. >> we talk about innovation. mr. cummings talked-about innovation. funding innovation is an important part of the government to's function. that is different than the loan guarantee program. commercialization should be a private function and it should happen was good projects. when you have a project that is not economically viable or costs
morin then economic alternatives, no amount of subsidy will bring that into widespread adoption. >> probably not a good investment. i am looking at j.p. morgan chastened i see the doj is going to investigate. $20 billion profit. the people who want to come down hard on them are 16 trillion dollars in the red. if the shareholders in that company, they should be demanding a look into what in the world are we doing with this money and where are we investing get? -- investing in it? a team we are down for the day. thank you sincerely. -- i think we are done for the day. thank you sincerely. you cannot follow this trend and
be upset because people holds responsible for it. i have respect for what you do. by on a life has been a sweat equity. i understand. -- my own life has been a sweat equity. i understand. it comes down hard on you. and i appreciate your comments, mr. nelson. i know what works and does not work. this is science that is not economically viable right now. there will be a time in the future but maybe right now is not the right time. with that, this hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> coming up, a subcommittee examines regulations aimed at financial companies deemed too big to fail. president obama meets with small business owners in washington and the national committee to preserve social security releases a report on party among
senior women. on "washington journal" in conversation with steve keen on the republican's agenda in the house and the elections. then, marci will talk about the economy and the debt ceiling. ipor, on facebook's stock and the company's lobbying efforts on capitol hill. washington journal begins at 7:00 a.m. eastern with the news, your phone calls and e- mails. >> when people are saying to him, don't take the vice presidency. white now you are a powerful majority leader. do not take of vice-president seed. you will not have any power. johnson says power is where power goes.
meaning i can make power in any situation. nothing in his life previously makes that seem like he is boasting. that is exactly what he had done. >> sunday night, the conclusion of our conversation with robert caro. his multi volume biography of the 36 president, sunday night on c-span's q&a. >> even though job opportunities are scarce, it is not for nothing that you have spent this time preparing. jerry falwell senior observer to do not determine a man's greatness by his talent or well, but rather by by what it takes to discourage him. america and need your talent and skill. >> it is up to you to right wrongs. it is up to you to point out in justice. it is up to you to hold the
system and accountable. it is up to you to stand up and to be heard. to march, to organize, to vote. do not be content to sit back and watch. president obama in mitt romney delivered commencement addresses in the past few days and you could watch them on line at the c-span video library. look for other a commencement addresses. you can share them at c-span. org/videolibrary . fsoc was traded last year to monitor financial risk. it designates some firms as systemically important. their term for too big to fail. officials talked about how that determination is made of this house financial hearing.
this is three hours. >> this hearing is called to order. i want to welcome everyone. the financial institutions will examine the impact of being a big snake -- designated, specifically for non-banks financial entities. i could not begin a hearing without talking about the most topical subject of the day, there is no doubt that to j.p. morgan's trading losses has raised questions survive a similar loss? our other firms that are deemed
to significant submit -- sufficiently capitalized? where are the lapses in the risk controls with the firm? regulators aware of the risks? did they do an adequate job of supervising the risk? are they able to supervise the complexity of the firm's position? how well are our coordinators working across the globe and how do the provisions in dodd-frank help or exacerbate the problem? this morning's hearing focuses on the affect of designating non-bang financial banks as systemically important. the dodd-frank act grants financial-services for the
stability oversight council. the authority to designate the firms as systemically important of the statute is clear which institutions will be designated, it is less clear about to designating institutions. and the federal reserve is in the process of finalizing rules to supervise the entities designated. there are many questions about the effects the designation will have on these firms. we have already seen with the largest banks systemic -- equates to markets participants, viewing these institutions as too big to fail. the implied guarantee also results in lower borrowing costs. it is less clear what this will
have on non-bank entities. i know many of our witnesses have concerns about the standards used for designating the firm but also for the supervision of non-bank firms once it is designated. there are questions about how these standards will work with the business models. does the federal reserve have the expertise to supervise industries? how well will they court made to ensure the standards for designation are in harmony and are they working with their counterparts to harmonize standards for systemic significance in the united states? there are questions that deserve a robust discussion. i hope we get to that. i would like to thank our witnesses for appearing this morning and would like to recognize the ranking minority member for the purpose of making an opening statement. >> first of all, i want to thank
you for calling this hearing. i welcome our witnesses. this hearing is about a very important set of issues around the designation of nonbank companies as systemically significant. there are a lot of issues around it to that have been raised already by the chair. i think these are important issues and we should stay focused on them. if there was one area we learn from the financial crisis, the regulators did not have the tools to regulate complex nonbank companies like aig and did not have the ability to wind down in these companies in the event of a failure without disrupting the system and without taxpayer funding. as a result, these interconnected firms nearly
brought this entire country and its financial system to its knees and it was quickly recognized that the key supervision for these nonbank areas was missing. we didn't have to give you zero important things in dodd-frank to address this -- we did two important things in dodd-frank to address this. we give the financial stability oversight council the authority to require federal supervision of non-based financial companies that posed a systemic risk and required the fed to impose heightened regulatory requirements on these companies as well as any bank holding company with at least 50 billion in assets. these changes also level the playing field between nonbanks and banks. if a company does fail in spite of the heightened requirements,
we also provided an orderly liquidation of authority entitled to dodd-frank so regulators would not be faced with the horrible choice between impaling a company out had a taxpayer's expense or letting it failed to the detriment of the broader financial system. designation of nonbank companies is a two-step process. the entities must first be identified as non-bank and then they must be subjected to heightened supervision. fsoc was not required by dodd- frank and was done to provide clarity about how it will designate nonbanks. i understand it has been estimated that 50 entities will be considered for tightened regulation based on the size and
scope of their financial activities. these companies will be subject to stricter standards and which has asked for detailed input. i look forward to the hearing from the panel and that also look forward to hearing from the firms. i welcome our panelists today. i would like to ask unanimous consent for mr. green to have privileges so he may question. >> without objection. a recognize the chairman of the full committee for three minutes. >> i thank the chairman. we will have an opportunity to examine one of dodd-frank's most vague and problematic mandates. we are here to understand what it means to be systemically important, a euphemism for too big to fail.
what are the consequences for being deemed to systems -- systemically important? what are the advantages and disadvantages? how will these institutions be regulated and how will counterparties and other participants interact with them? we have been told by the fdic that part of this interaction will be to indemnify certain creditors. that seems similar to aig, which dodd-frank and members on both sides pledged we would not get into another bailout situation. many companies are asking themselves the same questions and whether the regulators think they are systemically important. the final roll is not clear. it is my hope that the regulators testifying today can help provide the committee and
all affected parties with some much-needed clarity on these important issues. i look forward to this discussion and thank the witnesses for being here. i want to say in conclusion, because of the j.p. morgan and chase situation, we are again hearing from some of our colleagues that we need a law which will prevent a business from losing money or taking risks. no law can do that nor should it attempt to prohibit a company from taking risks. that is an impossibility. when taxpayer funds are at risk and a bill that situation would be one of those, -- bailout situation would be one of those,
that is another question. and the j.p. morgan chase, if you're concerned about deposits in that institution, let me put it that loss in perspective. their pretax profit last year was $25 billion. a $2 billion loss would represent one month of earnings. it would reduce their earnings to $23 billion. it is about 100th of the firm's net worth. even with this loss, i believe they are one of the most profitable financial listed tuitions in the country. -- financial institutions in the country.
there is no risk from this loss to depositors or taxpayers. they remained very profitable. >> thank you for hosting this hearing along with the ranking member. i will also want to thank the panelists for being here. as we know, greenspan came to us many times and said the trust them. they know what they are doing. i guess we are trying to figure out if we should trust them. apparently we should not have. but we did. one of the biggest developments in 2008 was the realization of how much the impact could be felt from the collapse of the firms. until the problem arose, and no
one understood the level of interconnectedness some of these firms had. everyone knows that our government took action to them but the stress of these institutions. no one wants to see the events of 2008 repeated. in passing the dodd-frank two years ago, when a movie -- and created a sound framework that will allow us to stay ahead of the curve. to make sure we regulate these institutions and also that we do a lot of the enforcement and knees to be done. it is not just regulating them but how are we going to enforce them and what action will be taken to make sure we do not develop additional crisis? this framework will allow the regulators to work with the market to participate in creating efficient and secure regulatory structures. the same time, it will allow the
market to continue to operate in a free man and not dictated by the demands of the regulators. the firm does not run into trouble, and the mistakes of the few will not impact the actions of many others. that is only if action is taken and it is brought before us to make sure it does not affect a lot of the consumers involved. at the end of the day, what everyone is looking for is a certainty. industries want to run their business where they do not fear becoming a to unsuccessful but at the same time doing what is right. regulators want to make sure they can step in an act to correct that behavior. that is going to be the key. the american public wants to know that all parties involved are doing the best to ensure that the abusive behavior is not something that will be repeated. thank you to the ranking member
for having this hearing. >> a minute and a half, mr. garrett. >> thank you for this hearing. instead of calling these firms systemically important, we should call them what we all know, that is too big to fail institutions. if you are honest about it, dodd-frank codified too big to fail and changed the name. when you change the name, you have not changed anything about the characterization of them. you have not solved that too big to fail problem. the firms are on a list that are chosen by this administration that are designated as too big to fail. they still have funding
advantages in the marketplace. they are subject to a resolution process that allows the government to use taxpayer money to decide which creditors are going to win and which are going to lose. members on the other side of the aisle would not status one of their goals to and too big to fail. if we had ended its, there would be no reason for people to be concerned about j.p. morgan's loss because the taxpayers would not be on the hook. let's be honest. the debate has not -- is nothing more than a charade. we should call it what it is. it is a debate about which institutions are too big to fail. we should be debating how ugly and taxpayers being on the hook for these institutions.
>> mr. scott for two minutes. >> we need to make sure that as we look at the situation we are in today, the results of our financial crisis, even j.p. morgan chase, we have to do everything we can to make sure it does not happen again. but i caution on this point, i think we need what i referred to as a delicate balance. we need to make sure we have the regulations. dodd-frank is in place to do this. it is an excellent framework. it can marshal our efforts for stability. there is no assignation with and the bill. we are leaving those up to the fsoc.
i agree that the crisis we have had a few years ago, j.p. morgan, has to be avoided but we have to make sure that any additional regulation, including banks and nonbanks, will not stifle the growth of our economy and the creation of american jobs. that is the most important thing. we have to create jobs. we have to get this economy better. we have to make sure that the forces that generate the capital, that disperse the capitol, that keeps this economy going is not put in a straitjacket. i say that as a sponsor of dodd- frank and also one who understands, we have to make sure that the abuses do not happen. all i am saying is passing the
delicate balance test. economic growth. it should not be stifled. we are making great progress. the jobless rate is coming down. as we move forward, let's move forward with a jaundiced eye on this and do it correctly. >> more than any other section 165 of dodd-frank is emblematic of washington taking its eye off the ball. instead of focusing on those institutions everyone knows are too big to fail, instead of getting back to less leverage, and higher capital requirements for those few firms, the government will publicly stamp institutions, potentially dozens of them as a systemic. the explicit statement is that
washington believes these firms are special. implicit statement to the market will be the washington will never allow these firms to sell. given the precedents, given the propensity of government to air on the side of intervention, on the side of bailouts, i hope we can cast the smallest possible net and designate only the firms that everyone agrees are too big to fail. i yield back. >> mr. green ford two minutes. >> one thing i am convinced up, regardless of how we feel, the public is of the opinion that too big to fail is the right size to regulate. it is the right size to deal
with so that it does not bring down the economy. aig is a prime example of what we did not have the authority and the ability to properly deal with when it was going out of business. we cannot allow ourselves, on our watch, to simply say we need to get back to business as usual. i hear a lot of that in other words. let's get back to business as usual. we cannot afford business as usual because it brings down the economy with these institutions when they become so large that they have an impact across not only american economy but across
the world. it is appropriate for us to examine the rules and to note that we cannot allow business as usual to become the order of the day. i yield back the balance of my time. >> that concludes our opening statements. i would like to act than the -- asked the witnesses for a summation of your written statement. our first panelist is lance auer. welcome. >> wdo you have your microphone? maybe pull it closer. >> ranking members, members of the subcommittee, aggressive for the opportunity to discuss the role and guidance for identifying non-bank financial
companies subject to enhanced standards. in the 2008 crisis, the financial distress at certain companies contributed to a broad is seizing of the financial markets. to address risks posed to stability by these types of companies, the dodd-frank act authorizes council to determine that certain companies could pose a threat to u.s. financial stability and would be subject to the supervision of the financial reserves -- federal reserve. although it out line misheard requirements for the -- out lines requirements for dozens of companies, in order to obtain interest of all companies, will provide increased transparency to the top but. the council provided the public with a three separate
opportunities to comment on its proposal. after receiving input from all participants, and academics, and other members of the public, the council approved its final rule in april of this year. the final rule provides a process for evaluating whether a financial company should be subject to supervision. the council will approach each determination using a consistent framework but ultimately each as a nation must be made on a company-specific basis considering the risk to the u.s. financial stability that each and non-bank company may pose. the rule and guidance explains the three stage process the council intends to use in assessing non-bank companies. stage one, that council will apply uniform threshold's to identify those nonbank companies that will be subject to further
evaluation. the use of clear threshold's enables the public to assess whether a particular company is likely to be subject to further evaluation. stage two, the council will analyze the nonbank companies identified in stage one using a broad range of information available to the council through existing the existing sources -- through existing sources including quantitative and qualitative information. stage three, the council will contact each financial company meriting for the review to collect further information from the company not available and prior stages. each nonbanks company and that is reviewed will be notified it is under consideration in be provided an opportunity to submit written materials for the council's consideration. if the council votes to approve
a proposed to determination, a nonbank companies will receive an explanation of the basis of the determination. it may request a hearing. after the hearing, a final determination requires a second vote of the council. the authority under the dodd- frank act to designate on big companies for enhanced supervision is an important part of the ability to carry out the statutory duties to identify risk to u.s. financial stability and respond to such threats to protected the u.s. financial system. i would be happy to answer any of your questions. >> our second witness is michael gibson, board of governors of the federal reserve. welcome. >> sherman -- chairman capito,
thank you for the opportunity to testify today as it relates to the designation and regulation of systemically important companies. some financial companies had grown so large, so leveraged, and so connected that there the year could pose a threat to statement -- overall stability and the collapses of the companies were among the most stabilizing events of the crisis. the dodd-frank act addresses gaps in the framework for supervising and regulating non- bank financial restitutions through a multi pronged approach that includes the establishment of the stability oversight council, which has the authority
to designate non-bank financial companies that could pose a threat to stability. a new framework for consolidated supervision and regulation of non-bank financial companies designated by the council. and improved tools for the resolution of failed companies. with respect to the first part, the financial stability council was created to coordinate efforts to identify and mitigates threats to u.s. financial stability across a range of institutions and markets. including establishing a framework for designating non- bank financial companies whose failure could pose a threat to stability. on april 3, there was a final rule setting forth of the criteria and process to designate a non-bank financial firms as a systemically important. the issuance of this rule is an important step forward in
ensuring that important non-bank financial firms will be subject to strong, consolidated supervision. with respect to the second part, the enhanced standards, sections 165 and 166 required the federal reserve to establish enhanced standards for the largest companies and for non-bank financial companies designated by the council. these standards include requirements for enhanced risk based capital and leverage requirements, and liquidity, risk management, stress testing, and resolution planning as well as single counterparty credit limits and an early remediation regime. in december, the forger reserve issued proposed rules which would apply the same set of standards to covered companies that are bank holding companies and companies designated non- bank financial companies.
the federal reserve may tailor the application of the standards to different companies on an individual basis or by category. working out the details of how enhanced standards will apply will require a thoughtful analysis of each designated company over time. the federal reserve is committed to early assessing the business model, structure, and risk profile of each designated company in tailoring the application of the standards to reach company. with respect to the third part, resolution, the dodd-frank act provides important regulatory tools. both of which extends to systemically important non-bank financial companies. first, each of the largest companies and these nonbank companies designated by the council, is required to prepare and provide to the f.d.i.c. in federal reserve irresolution
plan for its resolution under the bankruptcy code. title 2 of the dodd-frank act provides for an orderly resolution process to be administered by the fdic. thank you for your attention. >> i will begin with the question. as you are probably aware, at many companies from various industries, you emphasize to the tailoring of this designation procedure. some that have been mentioned as candidates are concerned about a one size fits all. say you are assessing an insurance company on the same sort of criteria you would judge a bank institution, you mentioned this but how you deal
with the differences in the models? i will start with the treasury. >> the process that that council developer is in putting out its proposed rule was to devise a three strange framework -- stage framer. by using a uniform thresholds based on available data so they could screen out the large number of firms the council is unlikely to consider for further evaluation. it is explicit in stages of 2 and 3 that the council plans to look at all and non-bank financial company under consideration to look at all of its activities, its businesses, the type of business is in
comedy in -- activities it in gauges and so it can take into account the specific factors of that industry and come up with a final proposal. >> we have made it clear in our proposal for enhanced standards that we intend to tailor the standards to the characteristics of the companies that are designated by the council. what we have proposed is a single set of standards applying to the main holding companies and the non-bank companies. we have said that once the firms are designated, we will consider tailoring the standards and the dodd-frank act gives us the authority to do that. we understand that there are some companies for which the paint-like standards we proposed would likely be a bad fit.
we have committed to looking at and when those companies are designated undoing what we can to tailor the standards. there are other companies that could be designated a that are not that different from a bank. we would expect the bank-light standards we would have would require less tailoring. >> would they do that particular exercise in terms of trying to tailor, if you're looking at enhanced capital, would that be done within the federal reserve or the fsoc? >> the federal reserved. >> can you let them all of the available business models laura my making it more complicated than it is? >> we have a wide range of expertise. a bank holding companies engage in a lot of activities that the
nonbank companies are engaging in as well. in a lot of cases, how we feel like we would have sufficient expertise. if there are cases where we would need more expertise, we would certainly do that. >> i would assume a designation by the name means that if one institution were to fail, there would be systemic problems to other companies. we obviously found that in 2008. is not one of the main criteria to having the designation? >> yes. the standard is that the council should designate firms that could pose a threat to the financial stability of the united states. the council has stated that the threats to financial stability is where impairment of financial activity could have an effect on the economy.
that is the standard on which a designation will be based. >> one of the concerns i have with the orderly liquidation authority, we tried to go with an enhanced bankruptcy look. again, i go back to my original question, when you're looking at a nonbank entity, i want to some confidence, and i know you cannot make a judgment, but is the confidence there that the fdic has the expertise to make judgments when trying to unwind in non-bank institutions? is that a concern? >> we, at the -- we have been
working with the fdic to understand what their approach will be to putting a firm in liquidation. they have devoted significant resources to that part -- process. ultimately the details of their approach is a question you would have to post to them. >> my time is up so i am going to go to miss maloney. >> i would like to ask mr. auer, i understand the criteria aaron established but i would like more clarity on the exact metrics that will be used in designating non-bank financial companies. for example, how much interconnectedness makes a firm?
>> in the multiple rounds of public comment we receive, there was a desire to have a three stage process. the first stage is based on countable metrics in order to provide greater clarity about the types of an entity is the council is likely to want to examine further. however, the council wants to look at stages two and three on a firm by a firm basis. there is a specific framework to do so. interconnected this is one of the elements the council will be looking at. it is one of six broad categories of the framework. the others are size,