Pattern of Poor Management, Unconstrained Lending Created Speculative High-Risk Portfolio at DOE, Oversight Report Says
Committee Also Highlights Shoddy Results of Weatherization Program
(WASHINGTON)—Reports authored by the House Committee on Oversight and Government Reform show a pattern of mismanagement, high-risk lending to green energy firms, and shoddy work performed under Department of Energy (DOE) weatherization programs.
One report released by the Committee and Chairman Darrell Issa (R-CA) documents that DOE disregarded its own taxpayer protections, ignored lending standards and eligibility requirements, and as a result, amassed an excessively risky loan portfolio—some $14.5 billion in total loan guarantees were authorized. Oversight investigators also identified instances when DOE faced barriers to completing a loan and simply sought to justify and overcome those regulatory barriers rather than giving the barriers due consideration.
In one glaring example, the report shows how DOE appears to have manipulated analysis and strategically modified evaluations in order to issue loans to First Solar that would make the project qualify under the statutory and regulatory guidelines.
A related Committee report also documents shortcomings from a $5 billion federal weatherization improvement program funded through the Department of Energy. The program “[R]epresents the kind of failure that materializes when you have an economic stimulus strategy contingent upon asking the federal bureaucracy to absorb billions of dollars when the structural infrastructure to administer, disseminate and manage that influx of new money is not put in place,” the report said.
The report documents faulty construction and retrofitting that left consumers with faulty home electrical, ventilation, insulation and other systems. It also includes a series of photographs showing shoddy workmanship in several states.
“These reports document a Department of Energy seemingly unprepared to deal with the exponential increase in taxpayer funds it received under the stimulus, leading to serious questions of waste and abuse. Taxpayers are right to expect better from the Department of Energy and the Obama Administration and to seek protections that this type of approach can be avoided in the future,” Chairman Issa added.
The reports as well as testimony and background information for a hearing today on this subject featuring Energy Secretary Steven Chu (10:00 a.m.) are available here.
*EDIT: An updated copy of the Committee's report on weatherization was posted on April 18, 2012.