states however doesn't stop for elections. it requires consistent direction and management cities important that ever embassadors work to remain at the posts until either the instructions are given. as i've traveled in so many countries over the last five or six months a number of you have told me that your time will be up in the spring or in the summer. but we don't know if we'll get people confirmed in the current political climate. we don't know who will or won't get confirmed in some last minute deal that might be worked out before the congress basically goes out for elections, so we very much encouraged you insofar as possible to stay. we need you and look to you and

there is no country in the world that can do without you. obviously there are many other important issues that i haven't touched on. we can -- and sure look forward to hearing about those from the speakers today, but also at town hall leader this afternoon. the simple truth is we have a lot to do, but we have a great team out in the field and here in washington. i look forward to seeing you at lunch and then leader this afternoon along with my colleagues to to your questions.

if we have a gem in the collection it is probably going to be this one. it's one of the books we are the most proud of. it is in the original findings, from 1699, and it was once owned by a very famous scientist. you can see he's written his

name. and we are not pulling it out so much anymore because it is starting to flake away on the title page. >> pioneer medicine is a long stretch from what it is today. when you consider that the things that we take for granted today when we go to the doctor, things like the instruments being as germfree as possible or the doctor has washed his hands before he's worked and then use the term loosely for doctors when we are talking early medicine to a lot of the doctors and our region was self-taught or had worked under some deals that had been self-taught and they were getting ready to retire so they would learn as they went. in the senate today majority

leader harry reid spoke about several judicial nominations awaiting a confirmation vote. accusing republicans of holding up the process. the minority leader mitch mcconnell responded to the charges. here are their comments on the senate floor. this is half an hour . rei >> majority leader? >> and a period of warningrol te business for one hour the half.'lsi on dethraeti morning business wl resume consideration of the bill. there will ibe to roll call vos in relation in the bingaman amendments at noon the senate will then recess until 2:15 and there will be as many as 20 roll action on the transportation bill. mr.resident i am told mr. president therefod are two bills at the desk for the second readings.

>> the act to increase americanb cob creation and economic growti by improving access to the public capital markets and emerging growth companies. amend s 2186, the bill to amend theabf americans with disabilities act ischemic mr. president i wouldi: object on these bills. o >> the objection is heard. the bills will be posted on the calendar. >> mr. president, today we resume consideration that most e important piece of jobslong te,d legislation we have had here in a long time and that is the highway bill. surfa but it's morece than a highway bill it is a surface transportation bill that dealsho with all aspects of helping our bridges some of them are 70,000f of those we have 20% of our we have problems with our massdr

transportation system and othero such things. so we have to move forward. building the nation'ss infrastructure with thisit wille legislation alone will createo 2.8 million jobs. this is an effort to build a em that world-class transportation system thatwa was started in the presence of eisenhower.ince then every president since then has recognized the need to move forward with the vision general eisenhower had. we must renew that commitment. t presidents in recent years have gone out of their way to doe a that.peeches a president ronald reagan gave a number of speeches on how important it was that we would begin to redo our commitment to that we should have tocoun infrastructure in this country. president clinton did the same s thing. ewe legislation is very ren important and the commitment to the renewal of the vision of general eisenhower is the

it has the endorsement of one oe the most concerned members of the senate and one of the most liberal members of the senate. e i wares disappointed it took as long as a gate to get where we are. but we are here. ago, we invoke cloture quite a long time ago and insight of the finished for this bill.emaining i am pleased to dispense the remaining amendments and the final passage for today'sul that business.ct mr. president, i am hopeful that the house will act to pass this bipartisan compromise rather than pursue what we has all read about in the extreme bill weey were considering last month. evy it failed every test but it failed the test of their ownd, caucus they said we can't do this.mp the highway bill is important to the republican members in the house as it is democratic and

republican members of the senatt and i would hope the speake understands that it is not goody for this country to have a a everything to be the majority. what that means is that the republicans have a majority in the house but i served in the w house and that is how things -- were done with bald michael who is the republican leader of the time, tip o'neill was thewith b icmocratic leader ofob the timem thereafter.orked w she worked to get legislation to them but then what he tried to . do is get to the number of 218 absent the majority in the housg and they got those votes fromli. i hope my friend, the speaker won't just get this surface transportation bill done withhe republicans opinion as to whatt.

should happen. passing a bipartisan bill the president can sign will be a our victory for both parties in theo country. the business doesn't end withlls completion. pas we have a small business jobs b bill that was passedsupporteby e overwhelmingly by the house and supported by president obama,n e and i had a conversation on the floor publicly here last night with the republican whip of arizona and we talked about the need to get'r this done in ordea tord move forward on thisthere expeditiously. the there are always bounce in the road and i hope they will beumpn very few bumps in the road.talk i haven't had an opportunity to talk to my friend the republican leader but i was told this morning that the ranking memberm of the banking committee my alabam friend froa,m alabama, senatords shall tbecome indicates he wank to make improvements we got froe the house. senat

i suggest we work with senatorss johnson making it a bipartisani' basis and doll it quickly i woud be happy to take a look at it. i think we kind of get the abo votes for a bill and 20 againstn so i think we have to before on this.is hav a one thing i am going to do is have a amendment prepared that n will allow us to move forward ot henry authorizing the bank. i hope that we can do that and it's something that is supporte. in the business community and c mentioned last night. the head of boeing said that itl is a tremendously important bill for the airline industry which is so important to the economy is as our country that it's not airlinefrtant to the industry is important to others as far as the industrial base. p it's important piece ofhat

legislation and i hope that we o can have that opportunity. ms if we can't, you understand that it could be a shame to do that. we are interested in this bill that has been supported by the house and the united states. i am convinced it will grow. bi jobs we have in the highway bill but it's good for job growth bringing more capital into theor business world and that is where we have needed that for severall years now and would streamlinesl the way the companies sell stock so i look forward to working with my friend, the republican leader to find a path forward o. this bipartisan legislation. in the coming days the senate must also consider the postal reform legislation and thegainsm authorization of the violence againstec women act, cybersecurs and measures to create jobs to improve the economy.sena from presenting the senate from

moving quickly on these itemsjol including a bipartisan jobs bils is what we have had this whole congress, obstructionism by my e friend the republicans and have forced under the amendments to t this bill, this bipartisan billo the surface transportation bill. so i hope they are not going to hold up the progress on the small business jobs bill. not i'm confident they will not if that is the case. mr. president, yesterday i found closure on 17 consensusr month o nominations. a i've worked with the republicans for a month to find you forwardr on the confirmation from any ofi these nominees including some that have been waiting for the up or down vote since october. i had here yesterday -- i don'tt ive it today but i will show it today a visual aid to show what and bush years and obama.

it's clear what has happened and it really doesn't fully represent what happened because in the clinton years, we had dozens of nominees that wouldn'y hold hearings on them but with lengthou of time the judge's report out of committee, clinton a few days, bush a few days and of course now we are talking about months of obamas nomination. that'sul not fair but they shoud all be entitled or down votesito especially the canada of theon. committee so overwhelmingly with the exception. there's s no reason we should en up one day of precious time the senate has to pass these measures. you can do it so quickly. president obamas nominations of 8546 times longer than president bushs nominations and that this

-ncrease in, not going down.ush- they sought the nominations and a single day. so there is no justification or obstruction on the matters oughh toere' be retained. there is too much to the senatee simply doesn't have the luxury to waste more time. >> of the republican leader.y to >> the senate is likely toill, finish the highway bill and onct we do i listened carefully toone the majority leader's remarkswe once we finish the highway billl we have to immediately turn to u these bipartisan jobs bill thats passed the houseda last thursdao the vote was 390 to 23. let me say that the vote in the house 390 to 23. presidents also indicated he would sign the house bill, so it s me with of the jobs emergency we have in this country with 8.3% unemployment

anmad many more millions ofng americans having given up tryinn to get in the workforce the thing to do is pocket this broao bipartisan bill and try to imme. create jobs immediately. friend, i heard my friend indicate he wants to have a different version of it to kind of freeill crafted. all that will do iws slow downoe the process and make it more imp difficult to get this important job legislation to the i president's desk rapidly. of so i hope the majority leader will reconsider whether we need to reinvent the wheel. this is already a broadly supported bipartisan bill which the president said he would d sw as sooiln as we send it to him.w i don't know why iain thus dennett we would want to make something that ought to be pretty simple extraordinarily complicated. the democratic turns to something as indicateda and said we are going to turn to

something contentious instead of try to do something that almost all of us agree on certainly ins the house and the presidentand agrees on that but focus on jobs and actually do some good. the american people and we spent a lot of time spinning our tueels around here putativeanufc rhetoric and try to manufacture grit lock and create the illusion of conflict where none should accessed, why don't we demonstrate we can actually get ne something done together at indolent when millions of americans are looking for work and millions more are struggline with a high price of gas and we have an opportunity to do something together right now ase soon as we finish this bill. ould s we could to get the jobs bill and send a small but importantab signal to the job creators and f innovators that we want to help make it easier for them to

higher. later today we will have anothe. chance to move forward on the keystone pipeline despite the president's continued stubborn r opposition to it and we will have anteother vote related to that subject offered by senator jt roberts. the house passed jobs bill isn't just important for what it does but also what it represents. it is a welcome signal that the lawmakers in washington still value the risk takers and the entrepreneurs have also been vital to our nation's greatness. at after three years of policies f that undermine the freeen winnes enterprise, there is the takings of winners and losers this legislation cents an entirelycoe different signal. the it is a welcome step to come back in the right direction. by clearing away the red tapencu that should encourage the kind of entrepreneurship that notew only leads to the new pockets oe ule industry and the jobs that f come with them but also helps

people fulfill their dreams com. and without adding to the deficit, this bill doesn't havel anything to the federal deficit. this is precisely,kind o mr. president, precisely the kind of thing we shouldng be dog right here in washington. this is the message that wepbtdw should send. we don't need fewer apples or microsoft or facebook, we need more of that. we need them for the value they add to our lives, the edge they give us in the world economy,ron the jobs they provide hundreds of thousands of american workers and for the satisfaction theym f bring to those who helped turn in a them from an idea into a w reality. belie so let's send it is important signal we still believe anve i opportunity, we still believe in innovation, and that when they common good is in sight and we t can see the common good rightan

before us, we can still work together to actually achieve atw this is so crucial that i am going to really what my, jon colleague senator john kyle did last night which is to offer a consent. i told the majority leader in going to do this, but if we turn to this important bipartisant piece of legislation, thatsu passed overwhelmingly in the house, supported by the iiately presidents of the united statesh immediately after we finish the highway bill let me say again there is no purpose served by manufacturing controversy here in the senate, mfg. controversyt when none should exist. we have an important jobs legislation passed overwhelmingly in the house supported by the president. higy the highway bill will clearly it this afternoon or tomorrow.

i think most senators would rather be working on things thad the a american people believe wt actually help create jobs than to see the senate embroiled in c anotheron controversy which i fr my good friend the majority leader is seeking to purchase a bit as soon as the highway billh was concluded.cons so,en mr. president, i ask any r notwithstanding any of the ruley of the following the disposition of tho pending transportation bill, th. senate proceed to consideration of h.r. 4606, the bill from theb house which would increaseand american jobs creation and economic growth by increasing our access to public capital erg markets for the emerging growth companies and i further ask consent bill remain in the oth business to the exclusioner of l other business until disposedthj ecof. some of mr. president?to obj >> is there any objection? >> reserving the right to object. they' i know that whenre people talk

they are always afraid people are not listening and maybe myhi friend the republican leader in my presentation this morning. a. there's nothing to fight about. i said i've heard that the ban ranking member and the ranking committee wants to take a look at this and i have more -- i encourage them to do so and joh. talked to senator johnson.ave i said that we are going to have anor opportunity on the amendmem to voteet on something i thoughe everyone wanted. republicans want it, democrats s want eight, the business community wants at, the workers in this country needed and it is a bank which goes out of business at the end of may. tak that will slow the bill up maybe half an hour, so mr. president, i said many times let's -- if wt

are going to have a fight makew. there is nothing to fight about. we are going to move as quickly asly we can.e 17 judges which have been held up one of them goes back toe goe october of last year.f so, i would be happy to have them approved under this bill. we are going to move this bill as quickly as possible but mye v spoke volumes this is a small hs but important bill. we realize that. those are his words. this is a bill dealing with the initial public offerings. we have heard for months and months that small businesses can't find capital to do the nd things they need to do.this bila this bill is a step in thatdire. direction. i support it. my caucus will support it.ithi sound of my voice we are going v to move the bill just as quickly

>> mr. president i would continue the debate it is a prit question of priority we agree we ought to pass the jobs bill. certainly if it were called up amendment and the majority leader could offer the amendment if he chose and other senators could as well but it's a question of priorities. we want to have a big fight inxm the press senate over procedures and we've had some proceduralwee differences which i will address leader, not right now but later relating to the confirmation ofn judge is the response of the ofa the senate under the states or turn immediately to a jobs bill we overwhelminglyhe mt agreed to as the majority leader just conceded so it is a question of priority the one to have the senate in the fight pre over procedure after we finished the highway bill or do you want to turn to an overwhelminglyipaa bipartisann j jobs bill supportd by the h president and passed by

o we wan the house it'st a question ofthc priorities what do we want to d? next for the american people. mt >> mr. president,, i am stunned by a controversy over nothing. , under the rules of the senate we found because there's been the obstruction on the license i fin didn't file the appellate judge. judges, each one of these menlig and women has been brought to aa standstill. the have the opportunity of a be lifetime to be able to become a federal trial court judge. they shouldn't have to wait until october. i say to my friend, we can approve these judges in one fais minutes. let's do that. it's not fair to say it'smportat unimportant and put it overuntil until a later time.

we have no problem with the bill we got from the house.it g how could we have 390 votes inet the house, president of the g united states supports it. we support it if we want to get this done and we will do it asa. quickly as we can get it may not be ten minutes from now 24 hourt from now but move to it just ase quickly as we can but if we can move to it very quickly as soon, as we finish this highway bill we can move to the judge's better disposed of and we could be on this after the highway bill but that's about all.. reie >> with the senator yield? >> i would be happy to yield.nt, >> when we talk about the majori ask there is 160 million disicts americans who were in judicial

districts with their vacancies because even though they've gone to the senate judiciary lder's committee, the majority leader has been blocked 160 million americans who were denied the je chance for the justice denied the chance to go to court, so why ask the leader who's had onn of the consideration -- som >> i mentioned this yesterday at lieve t some lengthhe and i believe the presiding officer was here when i did that more than half of the people in america today are thee living in areas where there'sneo been the judicial emergency and that is one of them we have these judges who are overwhelmed with work and i said yesterday i don't want the judges to have tr act as if they were night court

judges dealing with traffic wit cases as i said yesterday they e are you trying to make a federaf case out of it? they said that because there iss no finer law dispensing anyplace in the world than the federal s. court system and you can't doand that when the men and women ared overwhelmed with work on the circuit court of little that'sye one thing. overwhelmed with wt ork on the, trial court level you areh dealing with every problem people have with antitruster cases, business is having gone bankrupt and ought of the thingn the federal purpose jurisdiction of, and my friend is absolutely right. we should not only be concerned about the 17 people who had been he uni selected by the president of the having gotten a sign off fromher the republican senator in their state. them

i should talk not only about them individually, but what thee represent, and that is trying to do somethingth about the icergencies that exist for more >> mr. president? i thi >> the republican leader. estimate the colloquy underscorr points. my friends on the oversight are concerned that the jobs of the 17 individuals may be delayed for a few months to with i doubm if any of tplhem are unemployedt the moment. kely and this is highly unlikely that any of these individuals willd n not be confirmed in an orderly process and as we have been th issue .ngaged in this year.ties this year is the question of pretty. what is? more important, getting these 17 individuals into a jobt a lot quicker than the majorityr has experienced so far, or turn into a measure overwhelmingly supported by republicans and by democrats in the house quoted by the president in the united by states that might create in thee very near future hundreds of

thousands of jobs so it is a sands question of priorities that is why i say this is a manufacturet dispute.detail to i had much more in great detail to say about the judges but for the moment, the point is quite simply what are our priorities that we want to pass an overwhelming bipartisan jobson bill, the president supports as for anyle amendment the majorite leader might seek to offer or do we want to create a controversy over judges that are almost never denied confirmation whenwa we've been confirming judges alw along? point to continue thisan discussion any longer this moreo morning. i have a lot more to say about how we ended up in the situatioo where the majority leader is seeking to manufacture the crisis that shouldn't or ast. crisis that really doesn't exist.oor. mr. president, i yield going t e

>> these judges are going to get anyway approved anyway. so i have an idea. i.p.o. let's go to this bill immediately after finishing the highway bill in the agreement te and we will dispose of theseha judges immediately after that. sounds good to me. i'm happy to do that.about aeal >> how about a deal on that we that's just as soon as we finis this highway bill we will move , to the ipo bill and as soon as we finish that and get it out of the senate, we will then have of or down votes on the 17 judges. this doesn't include the agreement on the appellateith judges we will deal with thosei. at a how about that bill? so i would say again to my do

friend i would hope what wehe could do is when we finished th. highway bill, as soon as we finish that have an up or down vote on these judges i would be happy to work if any reasonablea fashion. >> mr. president?s not >> look, we've been discussing this is not the best time for the point is we have beenhly uny processing judges it is highly unlikely any of these district judges are not going to be confirmed. we've done a number of them this year. we have done seven this year. district judges are almost never defeated. this is just a very transparent attempt to try to slam-dunk the we've got that. we don't think that meets the of standard of civility. should that should be expected in the e

senate so any effort can make the minority look bad or slam o dunk them that this sort of is manufactured as this is it's tof going to of course be greeted with resistance.it c now, it could be that that iswhd precisely what my friend the min majority leader has in mind, try to make the senate looks like ie is embroiled in controversy where no controversy exists. why so my suggestion is why don't wt do first things first? first things first, and itoverwi strikes me that an overwhelmingd bipartisan jobs bill in theple house would be somethingn't we american people what applauded and supported by the president, why don't we take that up, the majority leader offer any amendments we think is appropriate and move it towardsp passage, because that is the kind of thing people expect ofee rr:.r. >> mr. president? it is obvious that the jobs bill

ess nothing to do with thejudg holding of these judges as has been articulated by my friend. it's just a question of stalling things as it happens all this congress. judic on areas where there is judiciat emergencies and it's important that we get this distinction of justice done and do it quicklyo. and the controversy of the ipo bill does not exist, there isn't uld any and i s would suggest to my friend i don't think that we iould have -- of this bill was so important and i believe it is that we have a very many thingsy left to do post office i don't;e we have all these judges of course we have cybersecurity, s. if we move it quickly to this

ipo built i cannot imagine why we would need an amendment. i indicated my right as a perfecting amendments and that would be to find out if the bode who feels strongly about what they said publicly that the banf should be part of the deal that. would hold the build a one vote1 i think it's a good 15 minutes, but in addition to that if ever beloved house bill so much, that's what we are going to vote on to beat you heard the expression fill the triet go to the ipo levity loves it so much we could get into the president's desk just as fast as we can.

there are a number of problems that we have to resolve problems with a growing people's republic of china a growing problem with iran we have a lot of problems to deal with and i think the diplomatic solution are going to have to be the answer in the future as we start to deal with of the problems coming watch the speeches from the house floor on capitol hill today, energy secretary steven chu testified about his department's loan guarantee program. that program lost $535 million due to the bankruptcy of solar

manufacturer solyndra and timber. the hearing of the senate energy resources committee is to end a half hours. this hearing will provide an independent snapshot on a loan programs within the department of energy that were created in the 2005 and the 2007 energy bills. mr. allison has expertise both within the government and the private sector and he has a useful review of how the programs are being administered including the suggestions on how the administration can be improved to share his findings with us as members of the committee know the issues surrounding the u.s. ability to compete in the international

race to develop and deploy the clean energy future has been a concern to many of us here on the committee for years. to the conditions and other efforts to support domestic deployment of the next generation technologies past the previous energy bills are part of a concerted effort to ensure the u.s. doesn't fall behind in addressing the critical challenges of energy, economic and climate security posed by the current reliance on fossil fuels for both power generation and transportation. the riggins in particular recognize it is not enough to have the innovative research and national labs and universities conduct it have returning those ideas and inventions into the profitable companies. i believe it's important to keep

in mind to keep this goal in mind as we look at these programs today while the programs need to be administered with high standards of professionalism and integrity i believe the report indicates they are it is also necessary to recognize that there is uncertainty about what technologies will eventually win the day if we want to be sure that tax. sloughs no money that is easy not to eliminate government support for american efforts to compete in the developing and deploying these new technologies the race to the loan guarantee program has been caught up with an election year issues my impression is overall the program is doing what it is designed to do, that is to take on risks that the private investors are not willing to take on what the private sector

has not taken on risk every investment the government has made large rise in business for the private sector, private markets are selecting the winners at least the companies they believe will be winners and the government is stepping in to help these on chip killers achieve the scale necessary to give them the chance to compete in the global state the sources of innovation in the world today it is not clear that we are going to reap the benefits of that innovation or even retain the advantage we have in that innovation in the ever-changing and the highly competitive environment of high technology and research and development necessarily follows the manufacturing and the next generation of technologies are being developed overseas as well as the manufacturing occurring overseas. as we've seen that scenario

played out in such industries as television, televisions and consumer electronics and in my view it would be tragic if it happened again that relate to the energy future. i believe that is the important context for the conversation today. the witnesses to the important insights on how we can best achieve the goal of a financing plan and energy in the united states in a way that gives the most value to the taxpayers this will never be a risk free enterprise or a few things of lasting benefit or but i look forward to their thoughts on how we can best balance those risks with potential benefits of fully developing this technology is here and at home. let me call on senator murkowski for her comments before we hear from our first witness to the estimates before mr. chairman, and i appreciate your scheduling what i believe is a very important here and i think it is vital for the committee to be

conducting regular and intensive oversight over the programs in the agency's letter under our jurisdiction especially when we see problems that may be unexpected or certainly serious problems began to surface. i understand secretaries chu will join us later this morning i believe the will be helpful to hear from him directly about what has gone on in this area, and mr. allison got to you, thank you not only for being here this morning before agreeing to take on the audit of the department's loan programs. this is one of the more complicated topics that i think our committee will be tackling. these loan related authorities and the energy department's use of them stand from different administrations, different conferences and include three separate programs, each with their own unique attributes to it i want to say that i found the independent audit to be quite useful. it disaggregate the project based on the profiles rather

than programmatic origin and discusses transparency and reporting shortcomings, reveals the concentration risk in the current portfolio, the audit for the highlights the portfolio reliance on the state and federal mandates to force the creation markets for certain projects and products and trepidation sweet and i think the secretary need to consider. if there is one shortcoming to the audit, it is that it doesn't delve deeply into the history of these programs which i think is essential to understanding how we got into some of the difficulties that we are now facing we're talking with three different programs it is section 1703 from the 05 energy bill from the to the sounds of an energy bill, and then you have section 17 of five from the 2,009 stimulus, and while there are certain similarities between the three, there's some very important distinctions and differences between the three programs.

i just will take a quick moment, mr. chairman, to review them. section 1703 was created by the republican congress and relied heavily upon the credit subsidy cost being self paid by the applicants and made in a project using inouye or sycophant the improved technologies eligible unfortunately isn't closed on a single loan guarantee. then you have section 1705, which was created by a democratic congress accompanied by $6 billion to pay for the applicants' credit subsidy costs narrowly limited eligibility to the renewable and transmission projects. this program has closed on a 27 loan guarantees worth approximately 16 billion. then you have the atv and designed to offer direct loans to the although makers over $7 billion appropriated to cover the credit subsidy costs by just five loans we've heard concerns raised around this table here about that, the last loan was in march of 2011 and the one prior

to that was april of 2010. many of the remaining applicants are withdrawing expressing the clear frustration over the apparent inability to either make an up or down decision on this. more than half of the lending authority remains unused and the program as i understand it is dormant. the 1705 and the atm programs are now dhaka geared by questions of political influence, compliance with underlining statutes and sometimes for an investment decisions we think everyone here is aware of that fact and some may think that piece called for this hearing this morning to pylon to add to those criticisms i don't want to take my time to add to the narrative of the scandal and the controversy the department is already confronting. instead, i would just all for this hard question needs to be

asked and the respondent in full. these programs should be examined and i think they should be improved. that is inappropriate role for congress and more specifically this committee. we didn't expect every single project of the department supported to be a roaring success, but we also didn't expect to see an accumulation of the failures so quickly. there are clearly problems that need to be sorted out and worked through. the audit mr. allison i think is a good first step, and i think this hearing moves us in the right direction. the d.o.t.s loan programs can serve a valuable purpose. i said that repeatedly. but right now, we need to know if the loans and loan guarantees that have been issued through them are as effective as we had all hoped that they would be. we still have tough decisions to make going forward and i hope we can learn enough this morning to make sure those decisions are fully informed. thank you mr. allison and mr. chairman.

>> thank you. mr. herb allison as the author of the report of the independent review with respect to the department of energy loan and loan guarantee portfolio. we appreciate your good work on that report, and we look forward to your describing it to us and making any other comments that you would like before we ask questions. thank you. >> thank you, chairman bingaman, a ranking member murkowski and members of the committee for asking me to testify today. last november was appointed by the chief of staff of the white house to study the department of energy portfolio of loans and guarantees to clean energy project. i was asked to perform tasks. first evaluate the current status of the portfolio to be the second, proposed ways to strengthen management and oversight of the program and third, recommend a system to provide early warning of problems that might harm the portfolio's value. the scope of my assignment did not include investigating past decisions and actions because

several independent investigations are already under way. given the tight 60-day deadline, my team and i relied on readily available information. the department of energy or doe roughly provided documents and arranged interviews that we have requested. we've conducted our review and develop our recommendations independently of the white house and of the doe. we chose to let its for underestimating the losses in the portfolio. the first method is the one that the doe must use to comply with the federal credit reform act of 1990. the second method called fair market value, or fmv is used to the discount from aloneness base value that investors would demand so they could receive an acceptable return if the purchase to the lowland. the fcra and fmv methods of different purposes, so the outputs are not directly

comparable. fcra, the government that, estimates the credit loss on the loans. fmv, the market that it estimates a broad set of costs and provides information useful in managing the portfolio. but fmv doesn't estimate the cost of doe if it holds the portfolio until the loans are paid off. using the fcra method we estimate the expected credit loss on the portfolio will be $2.7 billion, about 7% less of the recent estimate of $2.9 billion. using the method we calculate that investors purchasing the loans would demand a discount $5 billion to $6.8 billion from face value. importantly, neither fcra nor fmv nor any other financial model can reliably predict the eventual loss of the doe portfolio for several reasons to the first for the loans won't

mature for up to 50 years. well beyond the limits of the forecasting. second, most projects are still being built, and some of rely on unproven technologies. the performance won't be known for some years. there does project spread themselves, the risks and expected losses will diminish. fourth, the estimates of loss assume all projects will be fully funded and that doe will be a passive bystander unable to influence the portfolios risk over time. but so far doe has funded one-third of the total commitments. the loan agreements allow it to stop further funding in demand more credit protection of the projects don't meet targets. by the risky projects haven't received any funding and others have been funded only partially. of those projects don't meet conditions into loan agreements doe could cut off more funding and the forecast lost could decline substantially.

for all of these reasons, our focus should be less on these forecasts of losses and more on assuring effective management of the portfolio going forward. doe must be an active manager, continuously monitoring the project, spotting risks and limiting the taxpayer's exposure to loss. the report recommends ways to strengthen management and independent oversight of the program and provide early warning of the potential problems. the recommendations include first, assuring adequate funding and staffing of the program was second, protecting the taxpayers by strengthening of the does position as a creditor wherever possible, and having a clear policy on the funding projects that are not meeting targets. third of determining whether to hold or sell the loans over time, fourth of a strengthening the internal oversight by forming a risk-management and combining several committees

that now oversee the program. fiscal establishing a high-level web site is leeboard to consult with the secretary of energy on the policy matters, sixth, creating an early-warning system covering the market conditions, performance of all projects and loans, and internal operations of the programs. and last, improving the public reporting about the program. think you come and i will be pleased to answer your questions. >> thank you very much. maybe i could ask you to elaborate your report indicates that changes were made in the program to better control risks both before the program review or the review period, and also during the time that you were doing your review. and i guess i would be interested in any comments that he could get on the effect of

these either personnel or policy changes that have been made and what did you think those midcourse corrections have been useful or adequate. specs before, german bingaman. in terms of structuring the loans, they're have been improvements to the structure of the loans beginning in the middle of 2010. the department's loan agreements provided for more staging of the funding, and also provided that the sponsors of the projects it should fund the initial stage with equity before the department of energy will be providing the loan funds so the department would have the opportunity to view progress on the projects. we thought that the terms and conditions of the loans by and

large since the middle of 2010 in most cases come from closely to commercial practice and the industry. in terms of the internal management, they're has been a gradual evolution of the management and oversight of the program within the department of energy, we see that for instance several committees have been formed to oversee and make recommendations to the secretary about committing additional loan funds. however, in our view there still is room for improvement and that's why we've made the recommendations. first fall, to fully staff the alone project office, with permanent professionals there's project finance many of these positions are currently financed by consultants who are temporary

employees. we believe that going forward their needs to be consolidated internal oversight and very importantly, the formation of the risk management department currently. the loan project office executive director oversees the credit department for example, the compliance department. we believe those should be separated and they're ought to be an independent view within the department of energy about risks that is being undertaken as the loans are provided and also about the ongoing dynamic changes and risk within these loans. an independent oversight would be a check and balance and the position should have the ability to call for a halt in the fundamental the secretary approves of there's a different opinion between the risk management department and the loan project office as to

whether that loan should go forward. >> as i can't you are aware, senator murkowski and i and others here on the committee has proposed a bill called the clean energy deployment administration that was published and independent agency outside of the department of energy that would take over responsibility for administering loans. have you had a chance to look at that? do you think that the general thrust of the legislation would make sense as an alternative to the continued housing of this activity in the department of energy? >> german dinham and i have reviewed the legislation. i think that all can agree that there is a need for professional oversight and the use of best practices and managing in overseeing this portfolio. i think that there are several questions that i might pose.

these are more in relation to the policy, again, my briefing here was to be sacked based analysis but in answer to your question, i think that one issue if there is an independent agency within the department of energy, who is responsible for the policy implementation of this program, is it to the new agency or is it the secretary? my understanding is that the agency would be completely independent of the standpoint from the secretary, so 1i think it should provide who is accountable in the second, should there be a sunset provision in this bill? the purpose of the clean energy loans is to provide funding for projects until they reach commercial maturity and funding is available given ample amounts

in the public markets. unlike many other programs administered by the government, which have indefinite future is like student loans or fha and so forth, this is intended i believe to be a program that would run only a certain number of years, so perhaps there needs to be some type of sensitive provision. as i read the bill it would allow the agency to be able to borrow to fund its operations. this could mean that this agency would have not only equity perhaps $10 billion, but in the senate funding capability. is there a possibility that it might start to grow in size and begin to crowd out private

sector financing? that is one potential risks. could it become an independent force in and of itself? i think these types of issues need to be carefully looked at before the decision would be made to go ahead kucinich thank you very much. senator mikulski. >> mr. allison when we created the loan guarantee program, there were a number of terms and conditions that were inserted implementation, and i want to ask you three questions i hope pretty brief that one condition and the program is that there would be a, quote, reasonable prospect of repayment. in your opinion, what is the prospect of repayment? is it and 80% chance that is going to be repaid, 70%, is it higher, is at lower, what is

reasonable? >> that is an excellent question, and we actually looked at the history of that term in the legislation, and goes back quite a long way. but nowhere could we find a definition of reasonable prospect. >> how would you define it? >> i think that is precisely the issue. how does one define it? i would say the reasonable prospect would probably mean more than a 50% probability. but others might define it as a 90% probably get rid of that amount of feed as there's a great deal of controversy and second-guessing about this program, so i would respectfully give clarity to these policy goals regarding financial recovery. skype let me ask you another one, where i think that we ran into a situation where there were some vagueness. another requirement was that the

obligation is not supported at to other financing. ..

a couple of techniques that are mg that are unavailable or at least are in doubt to the doe. and one is to deal to subordinate because at least you'll get something back of the investment. the second is to be able to contribute equity. and -- were to convert to equity in this case it looks like that is ruled out. if i may speak more broadly, these laws confine that type of financing that the government can make. there is literally no of ciphertext pears if these projects succeed. there is strictly debt. there is one case, tesla, where the government to take options. apparently, the government can take equity interest as a condition for making a loan, but

it can make an outright equity contribution. at think for early stages of investments it might be suitable in some cases where the government to contribute equity to prevent a control issue from arising wedding government controls a project. mlb nonvoting, convertible preferred or 56 of something like that. one broad observation would be going forward the legislation like this, there might be a wider variety of options. the map be more consideration to recovery in gains for taxpayers. if a few projects were to pay off a lot, that might help to pay for any losses in the portfolio and other projects. >> let me ask you one more, and this is a requirement to, provide an amount sufficient to carry out the project. got to be pretty difficult to determine the overall cost of a project and whether or not available funds that will be -- will be there are sufficient to cover the amount before we have

issued this loan guarantee. and we finish that? >> well, most of the cost is going to take place during the construction phase until this project is up and running and begins to generate revenue. and at that phase of the loan agreements provide that there must be very detailed budgets. there must be independent engineering analyses and then reports as progress goes along. as i mentioned before, there is phase funding, so certain benchmarks and mawson's must be met before funds are advanced. >> is that happening? >> yes. and so that -- it is easier to estimate the cost. there still may be overruns, and most of these laws provide for some kirsten -- cushion in case of overruns built-in. there is -- to our understanding

frequent reviews of progress in all of these projects. what is the unknowable is what it -- was these projects are operating, especially those without a power purchase agreement, which is pretty much guarantee toes of revenue for the entire project capacity going forward, in the case of the manufacturing ventures they have no power purchase agreement. they have to sell into the market. how well they will succeed in a dynamic, highly competitive market -- princess, for electric cars, that is open the question. that is why we divided up the portfolio the way we did in to utility power purchase agreement type financing's to the non utility loans, including manufacturing ability "to sell the electrical components are cars. and then ford and nissan which is a large component of the whole portfolio, those were investment-grade credit to miss a we treat them differently.

azeris it analyzed. the real risk, much of the risk now would say in the portfolio is in these nine utility manufacturing company. >> senator. >> thank you, mr. chairman. thank-you very much for your analysis. very helpful to us. as someone who was deeply involved in offering the advanced technology vehicle manufacturing program section 136 working with our chairman, at the time when we put that into the energy bill there were a number of things that were happening in terms of the credit markets, but also we were in the legislation, the energy bill in 2007, we were raising the fuel efficiency standards. and we were encouraging more smaller fuel efficient vehicles. i was extremely a -- concern that the time that production

would go overseas if we did not in some way to support the plants. that is how we came up with this particular program, and in fact, it has done what we wanted to do, at least at the beginning. it stopped at the moment, but what we looked at ford motor company retooling their michigan assembly plant in massena saving 1900 jobs, they are bringing jobs back from mexico were related to the operation. as are a number of other operations. so first i would just as a statement, mr. chairman, we look at global economy where germany, china, india, japan -- every other country wants to do manufacturing, advanced manufacturing so that they have good middle-class jobs. there'll providing support in some way for financing tax incentives and so on. at least as it relates to a tv program, that is very much with the goal of that is coming to make sure we are providing that

support to keep jobs here in america. what would you recommend to make this retooling program more effective at this point? >> first of all, i would point out that this program -- these programs are intended to encourage risk-taking. that is the whole point rally. and so having risen in the portfolio is understandable. i think what is important going forward is to make sure that this portfolio is well managed by professionals that there is in the panera risk oversight of this portfolio, that there is ample public reporting on each of these projects and how they're doing so that the public and the congress is kept well informed. and while these programs are being managed, i again commend there is some room for improvement.

i think that with the recommendations that we are putting forth, if those are adopted, i think that this portfolio can be irresponsibly managed going forward. >> speaking more about the risk because i know this concerns. there have been criticism. at find it interesting that your report suggests some of the risk associated with loans has actually gone down, in particular with the retooling, manufacturing retooling loans. you calculate risk associated with the ford recently none in the sun had decreased by 95 percent. >> that's right. >> and then i would suggest it is in part because countries like ford or making fuel efficient vehicles. consumers are buying, doing -- doing well, it has been a real success story. i wonder if you talk more about other reasons for changes in risk assessment that you saw in

your report? >> well, first of all, some of these projects have progressed. you know, ford is the best example. during the height of the crisis of the automobile companies, and even ford always did not need a bailout, they were also suffering during that time. ford has to is a remarkable recovery, and that is why the debt that the government now holds from ford is rated investment grade, triple the today. that has had a major affect on the overall risk composition of this portfolio. and so i think that as projects, as i mentioned in my testimony, as they progress, as long as they are progressing according to plan their risk in that project declines. a major component of risk in many of these projects is during the construction phase, especially for the utility

related projects because once they are completed they will have a binding a long-term contract with an investment-grade utility to purchase all of their protection so i think that again, in several years the terrorist in this portfolio should be demonstrably improved if all goes according to plan. >> a key very much. >> thank you. >> thank you, mr. chairman. i wanted thank you for your work. very important to have someone taken independent look at the situation. i guess my question goes back to more fundamental question. we have some celebrated failures. it's hours the public in terms of use of taxpayer money when there redevelop these failures. your technical estimates of

several billion dollars of taxpayer money. i guess my question goes to the, what is your take on the question of the government limiting its investment so that basic research and letting the private market take more of the risk in terms of the commercialization of various products. new innovations. have we learned some lessons from our first sub direct money to specific industries as specific companies? political influence and decision making process. these allegations him about allegations that on some of these laws there were directions from policymakers at the white house for political directors coming down in terms of certain industries and so forth and so on. are we just -- and now we're talking about better management of the process, but is the basic

process open to have a fatal flaw to start with? could you just give me your thoughts on that? >> thank you for the question. a very important question. i am a big believer in the capital markets having spent most of my years of my professional career in the capital markets. i think that if we look back in history here and i'm sure you're aware of this, and the energy field that many other fields like medicine, a transportation, the federal government has played an important role in getting projects off the ground to the point where they can stand on their own. if you look at the space program now reasserted to see commercial launch companies coming in to effect an operation. the government had to fund the initial stage. nuclear energy is a great example. so where they're is a policy,

and this is where, of course, the senate and house of representatives have to make the decisions there may well be a legitimate role for government financing. however, the financing is to be tailored to the policy goal and to the risk characteristics of these projects and to, where possible, provide a mechanism for taxpayers to benefit of projects are successful with federal money. i do think that there is the so-called belly of death in various phases of financing for it play energy, the government can play a effective role. this project is to be carefully researched, and they need to have financing structures that protect taxpayers. there ought to be a finite life to these types of programs which are intended for a specific purpose, a certain amount of time until these industries

mature. >> well, i think your recommendations should we go forward of a basis of allegis said would be helpful in that regard. it concerns me when i read the inability to attract the necessary people and necessary skills and experience in order to work in the public sector to make these types of valuations, particularly when they're using someone else's money, making these evaluations and the private sector, bottom line is you ultimately counts. and so therefore i think this naturally you get a much keener and sharper look and do diligence before it you commit the funds. secondly, it is outside the political process. there is a possibility here that falls on both sides. some of these programs in terms of the continue to read about the political influence. for instance, stepping out of

this field and to another, remember talking to the head of the nih. he said congress would not direct how we do -- how we allocate our money, we could be making breakthroughs in life-threatening illnesses that are very, very close, but carries to selling as, you have to put the money somewhere else. i'm afraid part of the beast year and a zest for my political sam pointer in terms of our thinking responding to gosar requests. we have a better ability to direct weather they go to private sector. i think we get in trouble. my time has expired. and did not come to preach. you do come out of the private sector. i think your evaluation of this is important for us to your. >> senator, --

>> go right ahead. >> on your final point, senator, i think it is important that these programs be reviewed periodically to see whether they are still relevant and ideal for what the current climate and objectives that are being sought. i think in terms of making sure that there is professional staffing, as we pointed out, there is no provision for long-term funding of the alone project office. i think one of the reasons why it's difficult to attract and retain professional talent is that people don't see that if they come into the government in one of these roles, that this program will be funded down the road. it is funded now out of origination fees. so as lazar close funding comes into the department of energy that underpins this loan project office. was the origination stops that funding to levels. this program has laws that are

going to be up there for a tone to the 30 years. it is going to be enacted professional management for the entire time that the government holds these laws because decisions would have to be made all along the way. so to attract people i think they need to have assurance that the funding will be there, otherwise why should they join a and never see this program? >> wasn't that our goal? all concepts for the program, investment, 30 in 40 years out. >> well, what i'm talking about, center, is that if there is it an ongoing program where you have to be making loans overtime then i think you need said think about having a sunset provision. when do we stop making new loans? one is the private market able

to finance these types of projects without given assistance? once long-term loans like these are made they're going to have to be administered. now, as you point out, one consideration should be, should the doe sell-off these loans? was they are matured and they're is a public market for that, should they sell-off? or, should they hold them? we presume that they're going to all that for many years. if a guard told the for many years is going to have to have professional oversight to make sure that the taxpayers are being protected. >> senator, thank you, mr. chairman. thank you for your good work. it seems to me that as you drove into this and look at the various kinds of loans you come to the conclusion that not all energy loan guarantees are created equal. and you then compare that to the statute the loan guarantees

statute which basically blocks everything together. you say to yourself, that sure looks like it is right at the heart of what the congress ought to be trying to do. you have made a number of constructive comments today that check with my thinking. if there is a private sector investment, for example, that signals the message that people can feel more confident if this is something that can work. utility linked loans, for a sample, which the pacific northwest, as you know, has been very interested in. utility linked loans insured that you already have a customer line that, customers lined up from the get go which also should give a measure of confidence. and i think my question to you as a result of sort of starting with this proposition that not

all energy loan guarantees are created equal, my question would be see you, would it make sense for the congress to really step back now and look at restructuring the loan guarantees statute tech, in effect, set up different categories that recognize fundamentally different risk to the taxpayer? and you would measure, for example, something that would ensure that there is a market from the get go that could be one category, something else which was exciting and promising, but did not have the same level. a different, you know, a category. my question to you is, what it makes sense to restructure the loan guarantee statute along the lines of recognizing different risks to taxpayers?

>> senator, i think that is an excellent bought. i think that you do have a wide variety of loans in the spring ram. i think that the fact that -- by the bin is to be great clarity about the purposes of the programs as a whole and what they are designed to receive. and again, as i said before, i don't think there is anything wrong with making some loans that are admittedly risky as long as we are balancing at the time the risk in the loans. at think one of the causes of controversy about this program is that there are differing expectations about what this is supposed to be doing. i think your question hits on that. and you could have some programs like the utility link loans where, as the rest so much better understood where you have much less risk once these projects are built.

there are certain risk characteristics. that is why we divided the portfolio. there may be very good reasons to be supporting early stage innovative manufacturing companies increased energy. to get those industries of the ground, that has to involve higher risk and that should be abolished. there should be different types of financing available so that greater risk, there ought to be prospects to greater or for taxpayers. the way this program is structured today, one size fits all, these are loans and government rates. and not sure that in all cases they need to be at such a low interest-rate to attract funding . the fees that the doe can charge a very low. there is no provision for upside in terms of some parts of an equity link came. and so maybe there is a different type or package of financing that should be available for riskier projects

that, firstly, the utility projects where they're is a pretty conventional approach to the structuring. >> i think you, and i thought the senator also read a lot of sense when she was saying right from the get go, nobody goes into this thinking that everything is going to be 100 percent and i you know, winner. a dramatic opportunity for creating scores of new jobs in the like, but tax preserve better, it seems to me, then a program that lumps solyndra, in effect, in the same category as one of these utility link project that has the customer up front. i think this is another area to and i appreciate all your answers where we can do better for taxpayers in this country, do better for some of the most exciting and promising technologies. i see senator sanders. he talked a lot of the aborigines and renewable energy. we have a chance to make some exciting changes in this country we restructured this program.

i think you furling the hearing. >> senator, -- >> thank you mr. chairman, and i agree with my colleagues in the taxpayers deserve better i appreciate your work of this. the report had a section called brightly protecting the taxpayers' interest. the report says that doe should aggressively strengthen its position as lender or guarantor in cases where boris secretly for requirements in the loan repayments. senator murkowski addressed that you know, with regard to the situation with solyndra, the secretary has argued the department of energy did not violate the 2005 energy policy act when restructuring the loans. they restructured and it worked in a way that i thought put the american taxpayers and a disadvantage. they were subordinated to other financing. so, you know, they understand the secretary saying that the law applies to origination loans, the restructuring of loans.

i don't agree with that interpretation. at the policy -- energy policy act of 2005 does not distinguish between a rich sense of loans and restructuring of loans. with that said, we do support legislation to ensure that american taxpayers will always be paid before private investors , whether in origination or restructuring. -- >> senator, thank you for your question. i think of the paramount issue is recovery for taxpayers once these loans are made for policy purposes, based on my experience in the commercial world i think that in this case the department of energy should have some flexibility to subordinate because that may be the best way was the loan as the ec on a senior basis to recover some money for taxpayers. because by subordinating it may make it possible to attract additional funding from other debt investors, which could help the project succeed.

sometimes these projects going to run into trouble. they are, after all, risky, but that does not mean everything has to be lost. their knees to be creative refinancing for projects as a way to protect taxpayers. actually, in his the probability that they will get some of their money back. >> in this seems to be the subordination in the cases did not work to accomplish that goal. thank you. let me ask about bonus payments. the following upon what you said about taxpayers and getting value for their money, several departments of energy loan and grant recipients have recently filed for bankruptcy. the laid-off workers, a serious financial difficulty. the media has reported several of these companies, including solyndra, all worth large bonuses to executives and other employees, specifically bonuses to executives of employees are being laid off. last week it was reported that begin powers bonuses were

specifically linked to executive's progress in the landing the company's $43 million loan guarantee. so what if any protections are in place to ensure american taxpayers don't put a bill for bonuses awarded at failing companies. >> thank you, senator. first of all, let me emphasize we did not like the solyndra and begin. we have not let the companies that receive grants. rarely looking at the loan program. i think that it is important -- and the provisions in the -- in this law allows for this, and the department can certainly have policies on this. they should be looking at all the expenses claimed in these programs. and they may want to build them the capability to reveal, for instance, compensation programs. i am not sure that that provision is end these loan agreements, by the way. that is something that might be

considered because i can certainly understand the public consternation as people receiving bonuses while the company is varying toward bankruptcy. >> that will be one of your recommendations in terms of assuring the pieces like this to take place. >> i think that is a reasonable idea. yes, sir. >> thank you, mr. chairman. >> thank you. senator sanders. >> thank you, mr. chairman. thank you for being with us. in terms of the full disclosure, let me just be very clear that i happen to believe that global warming is very real. at think it is closing enormous problems to our planet today. at think it is totally irresponsible that we are not moving as aggressively as possible to reduce greenhouse gases. ..

what we are talking about today is the role of government in energy, and we have been focusing on solyndra and the 1705 program. beckham the 1960's and the 1970's there was a huge overbuild in terms of nuclear projects. in fact as i understand about 100 nuclear facilities were

terminated and huge expense both to the ratepayers and taxpayers. right now i find it a bit ironic that some of my friends talk about taking lenders and losers but wouldn't you agree with me that for the last 50 or so years the united states has picked as one of its lenders a very risky industry called nuclear power, an industry which, and please correct me if you disagree with me but not be in existence today without the strong support of a federal government in terms of the price and insurance per demint furthermore, in terms of the attempt to get rid of nuclear waste. so what the nuclear industry be in existence today if it were solely dependent upon the wall street and the financial community to support them. >> i would like to respond to

your question but i must confess i don't have real expertise on that question. i think that's a very broad and deep question as to whether the government should have been sponsoring nuclear energy. i do believe as a general comment that in any nascent industry right now you could look at nuclear fusion which could be the answer to a lot of our energy needs and could be a very clean source of energy. >> i'm sorry to interrupt you, i have a limited amount of time. people talk about winners and losers is it fair to say that for the last 50 years the united states government has decided that one of the winners in which we should make huge investments is the very, very risky nuclear power? >> the only comment i would make is that early -- and this is from my own experience i can comment on this, and early phase of any industry is very difficult to pick winners and

losers. therefore often you find financing for a lot of different approaches to solving a particular problem, and overtime one learns a lot. >> i agree with that. the only point i am making is that when some people talk about the riskiness of certain types of sustainable energy or the problems with solyndra is it fair to say that we've seen that may be ten times plus in terms of the nuclear industry which has at certain times already lost huge amounts of money from the taxpayers in this country? >> i would respectfully answers i think that your next witness, secretary chu, is a far more qualified expert on that question and i am. >> thank you very much mr. chairman, yes, we do pick winners and losers and probably the great winner in terms of federal subsidies is not only nuclear industry by fossil fuel as well we've pumped billions of dollars into those industries,

and i for one thing that it's time to begin focusing on energy efficiency and sustainable energy. thank you, mr. chairman. >> thank you. senator lee? >> thank you mr. chairman and mr. allison for being here. i certainly agree that an audit of the program is warranted wholeheartedly. the question for me is whether the government should even be playing venture capitalists with taxpayer money in the first place, whether in this specific sector the energy industry or elsewhere. i want to make clear my concerns over the administration of the loan guarantee program should not be mistaken for the approval of the program as a whole. when companies like solyndra and begin power fail millions of taxpayers' dollars are wasted,

and it's clear that the government in my opinion truly has no business being in the investment business. the apparent basis for the program as i a understand is that there are certain types of investments that are so inherently risky that only the government can invest in them only the government will invest in them. today if i am understanding what you're saying correctly to be somewhat dampening the risk of the investments it seems a little bit contradictory to say that on the one hand the government intervention is absolutely necessary because only the government can do this and that it is too high for a private equity markets, and then also to claim that it is an appropriate risk of taxpayer

funds because there are adequate safeguards in place, so which is it? is it too risky or are the risks manageable? >> senator, thank you for the question. i think that these are policy questions that congress needs to grapple with and answer. i'm not sure that -- you can get a blanket answer to your question. i think, and you know this far better than either the congress is constantly deliberating about what is in the national interest and the public interest over the long run, are the payoffs such initiative from the public it may not be the financial direct returns but they may be social consequences, whenever that make it worth the government's while to be involved. i think that there are numerous areas where private financing, and i'm talking about health initiatives for example, and that's why we have an i.c.h. doing research and we find

research in universities and physics and lots of other areas, so there may be a legitimate role for the government where private financing is not available. i believe as i mentioned earlier that the programs should be constantly reviewed in the extent there are programs in place to see whether they are still necessary. do they still meet that policy need, or are there private alternatives today? i believe ultimately the best allocation of resources will take place through private interactive markets. >> part of the inquiry were not to involve, is the risk manageable? if it is manageable, couldn't it under certain circumstances be manageable from a private capital standpoint? spec that is a very legitimate question. >> and if it is and then perhaps we shouldn't be putting tax payers' dollars at risk. so the majority report did not consider either solyndra or become power and that is because as i understand, that is no longer part of the program.

those are finished. >> cementer, they were no longer really part of the portfolio because they were in bankruptcy and the value would be determined in the courts and through recovery. >> do you have any way of guessing how that might have affected your report or what your report might have looked like and what might have been different had those still been on the books, had those not gone through bankruptcy at the time that you conducted the report? >> i don't want to be speculating that we have applied the same methodology is examining the loans of the companies were still to the extent of that in bankruptcy, and the process the we used in each case is totally independent, and we took a look at the voluminous information on each one of the loans to try to gauge the risk at this time but that engineer reports, rating agency reports and so forth, so we would have followed the same process where. and i don't want to be speculating as to what we would

have found, however, because we didn't look at those two companies. summit might this have been one of the instances as you acknowledged in the report certain procedures were not followed in certain documents were not completed and so forth. >> i believe, senator, that there are investigations under way. i don't want to be speculating about that because i have no information about solyndra that's not available in the newspapers. >> thank you pure i see my time is expired. thank you pure >> thank you, senator frank and. >> if i heard senator lee correctly, he says that if a project -- if the risk is manageable we shouldn't be putting tax others at risk and if it is unmanageable, we shouldn't be putting tax dollars at risk; did i hear that correctly? therefore we shouldn't ever put tax dollars at risk.

now i agree with senator sanders, we have a global climate change problem. we have testimony from the director of the forest to the khator foreign service the other day who said that the duration, intensity of the forest fires are caused by global climate change and it is just going to get worse and we are spending more and more money on that if there is an actual cost to the taxpayers at risk because of the global climate change. subarctic beetle is even more and more forests because of climate change, because they don't buy from severe winter set certain elevations when they used to. so it is actually costing the taxpayers dollars at risk if we

don't address and try to get clean energy. so it seems to me that our tax dollars are at risk if we don't do something. that is what it seems to me. so it seems like we have got to do this as smart as possible. that is what it seems like to me. so i want to follow-up on senator wydens comments and questions, first of all i just want to say that i appreciate the faeroe investigation you have conducted here. let me bore down on something very specific. one of the most important aspects of the loan guarantee program is the right credit subsidy of the loans. of the cost is too high to accompany it may not be able to

seek the loan and it may be the technology that has a lot of promise. if it is too low, the taxpayer may not be adequately protected from possible loan default. and as you noted in your report, in some cases the subsidy costs were underestimated while in other cases they were overestimated. my question is can you tell us what you're observing with respect to transparency of the credit subsidy cost calculation can the credit subsidy cost calculation for each individual project be done in a more transparent process that the public can access? >> we did look because we had to make our own estimates as to what the credit subsidy we think should be.

like any financial model, it has strengths and weaknesses given in the intended purpose. the purpose of fcra, the credit reform act method used in budgeting is to have a consistent approach applies to all programs across the government, and fcra can certainly do that. for instance, it uses the same government discount rate pretty much for all of these programs to aid in terms of the estimated loss on these particular loans and the portfolio, you then have to calculate a credit rating because the credit rating is used to determine with the default rate is expected to be given that credit. for instance most of these are single d or vv credits, and so what is done is to look at the years of data across the different types of loans retek let's say vv and siggerud

historical what is in the full rate, and then you plug that rate into the model and then there is a recovery rate let's say the alone does go bad and you have to recover in bankruptcy what has been the typical rate of recovery against the amount of the loan or the value of the assets after bankruptcy? the weakness in that model was that you are using indexing on board before rates and recovery rates and the wide variety of the loans that are not particular to the use of credit nature of these loans so there is no easy way given the novelty of the loans to calculate what the people rates and the recovery rates are going to be. and fair market value, another method, has some advantages and that will apply in an estimate of a target rate of discount to

determine the discount the investors would demand in order to purchase this loan at the interest rate that it has and get a market return given the risk. that also has weaknesses because you can't apply that in budgeting very easily across the government because each discount rate would be different. there would be a lot of contention about what is inappropriate discount rate for each one of these. i think it would be hard to have the standard budgeting process, so it's important with all these models to understand what the purpose is, with the strength and weakness of the models are and lastly, don't give too much credence to these models estimating with the ultimate loss will be especially with loans like these that have 20 or 40 year lives that are dealing with novel technology and the government has the ability to control the rest in its exposure in a variety of ways. it doesn't have to advance all the money from example if the projects are not meeting their

contractual benchmarks. so given all that, that's why we concluded here are the estimates using the models as best we can do. don't pay much attention to that or they think we are going to lose to planned $7 billion. that's not the case. it may be less. it could be a lot less than the indicated by that number. what's important is to manage the portfolio a very actively from day-to-day. you have it, it exists, you better manage it very carefully on behalf of taxpayers and use the terms of the loan agreements to the head at the taxpayers', so my time is way up, but what you are basically saying is that there isn't necessarily a scientific subsidy calculation here for this subset of the loan guarantees, but the management

of each guarantee is of tremendous importance. thank you for your work. >> senator paul? >> thank you for coming today. do you think that the commissioning of your study had anything to do with the political of crites over the bankruptcy of solyndra? >> senator paul, i couldn't speculate on that. >> were you commission after it became public that solyndra was going bankrupt? >> yes. >> i find it curious than that we have this huge public outcry over this huge collapse of oversight where a billionaire gets a 500 million-dollar loan from the u.s. government and goes bankrupt, turns out that his attorney husband works in the department of energy granting the loans and we are going to study oversight and we are not going to look at solyndra? i find that very, very curious, and my question to you would be did anyone from the administration ask you either verbally or in writing not to

mention or looking to solyndra? picks been a a direct answer to the question is no. >> did you have the power to look if you wish to? you're mandate looks to be wide open. you're supposed to look at oversight. look at where the problem is. >> i was asked to but that the loans that exist now to this the mcginniss current status of the portfolio strengthen management and oversight of the program if you were going to strengthen oversight, certainly look where the problem sort i wouldn't think -- this seems to be so myopic and politically motivated by a very skeptical of why you don't look at solyndra when that is the whole reason that your commission was over solyndra. but here is the third thing is you have got solyndra going bankrupt, blight source may be going bankrupt, what about blight source, did you look at the right source? >> that wasn't a part of this program, sir. >> isn't bright source a part of the current level? it got on page $8 billion from the loan portfolio and the thing

is who owns bright source? robert kennedy jr., another politically connected obama contributor who gets $1.8 billion of our money. you know the profit was? the loss, they lost 13.5 billion, 1.8, is bright source ever going to get out of that? why are we giving taxpayers' money to a family that has killed hundreds of millions of dollars? this is about crony capitalism, this isn't about starting a solar panels, it's about giving money to people who already got enough money. let them make their own of loans that they like solar panel, let them do it. but i don't understand, and you didn't look at any of the problems until we come to conclusions about oversight if you didn't with the companies where the problems originated. >> i understand your question. i think first of all, there are several investigations under way. and if we were going to get that, we would have needed the

investigatory power, subpoena power, the right to demand documents. we would have taken probably many months if not the year, and we would have been going on top of the investigation. estimate very specifically the public information that is out there on the solyndra, the husband attorney worked in this part of energy does that have a red flag for you? >> again, senator, i have not looked at those. >> if you knew that the attorney for solyndras husband worked in the loan department granting the department of energy does that send of red flags, yes or no? >> senator, i don't know the facts. >> if you knew somebody used to work for the kennedy family companies now works in the department of energy and approved the one planned 8 billion-dollar loan estimate does that set up a red flag? if you are commissioned to look at oversight and your reputation is on the line as an independent person or commissioned to look at oversight, and you didn't look at where the problems in

oversight or pumas degette shall become a senator, we have looked at that. my point is regardless of those facts, we were going to do as thorough a process of reviewing the policies and procedures of the department of energy regarding the management of the portfolio. i think we did that. i think that we can to our own independent conclusions about first of all held the portfolio is being managed and you see a number of recommendations about a dozen. >> do we give loans to the company's? >> we gave loans under the law the loans could be made to the u.s. companies. >> he got 500 million. my understanding is they're spending and building cars newfoundland; is that true or not true? >> these are at the time and again we did not investigate whether the law was complied with in all cases. that wasn't a part of our review. however -- connected to get the 500 million directed towards

jobs in finland? >> the entities that borrowed the money are u.s. companies. they may have ownership from abroad but the u.s. companies for instance nissan north america is a bar where and it's owned by a japanese company but it is a u.s. corporation. specs before. >> we have a second panel which is psychiatry chu and i would suggest we go ahead and thank mr. allison for his testimony and going it to the second panel unless there is any reason not to. >> thank you very much. we appreciate your being here in your testimony today. why don't we see if we could ask secretary chu to come in so we can hear his perspective and ask him some questions.

>> [inaudible conversations] >> mr. secretary, thank you for being here. welcome back to the committee. as you know, we just received testimony from herb allison and out his report reviewing the department of energy loan and guarantee portfolio, and we would be anxious to hear any thoughts you have on that same subject and then i'm sure the senators will have questions.

so go right ahead. >> there we go. thank you, chairman, remember mikulski and members of the committee. thank you for the opportunity to discuss the the part of energy efforts and to grow americas clean energy economy. as a part of our commitment to be responsible steward of public dollars, the departments cooperate with the congress' request to discuss the loan portfolio and welcome the independent review of herb nissan. he released a thoughtful report and made some important for recommendations but even before the conclusion about mr. allisons review we took steps many of which are consistent with the report's recommendations to improve the loan program. this includes working to ensure that our team has sufficient number of skills and experienced personnel to monitor and manage the portfolio to protect u.s.

taxpayers. with improved and we continue to improve the positive fees for the product of monitoring alone administration compliance, reporting and resolution capabilities to take into account the best practices. in addition, we have put in place rigorous internal and external reviews told the loan program office accountable. the department takes this responsibility to the u.s. taxpayers seriously, and we are working closely and the recommendations for additional improvements. mr. allison at the portfolio looked at the risk factors behind each loan and estimating each loan cost. mr. allisons report concluded that the department is using the appropriate risk factors in assessing each loan. the federal credit reform act defines the cost of the programs as the estimated shortfall to leave the long-term cost

appropriates the report finds department has estimated the cost in fact mr. allison estimates that the long-term cost of the outstanding portfolio is 2.7 billion, roughly 200 million lower than the departments most recent estimate. the purpose of the loan program is to provide low-cost financing to innovative clean air deutsch projects that have been the unique value to the nation's in terms of providing clean energy and the development of new industries. overall, the loan programs have been successful and growing in america's clean energy sector. the department supports roughly three dozen and are expected to

import more and 60,000 americans generate enough to cover 3 million homes and displaced nearly 300 million gallons of gasoline and julie as these are just direct benefits they do not include additional supply chain jobs. the loan program aspiring tens of millions of dollars of investment projects and helping to unlock private capital to read things in part to the loan programs we last year the united states regained the title from china as the leader in total investment in clean energy. that party is using all the tools at our disposal including the wall street program to strengthen the clean energy economy so we can compete globally. improvements in technology and dramatic reductions in the cost are driving a global revolution and clean energy. last year a record twittered $60 billion was invested globally and clean energy. the question is no longer with their clean energy economy will arrive or whether america will

lead it. as the opportunity grows, so does the competition. many countries have a stelle list supportive policies the making major investments in everything from the renewables, electric vehicles to the next generation biofuels. the clean energy job of the future the united states must do more than invent technologies it must also manufacture them come to deploy them here at home and sell them around the world. production of the energy technology benefits from scale simply put to have a competitive clean energy industry we need programs to help spur deployment and markets. america faces a stark choice today. we try to win the clean energy race or well we've watched the rest of the world pass us by. can we invested america's workers industries we can invest in america's workers and industries and innovations or send it money and jobs overseas to import the technologies of tomorrow. throughout history of aviation jet culture to computer technology the federal

government has supported the private sector to keep the united states at the technological forefront of important industries. it's hard to take a page from the playbooks week when the clean energy race while we must act now. i know that the committee tuesday plea about our energy future and i look forward to working with you to ensure that the united states leads in the clean energy economy. so i think you and i am pleased to answer your questions. >> thank you for being here. let me start with a general question. you advocated strongly for winning the clean energy race which i hear you say before and i've done myself many times in fact it's clear we have several different clean energy racist -- raise is of these technologies working on that and the technology has various other efforts going to achieve that.

the second so-called clean energy race might be the manufacturing of these technologies so we create the jobs here that are going to be created in this area. third is the deployment of clean energy technologies and think you correctly point out that there is another possibility that we would essentially see to the rest of the world the ability to develop and benefactor technologies and just decide all we can do here is in port them and hopefully to pour them that it's a different challenge. i guess that senator wyden correctly pointed out that when we put load guarantee program into the 2005 law we hadn't separated out the different types of clean energy or energy

projects that might require a level of government support for the loan guarantee and we hadn't perhaps adequately segregated those out. i would be interested in any general thoughts you have about the appropriateness of us going back and trying to be sure that we are doing all we can in each of these choices to be sure that the united states doesn't drop out of the competition. >> a portion of the testimony i agree with him and the report. the report that took the loan program and divided in certain sectors and to consider the sector where you are deploying a known technology whether it is wind or solar or the proven track record, there are

considerably less especially if that project and has a utility company which is a solid utility company with a good bond writing with a long-term so-called power purchase agreement that is to say you have signed a contract this utility company will pay this amount for this and looked as the generation by wind or solar and as long as that utility company is a strong stable company, this risk of the loan is different than the risk of the new innovative startup company. it is a considerably less, but it does help very much in the deployment of these projects so that is one class of loans. the other class of loans that congress asked us to invest in our investments and clean innovative and fraud during and whether it's in the evolution

board. however, the mechanism we were tasked with using the rules tries to assess what are the risks to these loans and using the destination in the report says that we were on par with their evaluation of the risks of the loans and congress had appropriated the money appropriated not from meaning the money could have been spent on other things to hire the could have been spent on research, could have been spent on hiring policemen and teachers, but they chose to appropriate because they recognize there was an opportunity to actually help these industries and help create jobs.

>> i think mr. allison also said it's extremely important that you get the right professional employees working at the management and oversight of this loan portfolio over the long term and that in order to do that, you need to have a short funding for this so the people might actually consider leading the private sector in coming to work for the department to pursue this. do you have anything on that recommendation? >> yes, i agree with that recommendation. i think it's very important and we are in the process of trying to bring in a career professional and as noted in that because we had the stuff they quickly we hired a number of consultants to give us the financial expertise and we very much want to bring in to this

program people that experienced the project and its experienced finance in general, and so we agree with that. it's very important because of the tenure of the loans some 25, 30 years, it's very important, and because we have the specific grant milestones repeater a close attention, milestones that then allow the loan program to give another and a lot of money it's very important that we follow each of these carefully. >> senator murkowski. >> mr. truman and secretary, thanks you for being here this morning. it was -- it's important to hear mr. allison speak to the audit but it's also equally important that he was the secretary of the department of energy be here to speak to some aspects of the loan program. in the report from mr. allison come he states that doe should better define the balance between policy goals and

financial goals. i look at that and to me it is a pretty basic managerial function, and i guess i was a bit surprised to learn from the audit perspective mr. allisons perspective that that was in fact lacking. so the question to you is how would you grade the department implementation of the loan guarantee program this far? >> when it started it was new. we made a lot of improvements and people will continue making improvements especially since we all know that we know that sometimes the industries that particular loan might be embedded in camera but the change. that in particular is something you need to watch and sometimes on a weekly basis. so, we think that -- i can't say

an official grade but i think one of the things that the report and mr. allison is talking about this for a simple the vagueness also goes to moly the department policy with the law itself, what do you mean by the significant chance of -- >> that is an important thing. as a committee, i think that we are tasked this oversight. the loan guarantee program is in place. i want to make sure that it is working as we had hoped that it would come and we would not see, again, some of the somewhat stunning failure that we have seen from at. based again on the results of the audit, but you have observed and through the interactions of your folks. it looks to me like we need to do some changes. this is not tweaking a program that some serious changes to this program so that we do have

assurances to the taxpayers, so that we do have a structure in place that provides and allows for a level of accountability. i know that senator stabenow is probably going to ask about the atvm program and the fact we haven't seen those loans go out the door under the 05 fact we haven't seen any of the loans go forward and then from vara results from the stimulus dollars that came in, we had a lot of money about the door and that is where we are seeing some pretty serious concerns, so i'm looking at this and if i had to give a great as if i had to assign a letter grade to the department at this point in time it isn't a passing grade. and i think that we need to be able to do much, much better, and i would like to think if you said just that you are going to be moving forward with some policy changes. but i think that we need to be aggressive about that.

let me ask a question, this is kind of a follow-on to what i had asked mr. allison. some of the conditions that are in the 05 energy bill as it relates to the loan guarantee programs, one of the midst of reasonable prospect of repayment. we certainly faced with solyndra and the failure to repay the loan. there is another requirement in the law that says no guarantee shall be made unless the secretary you determined the end of the obligation is sufficient to carry out the project and it is now clear in hindsight that with solyndra that condition was not end here to $75 million had to come in from private investors and to make that happen when we saw then was the subordination. doe put taxpayers second in line and that bankruptcy, and that has caused a great deal of consternation. did you make the determination as that time as the law required

did he make that determination that the amount available when the loan guarantee was close that they were sufficient to carry out the solyndra project and if you did make that determination, how do we get to where we are today which again is a pretty bad mark on the book? >> when the loan closed during the commitment when the loan closed, there was a world of difference to win the time of the restriction of the loan we knew that the company was trouble, but to your earlier point about what we intend to do, much of the things that were in the report we are doing. we set up a brisk committee. mr. allison and his colleagues recommended that there would be a risk management structure. we agree with that and set up a different independent part of

the loan program that would look at strictly the risk before the report was submitted and the report acknowledged that we were doing that. we were taking his advice and we reached this out ourselves we were outside of the program per say to be part of the body which and it's important we get additional advice on that. so in terms of the specific loans mentioned there was a rapidly changing dynamic during this period what time, and during that restructuring, we knew that the chances of repayment was low, but what we did is we did something that we fought in the best interest of the taxpayers as mr. allison pointed out, when asked

specifically what you be in favor of the requirement of what not subordinate anything come and planned very clearly that we follow the statute in the time of origination no subordination, but there has to be mechanisms to draw additional investments to get out the highest chance of recovery to the talks. so, what we did, and i think that the allison report confirms we were doing this that would ensure the highest return of the money given the circumstances would rather be changed in the circumstance. >> my time has expired, and i want my colleagues to have an opportunity to speak but i do think it's important that we also look to some of the other aspects of the report that speak to the importance of the real-time control to make sure the risks are properly managed, and i think solyndra is a perfect case in point where we missed on that with regards to

the polis a look an issue and where it was at that point in time to others in the panel in the factoring business. i'm going to refer to my colleagues as they have an opportunity to question. >> senator shaheen, you haven't had a chance to ask questions. go ahead. >> thank you mr. chairman and mr. secretary for being here. yesterday i held a hearing on the uss at the naval shipyard and the was the naval committee. we heard from secretary of the navy brazos and former secretary of the navy and senator john warner and also some of the top-ranking officials with an uneasy and the marines about what they are doing to implement the energy efficiency and the

navy and the marines who are on the front lines in afghanistan. we for a couple of things i think are important to this discussion. one is that being able to look at alternative energy sources like renewables that can be used in the field are critical, reducing our dependence on foreign oil is vital to our national defense, and there is a direct correlation between the dependence on fossil fuels and casualties on the battlefield. now, one of the things i would hope he might address this morning, and i would point out i know the energy, the department of energy is working closely with the navy with the department of agriculture on the

biofuel, which are a critical point of trying to reduce the dependence of our military on foreign oil, but can you talk about how the programs we are talking about as a part of the loan guarantee program relate to our national defense and how critical the or if we are going to make some of these changes on the military side of our government? >> certainly. let me begin begin with biofuel. a lot of the things we invest in from the the energy we think that the biofuels has considerable promise and by that i mean we think that they have considerable promise in developing technologies that can compete in the open market without subsidy and that is our goal. the united states is great agricultural resources if we can use biological waste or things

that don't compete with the farm land we think it is a great opportunity to offload our dependency on oil especially if the technology is advanced to the point you can produce the biofuels and so the profit and a business of $80 a barrel, something like that. we also do a lot to give not only the military but the consumers and businesses the advancement of batteries is very important. batteries are important because rather than trucking into the hawsers ralf usually diesel fuel can generate electricity you could have a light weight system with a lightweight battery that could be part of your supply chains of its important. >> we saw a demonstration of that yesterday that was very impressive that are already in

use in afghanistan and heard about how much weight and also began not having to provide the resupply convoys. >> that is yet another aspect of the increasing as people attacked the supply lines and some of our soldiers and and please die from these attacks we think it's very important that you -- we develop these programs. remarkable progress with batteries for example. recently in the summit conference the company the support announced that they doubled the world record energy density which appears to have had no additional cost to the and factoring. and they are optimistic it can go much better than a pittance, this is something that is going to be very important. not only for the deployed areas but in general for the military

we think is a very important part of stretching the u.s. tax dollars so the mother to rekindle the security in a way by saving energy and having a close working relationship with the department of defense. >> again, we saw some excellent examples of that to save money and also because less dependent and more efficient. my time is up with me make one other comment about the hearing because one of the other things we heard from all of the military officials who testified by sending signals to the private sector about the importance of these energy efficiency and renewable technologies the role of the government has a role to play in doing that is very important to the national security.

thank you mr. secretary. >> thank you. senator bingaman had to go to the floor to speak to an amendment and instead i would call once an utterly. thank you, mr. chu for joining us today. shortly before you begin the energy secretary you were quoted as saying, "somehow we have to figure out how to boost the price of gasoline to the levels in europe. the price of gasoline as i understand was about $8 a gallon which is a lot of money. last week in your testimony come over in the house of representatives, it is my understanding that you indicated the high gas prices are spurring research on the alternative energy. i understand the point at least so far as it's made to the exclusion of another more compelling point which is

provides more capital that can be invested in the research and development purposes and research and development money is definitely needed to help the alternative energy. as a legal duty that perspective into account. i don't think that the high gasoline prices held anyone. i don't think they do anything other than hurt the american people. look, i don't know how much driving you personally do. as yourself, and so you may not be personally feeling the goucher pump, but i can assure you that hundreds of millions of hard-working americans do feel this. they feel that every time they refuel their cars. some of more than others, but all feel it. and while hard working americans continue to suffer because of the price they pay at the pump, and the corresponding prices that they have to pay the grocery store and everywhere else because all of these costs and getting passed downstream. i hope the administration would

take that into account in its energy policy and pursue an energy policy that acknowledges the fact that whether we like it or not, we as a people, we as human beings living in this country today continue to be dependent on liquid fuels, and we have to continue to have a source of demand that means we have to continue a robust policy of aggressive exploration and production of petroleum and natural gas. instead of senate focus on this administration. it has placed most of its emphasis in this area on some failed policies including a lot of subsidies of alternative energy projects. and on that note, the recent gao auditor of the loan guarantee program found that, quote, doe didn't always follow its own process for reviewing

applications and documents in its analysis and decisions, potentially increasing the taxpayer's exposure to the financial risk from an apple default. it went on in that same report to determine that doe, quote, also hasn't completely documented its analysis and decisions made during reviews, which made to the committee and the nine applicants and the public's confidence in the legitimacy of its decisions. ortiz accurate and are these to be statements accurate in your opinion? >> well, let me first respond to this statement so i can make correct the record. since i walked in the door as the secretary of energy i have been doing everything in my power to do what we can to reduce these as we see these spike to reduce the prices, and the administration, the president and i personally -- yes, we do acknowledge and feel the pain of model lady american

consumers but american businesses when they see these prices increased. what we can do, all of the tools available, we are using, but in the department the most important thing we are doing is to offload the dependency on oil using natural gas for transportation, electrification, biofuels, all of these things. >> are you saying that you no longer share the view that we need to figure out how to boost gasoline prices? >> i no longer sure that you. >> you did then that you don't now? >> when i became secretary of energy i represented the u.s. government, and i think that right now in this economic very slow but, you know, a return that we need to have these in the comeback of our economy and we are very worried about that

and so of course we don't want the price of gasoline to go up, we want it to go down to. but go to the gao report. the other part of the report within a few sentences of that showed the diligence the we did in the loan program was actually considerably more thorough than the private sector did. the thing that you are referring to come and i admit there is truth and that is that we had in the beginning of the loan program started in 2007 or 2005 serious about 2007 a lot of the input was in paper form. a lot of the input was such that it was we are moving towards making those records electronics is that you can have a more modern data the this is my true of the loan program quite frankly, it is true throughout

the department of energy as a kind of techno guy i like the idea that we have electronic records rather than paper records and i am encouraging the department to make this transition and we are doing it in the loan program. >> you think that will bring about more compliance with the department's process these? >> the gao reports that because the records are here and there and not in the central repository, it would be harder for the loan program over all to see what is going on and so it is a part of their risk-management going forward we've recognized need a sense of the repository's data set you can get some access to this but my time is expired. thank you. >> thank you very much.

i want to talk with the vehicle technology program, and first let me say in your testimony when you talk about the fact to when the plane energy jobs of the future the united states must do more than infant technology we must also manufacture them and sell them around the world i couldn't agree with you more to me and i appreciate the fact that when all i was able to make this program part of the 2007 energy bill that passed it wasn't implemented in the last administration and was a priority for you and the administration and it was in fact implemented in 2009. that's the good news. we have good things to report, jobs being saved the jobs coming back from overseas, and now we are in a spot where we have incredible delay year after year

after year. we have one company that in fact indicated that after spending $25 million as a start up on a three-year replication, the application was never completed. i am very concerned about where we are right now and something that clearly goes to the heart of keeping advanced manufacturing in this country. you know that we are competing with countries are around the world. our companies are competing with companies that are providing tax incentives that are providing finances and get a sense during a number of things come and the toole program goes right to that effort of getting advanced technology and manufacturing to keep jobs here rather than overseas, and so i wondered as we look of course we want to protect taxpayers' dollars. of course that is absolutely critical, but how do we streamline this process at this point so that it actually is meeting the goal it was set up

to do? >> senator, i think that we are very much on the same page year in total agreement with regards to the importance of the atvm loans. we believe that is also flexible the loans to ford and nissan generate thousands of jobs and ford is over 20,000. a big success story because that loan enables ford to retool to sell now a major leader internationally in selling very competitive cards. this is exactly what the loan program was intended to do. and it is a great success. i think that the loan to generate produces cars in tennessee and another great success. having said that, we do have to look at the taxpayers' money, and as conditions change, we have to say, again, going back

to the original covenant of the law which says is there a reasonable chance of repayment come in many instances we feel that we would like to see private equity invested in these companies and then there are milestones after the private investment so we can then say all right, we can help you grow your business and so we are very sensitive to those things trying to balance the line as you noted between stimulating the manufacturers with these loans, and again one of the big success stories and making sure that especially in the company where we have to independently assess the market projections to make this rapidly dynamics of that we try our best to do that for the taxpayer money nothing that we

do want to stimulate investment in manufacturing in the united states. >> and i appreciate that mr. secretary. at this point the way things have gotten bogged down and the slowness of it is deceiving the whole purpose of what it means to be done because it is an unattainable situation for the businesses that are on the edge to the will to move forward to create the new technologies but waiting three years is just too long to people to come up with those judgments. let me ask you one other thing, what changes would you suggest to make the program more effective to possibly have more opportunities for companies? we have passed now twice in this committee legislation that would expand to medium and heavy-duty vehicles. we noticed a tremendous energy savings and larger vehicles, very exciting work is being done. would you support something like

that with more opportunity to save energy and create jobs? .. >> mr. secretary, i

appreciate being here. the department has the $10 million prize for a wide ball that is energy efficient and affordable. the prize went to philips lighting. how much does that winning libeled retail? >> rule-making guess. >> 40 or $50. >> $50 per affordability award goes to the $50 labeled. you think that is affordable for american families? saying the average household has over 40 loopholes? a riyal asking american families to spend $2,000 to trade loopholes? >> absolutely not.

-- light bulb. >> is for technology. parking places you have to hire people to go up to a crane is very affordable. traffic lights, it pays for itself. it is to stimulate future developments. >> the president claims he promotes fairness. he talks fairness lot. a headline more than half of his fund-raisers got jobs in his administration. the bondholders who collected at least 500,000 were given jobs. obama hired one thunder as a liaison it as the energy department. he pressed to find allies of

government loan for solyndra. another bundle lourdes was an investor. good gao released the loan program that good deal we did not follow its own process to document decisions increase in the taxpayer exposure to financial risk from the applicant default. is seen as i did frustration looks -- does good looking now for friends but what about american taxpayers? >> first. that taxpayer was firewalls from making any decision before any loan. level lonesome and jumper crow he was pressing after the conditional commitment was made to finalize but not part of the decision making process. >> additionally, electric

vehicles. president in north carolina promoting electric cars. last week returned general motors suspending production of the chevy volt. if failed to meet sales expectations prepare your department cut off funds to fiscal automotive fifth failed to meet sales expectations. ranging between 40,000 and $100,000 is that a practical solution for families? especially as the president increases the tax credit for luxury vehicles from 7500 dow up at $10,000. is raising the tax credits is that the rights and fair

thing to do? >> as you may know, this goal of the the -- department of energy is to develop the energy to drive down the price. in the $25,000 range, but the cost of ownership is less than the internal combustion engine because you will save in the gasoline those. if you take internal combustion getting 30 miles per gallon, with today that is around this $1,400 per year. if you get the elector vehicle to drive the same

amount it is about $300 electricity. we are focused on driving those blows down. so the cost that the american people can afford. >> mr. chairman? >> i have the invisible gavel. thank you for being with us. talking about a high price of gasoline and what it does

put those who speculate and drive prices up, goldman sachs of soc estimated speculated -- speculation adds $0.56 per gallon of guest. >> cannot say to the estimate goldman sachs has made. to put on the additional price as speculation, but i agree futures to pay a roll. if southwest was to global

their cost of energy, but they use the fuel. that is a financial mechanism to help them plan. that is the stabilizing role for prospects. but futures trade back and forth, back and forth and nobody takes delivery it is different. with the prices i don't know. not what it was meant to do. >> my and standing right now we have 100,000 americans working at 5,000 solar company is. the impression is sustainable energy is doing terrible, companies not making money, not creating

jobs. in recent years not unrelated to the work you're doing, we have seen a significant increase jobs comment installation of solar panels, energy from wind? >> we're making in dramatic progress. we have almost doubled renewable energy from 2008 with those sources. >> that is not insignificant prepare and creating jobs as well. would you agree virtually virtually the scientific community around the world recognizes global warming israel and caused by human activity and if we don't give a handle on greenhouse

gas emissions, all kinds of problems in the future for the country. >> yes. i agree. >> mr. secretary, talk of the role the federal government plays in support of energy technologies. is sustainable energy the only one to receive help from the federal government? >> looking backward, every form of energy received substantial help coal, oil, guest, nuclear, t hey received substantial hopes. >> natalee emerging but still sell? >> in some cases. correct. >> it is ironic some friends

on this committee expressed distaste for loan guarantees then went to build 100 power plants setter nuclear but would not take place at all without of federal loan guarantee? is that a fair statement? >> it may not be. what you are driving at. after we subsidized emerging technology it is successful on its own, a good case to be made it does not need federal support. we think renewable energy, i don't know this decade or the next but not 30 years from today, it will be the same as any new form as

of -- energy, and be competitive. until that day, it could use more support. you can sense that that. industries that do quite well, we can ask do they need continued support? >> there is a new plant proposed standard joke. how many federal loan guarantees? >> the vogel power plant is a consortium of believe a conditional commitment about 8.$3 billion per growth that credit subsidy is paid by the applicant. it has sold 1% scorer but it

is paid by the applicant. i was hedging. i know before approval another set of two nuclear reactors are not applying for a loan. i cannot say definitively. >> of the federal government repeals price anderson which is a federal insurance program god forbid nuclear accident? willow street be prepared to invest 1108? >> i agree. >> thank you for your excellent work. my only point* i hear sustainable energy attacked but yet to you have the great industry totally dependent and would not last

two days without the federal government. senator paul? >> they give for coming secretary to. have you met george kaiser? >> the only one i can recall. >> are you concerned about the propriety giving 500 million to a billionaire than changing the rules so he gets the better deal than the taxpayers? >> i am convinced that nothing i have seen that there is any connection and church kaiser had raising money had nothing to do with the loan. solyndra was the head of the

line picked by the previous department of energy under a different administration. it was advanced as the most work done on that loan to satisfy the conditions. >> that is troubling they're the best case but then when they graft. what is troubling is $500 billion loan to a guy who was a billionaire? why? >> there are other investors associated with the republican party. >> i would not give it to them either. >> the politics was not part of the decision. >> is there a question of propriety is somebody who works for you, married to

somebody who works as a lender. there may be a fire wall but he never wrote e-mails in favor of solyndra? he did? correct? >> he was corresponding after it was approached. >> do you think it is appropriate at any stage? >> in the beginning is a little excuse but the word solyndra and never should leave his lips. i think it was. >> department of energy has rigorous standards but his wife was firewalls from doing any business with solyndra as walt -- as well. >> cabbie met robert kennedy, jr. >> guide to not recall. >> how many times? >> buydown not sure. [laughter] >> are you aware of the

kennedy family fortune worth hundreds of millions of dollars and we gave his company 1.8 billion somebody who works for you who used to work for the kennedys? >> i am not aware. >> wany to look into that as well. this suggestion will go on. the revolving door big business into the department of energy, 1.8 billion dollars given to a large campaign contributor to the president. the u.s. ahead or the organization giving these loans and looks bad. do you give loans to foreign companies? >> those men to manufacture in the united states. >> what about the oscar? >> we give a loan to a

design group in los angeles and another part to manufacturing in the united states. the money is targeted. >> gained a stand they were struggling here. and the money would be used in finland? >> the loans are for american jobs. >> no money goes to finland? none of that? >> we give loans for jobs in america and very clear about that. >> so he is not using any taxpayers' dollars in finland? >> i can give back to you. it is far manufacturing jobs. >> you can see our concern for broke even though we pay for the windmills did have

come subsidize saying they are not profitable. we just throw money at them. i don't see the purpose. we should not be in this business at all. you choose $50 libels. nobody and stance that. might counseling and device is get out of the business. don't be involved. by your involvement it looks unseemly. i don't question your character from academia. but you overseas something that does not pass the smell test. >> thank you. senator sanders hast to go vote for perot senator paul

paul, you don't have to go to if you don't want to. [laughter] >> you have to play the percentages. [laughter] thank you mr. secretary. i want to ask about the competition in the world with these technologies. it is important we keep pace don't fall behind china, india, europe. just as i was listening to other questions on the heather panel, thinking all of the above, i know the president is criticized for

example, he may not approve offshore drilling everywhere. what about all of the above? my feeling is all of the above does not mean all of the above. but if it does, certainly it means innovation r&d, patterned after what is created the internet to comment tell me if i am wrong, has created some jobs? >> i think you are right. >> thank you for that validation. also what mr. allison refers

to as investment. so we don't have the valley of death. and rehab had some investment by the federal government to commercialize it. that is what the loan program was about. >> it is mischaracterized the government being a venture capitalist. it is at an earlier stage. the debt is to deploy a commercial scale where a large investment of capital is needed. when these were set up, then authorize, the end of

2008, the credit market froze. this is why many countries have the bank of their own to allow industries to grow. china has a credit line one year of $34 billion of renewable energy. netherlands, germany, englan d, they have these types of programs. >> aren't they simply looking at the future? the near future in terms of the competitive global environment, these technologies this is where we're going. >> yes. they want their industries

industries, in their countries, led to the advantage. if all the countries have any sort of government financing is one thing. but large number doing this we should ask purcell's what should we be doing? >> we want to be competitive in these technologies that is 10 and nervous part of the world energy economy? right to. >> ignoring fact seems almost willful to not understand where the world is going. >> i domain to be harsh. would you would read? [laughter] >> raising differently

looking at private sector investment, ultimately what we want to do. alone program, most people agree stimulates private sector investment at 10 /1 ratio. this is a good thing. the laws are far less than what was authorized. the aggregate, it has been very good at stimulating private sector investment and success. >> my time has run out. i am now the chairman. [laughter] solyndra was 3.3% of the entire 17 '05 program. there are risks.

me have one senator come up my friend and colleague says about the loan program, if the risk is manageable, we should not put tax dollars in nebraska. if it is not manageable we should not put tax dollars at risk. in other words, never put tax dollars at risk. he signed on to all of the above. i would suggest anyone that is for all of the above and not the loan programs is really not for all of the above. >> of caution when the

president doesn't end open every square mile of the continental shelf to drilling, the criticism he is a hypocrite to come by they should be careful in that regard. train that is doing 36 billion? >> lines of credit to at 34 billion to renewable or the clean energy sector. >> i think it is absolutely crucial for all kinds of reasons that we invest in clean and renewable energy for obvious reasons.

and also, hear about the $50 libeled -- light bulb i faint what laptops were when the first laptop came out. the essentially of mainframe. compared to now everybody who can come mike gets one. that is what that is about. the $50 lipo. are you expecting every american to spend $2,000 per year on my polls -- light bulb strikes me as disingenuous or not understanding the purpose of develop