Shake Shack, Then Harvard: Who’s Minding That $2.6 Trillion?

At some point today, Congress and the White House will sign off on a bill authorizing an additional $380 billion in federal emergency aid for small businesses. The money will then begin making its way to banks and, ideally, find a home with tens of millions of shops unraveling amid the coronavirus pandemic.

We aren’t living in an ideal world, of course. This $380 billion follows a previous $349 billion lifeline Congress teed up for small businesses. That earlier fund evaporated in just a couple of weeks, and perhaps only about 5% of the nation’s 30 million small businesses — and possibly significantly less — got their hands on it. Some of it went to more well-heeled enterprises, including Shake Shack and, as the Associated Press reported, 94 publicly traded companies that didn’t appear to be prime candidates for small-business rescues. Shake Shack gave the money back. Others haven’t.

Upon learning that Shake Shack disgorged its $10 million in public aid, Treasury Secretary Steven Mnuchin, who stewards the small-business program, took to Twitter on Monday to note that he was “glad” the company did so. Given that there are likely to be myriad companies and possibly many billions of dollars that wound up in the wrong hands, Mnuchin might stow his joy for the moment. It was his team’s responsibility to make sure banks properly vetted and prioritized borrowers to avoid foul-ups before taxpayers’ money went out the door, not after.

Although Mnuchin has used selective data to spin the first round of aid as a success, he and the Small Business Administration haven’t released enough information about exactly who was funded, and how much they received, to convince outside observers to agree with him. The money was meant to support employees of small businesses, and it’s not clear yet whether workers received it or what impact it will ultimately have if the crisis is prolonged. And the Treasury Department, like so many federal agencies these days, also may not be in fighting shape — which raises questions about its broader ability to manage the most sweeping financial rescue in history. Senior positions at the Treasury Department have gone unfilled, and the agency’s lack of experienced leadership and expertise is particularly apparent in its domestic finance unit, which would normally handle the bulk of financial engineering needed in a rescue of this magnitude.

All of which begs a more general question about oversight of what is now a $2.6 trillion federal airlift of individuals, businesses, state and local governments, health-care providers and other public institutions: Who’s minding the store?