My understanding that Harvard, with its $40 billion+ endowment, received a line-item grant of federal funds in the CARES Act, which is different than receiving a loan from the small business relief program. That doesn’t make it any less embarrassing for the university, however, especially when their less lavishly funded peer institutions are in the process of furloughing and laying off staff (and Harvard ended up doing the same with dining and residence hall staff, even though they could have easily afforded not to). Harvard getting money from the legislation is the classic rent-seeking behavior Americans hate, and the university should be downright ashamed of itself.
On top of the Harvard controversy, at least 75 publicly-traded corporations sought funding from the small business relief program. While it is possible to argue that their behavior might allow people to keep their jobs, these companies could have sought funding in the bond market. In fact, the Federal Reserve has been spending trillions keeping that market alive so they could do so. But they would have received less favorable terms than the small business relief program, so they stole the funds intended for small businesses instead. IMHO, they deserve any boycotts they get.
President Trump said Tuesday that he is going to ask large businesses and institutions like Harvard University to return money that they received as part of a coronavirus relief package.
“I’m going to request it,” Trump told reporters at the White House on Tuesday. “Harvard is going to pay back the money. They shouldn’t be taking it.”
“I’m not going to mention any other names but when I saw Harvard, they have one of the largest endowments anywhere in the country, maybe in the world. They’re going to pay back the money,” the president continued.
A small business loan program established by a third coronavirus relief package signed into law last month has fallen under scrutiny in recent days amid revelations that major restaurant chains, hotels and other big businesses were able to tap into the funds. The $350 billion program, called the Paycheck Protection Program (PPP). ran out of money last week and Congress is on the verge of passing legislation to replenish it.
The coronavirus relief package that established the PPP also allocated billions to support higher education institutions and reports surfaced last week that Harvard would receive over $8 million in funding.
Treasury Secretary Steven Mnuchin told reporters at Tuesday’s briefing that the Treasury Department would be issuing guidance on the certification that businesses need to meet in order to qualify for the loans.
Shake Shack, a major burger chain, announced Monday it would return $10 million it received through the program.
“We have over a million companies that have received this with less than 10 workers. There is very broad participation in really small business. I will comment there have been some big businesses that have taken these loans. I was pleased to see that Shake Shack returned the money,” Mnuchin said. “The intent of this was not for big public companies that have access to capital.”
Mnuchin did not single out Harvard specifically but the president did shortly thereafter, noting that the university received relief funding. Harvard did not receive funding through the PPP.
Mnuchin also said he wanted to give companies the “benefit of the doubt” by assuming they didn’t understand the requirements but warned of consequences for large businesses that take advantage of the program.
Asked to expand on what those consequences could be, Mnuchin did not provide any specifics.
“We’re going to put up very clear guidance so that people understand what the certification is, what it means if you are a big company,” Mnuchin said.
Some have called for reform to the program, run by the Small Business Administration, in order to ensure that the funds go to small businesses in need.
The Senate on Tuesday afternoon passed legislation allocating over $300 billion more for the lending program. Trump has endorsed the legislation, which was the product of negotiations between the White House and Congress, and Mnuchin said he expects the House to pass it on Wednesday.