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Pandemic watchdog calls the number of investigations into arts and restaurant bailouts ‘underwhelming’ and ’embarrassing’

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A top federal pandemic-aid investigator said the number of investigations into $43 billion in emergency grants to restaurants and entertainment businesses has been “embarrassing” and “underwhelming.”

William Kirk, the new inspector general for the Small Business Administration, urged Congress to give prosecutors more time to bring charges against people for defrauding two lesser-known pandemic aid programs: the $28.6 billion Restaurant Revitalization Fund and the $14.6 billion Shuttered Venue Operators Grant.

“There is no possible way that our office would be able to investigate all of the outstanding referrals and cases that we’ve received in the SVOG and the RRF program,” he said at a Senate hearing on Wednesday. “The scope of the work is such that we would need much more time.”

Business Insider reported in 2023 and 2024 on hundreds of millions of dollars that flowed from SVOG to artists like Lil Wayne, Post Malone, Marshmello, and Nickelback. While those grants may have been legal under the extremely broad language passed by Congress, records showed that some artists spent their taxpayer grants on lavish parties, private jets, and multimillion-dollar bonuses for themselves.

Senator Joni Ernst has pushed to extend the window for bringing charges related to SVOG and RRF fraud. Ernst previously said her Democratic counterpart, Senator Ed Markey, wasn’t letting the bill advance, though Markey’s comments at the hearing suggested the logjam might be breaking.

“I am committed to passing this legislation as part of a comprehensive set of reforms and look forward to working with the chair to advance it, along with other bipartisan priorities,” Markey said. “That said, our efforts to fight against fraud should not be limited to going after small restaurants and theaters, especially when President Trump is letting off fraudsters left and right.”

The bill had been caught up in a larger dispute about other small-business programs that provide research funds to early-stage tech companies. Markey said in a statement that a deal had been reached to extend them for five years.

Kirk, who was sworn in early January, said in prepared testimony that while hundreds of complaints have poured in about potential abuse of the Shuttered Venues program, his office has six open investigations. He said that while his office’s investigators and auditors are “dedicated professionals,” they were focused on other areas of fraud in recent years.

In response to questions from Ernst, who leads the Senate small business committee, about whether Kirk’s office would have time to bring charges before time runs out in April or May, Kirk called the office’s work on those programs “underwhelming.”

“The handful of investigations — quite honestly, it’s an embarrassing number — of investigations we currently have underway, those would probably time out,” he added.

Congress has already extended the statute of limitations to charge some fraud related to the Paycheck Protection Program and Economic Injury Disaster Loans, two larger and better-known programs, tacking on another five years to the normal five-year window to bring charges.

Some Democrats at the hearing pressed Kirk to investigate the activities of the White House’s Department of Government Efficiency at the SBA.

Asked by Senator Jeanne Shaheen if he was concerned about the office’s activities, Kirk said, “Not currently, no.”




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Jeremy Grantham called pandemic crash but screwed up his trade: memoir

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Legendary investor Jeremy Grantham raised the alarm on an AI bubble, revealed a pandemic bet that didn’t pay off, and recommended young people steer clear of Wall Street in a memoir published last month.

The GMO cofounder wrote in “The Making of a Permabear: The Perils of Long-term Investing in a Short-term World,” which he coauthored, that ChatGPT’s release in late 2022 shored up a crumbling stock market and created a “bubble within a bubble.”

There’s “no clear historical analogy to this strange new beast,” Grantham wrote, but the AI bubble is likely to “at least temporarily deflate,” allowing the original market bubble to pop.

He issued a grim outlook, warning that the massive run-up in stocks has frontloaded returns so the market’s long-term prospects “look as poor as almost any other time in history.” Investors face either a “dismal return forever or a hefty bear market followed by a normal return,” he added.

Grantham also predicted that past interest-rate hikes and “ridiculous speculation” during and after the pandemic would “eventually end in a recession.”

“The US market since at least 2020 has been in a bubble,” he wrote, adding that even though bubbles can be unpredictable, all of them have popped so far.

Right bet, wrong size

Grantham disclosed in his book that he anticipated the COVID-19 pandemic would tank the stock market, but he didn’t win big from the prescient call.

The investor wrote that he dug into every rumor about the mystery virus in January 2020, and determined it posed a serious medical and economic threat, especially if countries bungled their responses.

He took steps to protect the portfolio of his family foundation — the Grantham Foundation for the Protection of the Environment — from a slump in stocks, and later convinced his GMO colleagues to prepare for trouble too.

“I get to brag here at how early this was compared to most,” Grantham wrote. “The bad news was that when the smoke had cleared, our trade was so unlevered and so lacking in cleverness that we really might as well have done nothing.”

Grantham contrasted that with Bill Ackman, whose Pershing Square hedge fund spent $27 million on credit-default swaps (CDS) on investment-grade and high-yield CDS swap indexes in February 2020.

Those derivatives soared in value within weeks, and Ackman sold them for $2.6 billion by late March, scoring a nearly 100-fold profit. The windfall offset losses in Pershing’s equity portfolio, and Ackman plowed more than $2 billion into stocks before they rebounded.

Grantham said his comparatively lackluster pandemic trade was a reminder that he’s “good at research and judgment, but left to my own devices sometimes mediocre at implementation.”

He gave another example of that shortcoming. He recalled publishing a bullish outlook the day the stock market hit its low in March 2009, but “neither I nor our Foundation nor GMO came close to maximizing the potential rewards of such a highly confident call.”

Skip the finance job

Grantham wrote in his book that he enjoyed the “intellectual challenge” of investment management, but came to view it as a “trivial activity.”

“If I started out all over again I’d prefer to do something that has some socially redeeming features,” he wrote.

Grantham said the world needs more people with practical and scientific skills to weather hard times and tackle existential risks such as climate change.

“We are going to have desperately difficult years ahead,” he wrote. “And I would urge young people with talent to do really seriously useful stuff: engineering, farming, metal bashing and serious science and research because we are going to need those kinds of skills.”

Grantham added that his foundation invests in new ventures that could “save the day” by harnessing geothermal energy or replacing toxic food packaging with greaseproof paper.

He wrote that making strides in “something so important is more satisfying and exciting than the equivalent breakthrough in making money in the stock market.”




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