The problem, in both cases, is the same: a panel of senior jurors picks winners without really understanding how and why the shortlist was chosen. And, at least at the Loebs, the final jury not only has the ability to award no prize at all; they even have the ability to award the prize to a piece which the junior jury deliberately left off the list of finalists.
The final jury is filled with important worthies: there’s no point in them just being a rubber stamp. But at the same time, the lower juries tend to be much more familiar with the pieces in question, and tend to have put a huge amount of thought into determining who should be on the list and who shouldn’t be.
To take a not-entirely-hypothetical example: what if someone won a Loeb award for a piece which rehashed a much more original work in the same publication, dated a couple of months earlier? That would be bad. But this would be worse: if the rehashed piece was deliberately excluded from the list of finalists for obvious reasons, and then reinstated by the final judges, just because they had no idea why it wasn’t included.
The problem, in general, is a lack of communication between the first-round and second-round judges. The final-round judges should be much closer to the initial-round judges, going back and forth, asking them why this made it through and that didn’t. The final decision can remain where it is, but it should be much more informed by the people who picked the finalists than it is right now. Because if the second-round judges don’t talk to the first-round judges, the first-round judges are likely to feel rather disgruntled. Especially if the winner was never on the original list of finalists, or if there’s no winner at all.