Venture Capital CEO Dumbfounds CNBC Anchor by Saying Billionaires and Hedge Funds Don’t Deserve a Bailout: ‘Let Them Get Wiped Out!’

 

Former Facebook exec Chamath Palihapitiya dumbfounded a CNBC anchor on Thursday when he argued that billionaires, hedge funds, and mismanaged corporations, like airline companies, don’t deserve any federal bailout or stimulus money.

Speaking with Scott Wapner, host of the Fast Money Halftime Report, the Social Capital CEO unapologetically brushed off concerns for Wall Street’s financial giants, comparing their relative discomfort to the real economic pain being suffered by unemployed workers.

“Lastly, let me ask you one last question,” Wapner said. “I think we all agree that more money for Main Street is needed. Maybe not in spite of the money to all of these companies or whatever that make up the economy as well, hat more money is needed everywhere, perhaps. Are you, you keep saying ‘propping up zombie companies.’ Are you arguing to let airlines fail?”

“Yes,” was Palihapitiya’s curt answer.

“Wh – Why?” a stunned Wapner said after a beat. “How does that make sense in the broader scheme of the economy?”

“When you look at, this is a lie that’s been purported by Wall Street. When a company fails, it does not fire employees it goes through a packaged bankruptcy . The people who have the pensions inside the companies, the employees of these companies end up owning more of the company. The people that get wiped out are the speculators hat own the unsecured tranches or the folks that own the equity. And by the way, those are the rules of the game. That’s right. These are the people that purport to be the most sophisticated investors in the world. They deserve to get wiped out.”

“I don’t understand why does anybody deserve to get wiped out from a crisis created like this?” an still-incredulous Wapner asked. “How does anybody deserve to get wiped out?”

“Just be clear, like, who are we talking about,” Palihapitiya shot back. “A hedge fund that serves a bunch of billionaire family offices? Who cares? Let them get wiped out, who cares? They don’t get to summer in the Hamptons? Who cares!”

When Wapner noted that many employees of major corporations own stock in their employers’ companies — and would likely lose most of those investments in a bankruptcy — Palihapitiya pointed out that those shares typically represented a tiny minority of corporate ownership.

“You can look on Bloomberg and see what percentage these companies are typically owned by,” he explained. “These things are owned by BlackRock, these huge, amorphous organizations, ultimately downstream is the employee owns a few hundred dollars.”

“Like a natural disaster, why does anybody deserve to get wiped out? Wouldn’t that be immoral in and of itself?” Wapner tried again, pleading the case for Wall Street.

“No,” Palihapitiya push back. “On Main Street today, people are getting wiped out. And right now, rich CEOs are not, boards that had horrible governance are not, people are. Six million people saying I don’t know how I’m going to make my own expenses for the next few week, days, months. And so it’s happening today to individual Americans what we have done is disproportionately protect poor performing CEO companies and boards. You have to wash these people out.”

“Well —” Wapner said, still reeling from the force of Palihapitiya’s argument. “We’re going to continue the debate another day, Chamath,” he said, chuckling. “You always give us something provocative to chew on, you did it again. Thank you for coming on today.”

Watch the video above, via CNBC.

 

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