'They don't get to summer in the Hamptons? Who cares?': CEO says US should let companies owned by billionaires get 'wiped out' during the coronavirus crisis

Chamath Palihapitiya Founder and CEO of Social Capital, presents during the 2018 Sohn Investment Conference in New York

  • Chamath Palihapitiya, CEO of the investment company Social Capital, told CNBC the US should refuse to bail out companies owned by billionaires during the coronavirus pandemic.
  • More than 10 million Americans filed for unemployment and Palihapitiya said they are the ones hurt most by the economic effects of the coronavirus pandemic, not big business executives.
  • Palihapitiya said that employees wouldn’t be fired if massive companies filed for bankruptcy, rather speculators would take the hit.
  • Visit Business Insider’s homepage for more stories.

Social Capital CEO Chamath Palihapitiya said that poor-performing billionaires, hedge funds, and massive companies — including airlines — deserve to be “wiped out” during the coronavirus pandemic, in an interview with CNBC.

Palihapitiya insisted during the interview that “zombie” companies run by billionaires that aren’t performing well shouldn’t be propped up during the public health crisis, they should be exposed to the market forces at play.

Nearly 10 million Americans filed for unemployment in a span of two weeks. Palihapitiya argues that it’s average Americans filing for unemployment that will bear the brunt of the economic crisis, not billionaires, their companies, or hedge funds. 

“On Main Street today, people are getting wiped out. And right now, rich CEOs are not. Boards that have horrible governance are not. Hedge funds are not. People are,” Palihapitiya told CNBC. “It’s happening today to individual Americans, and what we’ve done is disproportionately prop up and protect poor-performing CEOs’ companies and boards. And you have to wash these people out.” 

But Palihapitiya emphasized that the employees of these companies would not be at risk if the companies went under. Instead, speculators and the wealthy would take the hit if the companies failed.

“When a company fails, it does not fire their employees, it goes through a packaged bankruptcy,” Palihapitiya told CNBC. “If anything, what happens is the people who have pensions inside those companies, the employees of these companies, end up owning more of the company.”

“Just to be clear, who are we talking about? We’re talking about a hedge fund that serves a bunch of billionaire family offices?” he said. “Who cares? Let them get wiped out. Who cares? They don’t get to summer in the Hamptons? Who cares?”

As the economy slips into further disarray the US government stepped in.

The Senate passed the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, nearly two weeks ago in order to support individuals, businesses, and the healthcare system. And the Federal Reserve also plans to boost the economy by providing $2.3 trillion in aid which includes loans to businesses, big and small.

Yet, Palihapitiya stressed the idea that the economy would be better off if the Fed gave money to average Americans rather than financing businesses.

“I’m not disagreeing with what the Fed has to do,” Palihapitiya said. “What I’m saying is it’s creating a land mine, and it’s creating a bill that will have to come due.”

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Source: businessinsider
'They don't get to summer in the Hamptons? Who cares?': CEO says US should let companies owned by billionaires get 'wiped out' during the coronavirus crisis