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A Venture Capitalist Is Going Viral For Saying The Government Should Let Some Billionaires "Get Wiped Out"

"They don’t get to summer in the Hamptons? Who cares!”

Posted on April 10, 2020, at 1:43 p.m. ET

Richard Drew / AP

Chamath Palihapitiya on the floor of the New York Stock Exchange in 2017.

A CNBC interview going viral on Friday shows a venture capitalist urging the government not to bail out billionaires and hedge funds and instead let them "get wiped out."

In the interview recorded on Thursday, Fast Money Halftime Report host Scott Wapner appears utterly stunned at the suggestion from Chamath Palihapitiya, the CEO of venture capital firm Social Capital.

"You keep saying ‘propping up zombie companies,'" Wapner asks in a clip from the interview, which has since been seen more than 5 million times. "Are you arguing to let airlines, for example, fail?”

"Yes," Palihapitiya replies to Wapner's apparent shock.

The U.S. shouldn’t bail out billionaires and hedge funds during the coronavirus pandemic, Social Capital CEO Chamath Palihapitiya says. “Who cares? Let them get wiped out.” https://t.co/dIbizumtqG

"This is a lie that has been purported by Wall Street. When a company fails, it does not fire their employees — it goes through a packaged bankruptcy, right?" says Palihapitiya. "If anything, what happens is the people who have the pensions inside those companies, the employees of these companies, end up owning more of the company. The people that get wiped out are the speculators that own the unsecured tranches of debt or the folks that own the equity.

"And by the way, those are the rules of the game, that’s right," he continues. "Because these are the people that purport to be the most sophisticated investors in the world. They deserve to get wiped out — but the employees don't get wiped out, the pensions don't typically get wiped out.”

At this point, Wapner's jaw is nearing the floor. "Why does anybody deserve, using your word, to get 'wiped out' from a crisis created like this?" the CNBC anchor asks.

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

When Wapner argues that employees may own stock in these companies, but Palihapitiya contends that a minuscule portion of these large companies are worker-owned, with far more being owned by investment management firms.

"On Main Street today, people are getting wiped out, and right now rich CEOs are not, boards that had horrible governance are not, hedge funds are not — people are," Palihapitiya says. "Six million people just this week alone saying, 'Holy mackerel, I don't know how I'm going to make my own expenses for the next few weeks, days, months.'

"It's happening today to individual Americans, and what we've done is disproportionately prop up and protect poor-performing CEOS, companies, and boards," Palihapitiya says. "You have to wash these people out."

Many people who believe it's time to stop providing federal bailouts for billion-dollar companies praised Palihapitiya for his remarks.

America has always practiced socialism for the rich and capitalism for the working class. The fact that it is standard practice to bail out the rich and not the poor shows how corrupt and undemocratic the system is. https://t.co/r7tkdXduXk

This is spot on. You want to play at capitalism? Play all the way. If you're an airline that wasn't prepared to weather this storm, that's not the problem of the rest of us. Go bankrupt, let the next guy pick up the pieces and build a better company. Too big to fail is a lie. https://t.co/B8R5et95eS

People were particularly captivated by Wapner's reaction.

The interviewer here clutching his pearls as the guest tells him "who cares" about billionaires losing money if companies go under is something to behold

I have watched the first 12 seconds of this at least 100 times, its better than porn

One line in particular seemed to stand out.

This just rules to listen to. I want to hear more people say this. "So they can't summer in the Hamptons? Who cares?"

But Palihapitiya was not without his critics, either.

@CNBC Chamath is clueless by saying that employees are not hurt during bankruptcy. Large companies typically pay severance to laid off employees. There is no severance during bankruptcy. I can attest to that when Westinghouse was in bankruptcy no one received severance.

Let's not pretend Palihapitiya is making a pro-worker argument here. He's just sitting on cash and is sad he can't buy distressed assets on the cheap. Same guy was on RecodeDecode 3/24 arguing that isolating wasn't worth it due to the harm it would cause to "the economy" https://t.co/DGj5TnZohZ

On Recode Decode in March, Palihapitiya argued that the economic effects of the pandemic could be "more perilous for the world" and a "much, much bigger problem" than the disease itself.

"If you factor in suicide, domestic violence, separation, drug addiction, and other illnesses, and you add that all together, and then if you want to look over a 5- or 10-year period, it will be devastating," he said on the podcast.

MSNBC host Chris Hayes was also a little skeptical of the central thesis of Palihapitiya's argument — that bankruptcy and reorganization of a company can ultimately be beneficial to its shareholding workers — but still found the clip "bracing."

I'm not sure that bankruptcy is quite as low impact for workers as he says here, but still bracing. https://t.co/FjDDZmPleD

The interview comes after Congress passed a $2 trillion aid bill to alleviate the looming financial crisis that's been sparked by the coronavirus pandemic.

The package includes hundreds of billions of dollars to support businesses, particularly airlines, and provide checks of up to $1,200 for most Americans.

Palihapitiya did not immediately respond to a request for comment from BuzzFeed News.

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