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Leon Cooperman Weighs In On Chamath Palihapitiya's Take On Government Bailouts

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Leon Cooperman Weighs In On Chamath Palihapitiya's Take On Government Bailouts

Leon Cooperman, the chairman and CEO of Omega Advisors, responded on CNBC Monday to Chamath Palihapitiya's recent comments about hedge funds.

Palihapitiya went viral last week when he said the government should let the troubled airline companies fail, with the logic that by helping them, the government is bailing out hedge funds.  

Cooperman said that Palihapitiya went beyond his comments on hedge funds by saying that billionaires should not exist.

The Omega Advisors CEO said that Palihapitiya is an intelligent fellow, but inconsistent in his views. You become a billionaire by making a product or a service that the world needs, Cooperman said. 

If billionaires should not exist, that means that government should modify returns to the upside, and that argument leads to saying that the government should modify the downside risk from failure, he said.

The American dream is to start with very little, become very successful and to take that success and give it back to the society, Cooperman said, naming Jack Dorsey as an example of a billionaire who is giving one-third of his wealth to help other people.

Cooperman asked whether the world would be better without Bill Gates, Bernie Marcus, Ken Langone or Hank Greenberg.

Cooperman Says Issue Is Difference Between Solvency, Liquidity 

If the government lets airlines go bankrupt and they disgorge the labor, the government is going to have to pay a lot of unemployment benefits, Cooperman said.

Instead, he said the government could make low interest or interest-free interest loans to the companies that are experiencing a liquidity crisis and help them come back.

The world is better off because Chrysler and American International Group Inc (NYSE: AIG) survived, Cooperman said.

The issue at hand is one of solvency vs. liquidity, he said, adding that insolvent companies should be allowed to go bankrupt.

 

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