Wall Street legend Leon Cooperman, who helped Goldman Sachs grow and later founded a successful hedge fund, said Congress must do whatever it takes to shield businesses from the impact of COVID-19.
“If the government lets all these companies go bankrupt and they do disgorge labor, the government is going to have to basically pay a lot of unemployment benefits,” Cooperman told CNBC Monday (April 13) on “Fast Money Halftime Report. “Instead, they make low-interest rate or interest-free loans to these companies that are experiencing a liquidity crisis, the companies fix themselves up, and they come back.”
Cooperman’s remarks were in response to comments made last week on CNBC by Chamath Palihapitiya. The venture capitalist and guest on ABC’s “Shark Tank” said the government should not be in the business of bailing out billionaires as part of its response to the coronavirus pandemic.
Palihapitiya, founder and CEO of investment firm Social Capital, said Main Street businesses are getting wiped out, not rich CEOs. That certainly jibes with PYMNTS’ latest research, in which more than half of some 700 U.S. small- and medium-sized businesses that we surveyed either don’t think they’ll survive coronavirus-related shutdowns or aren’t sure whether they will or not. (You can read more of our findings here.)
Palihapitiya said the U.S. government’s COVID-19 bailout “is disproportionately [propping] up poor-performing CEOs and boards, and you have to wash these people out. … We’re talking about a hedge fund that serves a bunch of billionaire family offices, who cares? They don’t get the summer in the Hamptons? These are the people that purport to be the most sophisticated investors in the world.”
But Cooperman said bailouts would avoid a surge in unemployment, and lawmakers will get a return on their investment.
“To the extent that they’re helping these companies through a difficult period, they avoid the huge surge in unemployment and they will get a return on their investment,” he said. “The world’s better off because Chrysler survived. The world’s better off because AIG survived and they survived because of government assistance,” he said.
After spending 25 years at Goldman Sachs, Cooperman founded Omega Advisors in 1991 and a year later launched Omega Overseas. The hedge fund compounded at 12.6 percent per year, or 300 basis points above the S&P 500, according to a report by Institutional Investor.
Three years ago, Cooperman settled Securities and Exchange Commission insider trading charges by paying a $4.9 million fine He neither admitted nor denied the accusations.
In November, the 76-year-old billionaire fought with U.S. Sen. Elizabeth Warren (D-Mass) over her proposal to implement 2 percent tax on every dollar of an individual’s wealth above $50 million.