‘It’s a complete abomination.’
Tha’s Nate Koppikar, a partner at Orso Partners, as quoted in a Bloomberg News article on Tuesday expressing his displeasure with the prospect of hedge funds claiming bailout money intended to help cash-strapped small businesses in the throes of a deep recession wrought by the outbreak of COVID-19.
The Bloomberg article makes the case that hedge funds, which tend to charge 2% fees for managing other people’s money and take 20% of the profits from their bets, are enticed by the roughly $350 billion recovery package that offers loans to cover everything from payroll to rent and utilities for hair salons, restaurants and other businesses that have been bludgeoned by forced closures to help mitigate the spread of the infectious disease that was first identified in Wuhan, China, in December and has now infected nearly 2 million people globally.
The story hits upon a raging debate on Wall Street about whether hedge funds should avail themselves of bailout funds during the pandemic, which has hit nearly every corner of the economy and threatens to throw the U.S. into one of its deepest recessions in generations.
Chamath Palihapitiya, chief executive of venture-capital firm Social Capital LP, last week argued that the Fed’s massive coronavirus stimulus package helps the ultrarich at the expense of ordinary American workers.