White House economic adviser Kevin Hassett argued that restricting stock buybacks could backfire on the American economy, pointing to 'zombie firms' in Europe as a potential consequence of what can happen when companies don't recycle their cash
Hassett argued that buybacks are a reasonable way for companies to return excess cash to shareholders -- who can then invest in faster-growing startups. "It's a natural way our economy recycles cash from old successful firms to new entrepreneurial firms," Hassett told CNN's Poppy Harlow."If we were to stop share buybacks, or slow them down, we would be slowing down the cash flow to entrepreneurs.
Veteran hedge fund manager Mark Yusko recently told CNN Business that buybacks should be"illegal," in part because they are part of a"self-perpetuating loop that benefits one small group of people."Worried about deepening inequality, Democratic Senator Cory Booker introduced a bill last year that would require companies that do buybacks to pay a commensurate sum to its workers. And last month Senators Bernie Sanders and Chuck Schumer urged fellow lawmakers to limit buybacks.
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