Chamath argued that the L.A.-area wildfire insurance liabilities would be so large that California would turn to the federal government for a bailout / major help.

1. Insurance and loss liabilities were indeed massive. Modeling firm KCC estimated roughly $28 billion in insured losses from the January 2025 Los Angeles fires, making them the costliest wildfire event in U.S. history. A state wildfire insurance fund of $21 billion is reported as potentially being fully exhausted by related claims, and press coverage notes that the Eaton and Palisades fires alone could generate $20–45 billion in insurance losses. (reuters.com) California’s state-regulated FAIR Plan, which insures otherwise uninsurable properties, had limited liquid resources and had to obtain a $1 billion assessment from member insurers to keep paying claims. (insurance.ca.gov) This matches the premise that insurance-related liabilities would be enormous and strain existing mechanisms.

2. California sought and received very large federal financial assistance for recovery. FEMA and the U.S. Small Business Administration quickly became the largest single sources of recovery money. FEMA and SBA report more than $2 billion made available by late March 2025 and over $3 billion by early June 2025 in grants and disaster loans to homeowners, renters, and businesses affected by the Los Angeles County wildfires. (fema.gov) Governor Gavin Newsom publicly thanked federal partners and repeatedly urged residents to apply for FEMA and SBA assistance, framing it as a key pillar of the recovery. (gov.ca.gov)

3. The state explicitly asked Congress for a huge federal aid package. In February 2025, Newsom formally requested nearly $40 billion in federal disaster aid from Congress specifically for Los Angeles wildfire recovery. Reporting from AP, Politico, and the San Francisco Chronicle describes a 14‑page request that includes tens of billions for FEMA emergency public assistance, HUD grants for home and business repairs, debris removal, and over $5 billion in SBA lending authority. The request also anticipates federal reimbursement for several billion dollars in state outlays already approved in a $2.5 billion California wildfire aid package. (apnews.com) This is, in effect, California going to Washington for a very large federal backstop to help cover the financial burden of the disaster and its associated losses.

4. Nuance: the federal government is not literally recapitalizing state insurance funds. The evidence so far does not show the U.S. Treasury directly bailing out California’s wildfire insurance fund or the FAIR Plan; instead, the state has used its regulatory tools to tap private insurers via assessments. (insurance.ca.gov) However, Chamath’s normalized prediction includes the broader idea that California would seek substantial federal financial assistance tied to the same catastrophic loss event—both for rebuilding and to alleviate the economic shock those liabilities create. On that point, the record is clear: California has already secured and is actively pursuing very large-scale federal disaster funding.

Given (a) the unprecedented scale of wildfire-related liabilities and (b) California’s clear move to secure tens of billions in federal disaster money plus billions already flowing from FEMA/SBA, the prediction that the state would “look to the federal government to bail them out” in the sense of seeking major federal financial relief tied to these losses is best judged as right in substance, even though the federal government has not directly assumed the state’s insurance-fund obligations.