To give
money to a company so that it avoids
bankruptcy and is able to continue operations. Generally speaking, the term often refers to a government bailing out a private
corporation. A bailout may take the form of a direct transfer of
capital, or it may occur indirectly through low or no
interest loans and
subsidies. For example, in September of 2008 the
insurance conglomerate
AIG found itself in dire straits. The
Federal Reserve bailed it out by extending $85 billion (and eventually $182 billion) in
credit to the company. Proponents of bailouts say that they keep an
economy afloat when an industry thought
too big to fail otherwise would collapse. Critics contend that bailouts are
inefficient and that
non-competitive companies ought to fail. See also: Cash for clunkers.