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A capital infusion offered to a business with a national or multi-national footprint that is in danger of bankruptcy, insolvency, or total liquidation.  Financial aid can be provided in the form of debt or equity offerings, cash contributions, or some form of loan or line of credit, and is often accompanied by greater government oversight and regulation.  The failure of a business that employs thousands or plays an influential role in the economy potentially can send shock waves throughout the entire economy, including other industries. The credit crisis that began in 2007 created numerous failures around the world, which resulted in a large number of government-sponsored bailouts in almost every industry across the globe. See: Conservator, Conservatorship.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Bail Out

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


The financial rescue of a faltering business or other organization. Government guarantees for loans made to Chrysler Corporation constituted a bailout.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
It was the nation's third since 2010, and the country has altogether received 288 billion euros ($330 billion) from creditors, making it the biggest bailout in history.
At the same time, the regulation of bailouts poses some special problems.
The referendum was preceded by several rounds of talks, which failed to end in an agreement between the sides before the expiration of the previous bailout program.
McKinley makes a strong case that bailouts are not an optimal solution, but his conclusion that all failed institutions should simply be closed (though intellectually satisfying to believers in free markets) is politically naive.
The new bailout conditions do not go as far as they did in Cyprus, though, where senior bondholders and uninsured depositors took a hit.
The agreement cleared the way for the release of E34.4 billion in bailout funds in mid December, E23.8 billion of this is for bank recapitalisation and E10.6 billion for financing the Greek budget.
If a bailout were necessary, the 77-year-old agency wouldn't need congressional approval.
Parent Bailout investigates the motivation of bailouts in America and shows how a bailout system has crept into and crippled our American schools.
Hawkins continued: "Moreover, not only did Mitt support TARP, he has admitted during the debates that he's open to EVEN MORE bailouts. Put it all together and even Barack Obama is to Mitt's right on bailouts.
* Europe likely to keep Greece afloat into September * Europe's plan for a new bailout of Greece may buy the country only several more months' breathing space before it again has to confront the prospect of default or a radical restructuring of its debt.
I believe Mr Darling had won a veto for Britain on future bailouts but when the permanent bailout mechanism deal was agreed under the Mr Osborne in December 2010 our veto was not used.
Wellingborough MP Peter Bone said: "We should not have any more bailouts without approval."