TO BAIL OUT (a company)
This week, US investment bank Bear Stearns, on the verge of collapse, was bailed out when it was been bought by JP Morgan for a fraction of its former value, with backing of the US Federal Reserve.
Last summer, two of Bear Stearns' hedge funds had to be bailed out, partly precipitating the first stage of the global credit crunch.
So, to bail out a company - usually a financial institution - means to prevent it from collapsing following heavy losses. In 1995, Barings Bank was faced with financial collapse - bankruptcy - after the rogue trader, Nick Leeson, made huge losses. The Bank of England decided not to bail out Barings and the bank was eventually sold to ING for £1.
