Latest News on the Bailout

BAILOUT – the act of giving capital to a failing company in order to save it from bankruptcy and ruin.

The word ‘bailout’ was Merriam-Webster’s 2008 Word of the Year. It is defined in the Eleventh Edition of Merriam-Webster’s Collegiate® Dictionary as “a rescue from financial distress.”

The financial bailout of 2008 was a significant government intervention in response to the global financial crisis that began in 2007. This crisis was primarily triggered by the collapse of the U.S. housing market and the subsequent failure of mortgage-backed securities.

At the heart of the 2008 bailout was the Troubled Asset Relief Program (TARP), authorized by the Emergency Economic Stabilization Act of 2008.

The total direct cost of crisis-related bailouts on a fair value basis was approximately $498 billion, equivalent to 3.5% of the U.S. GDP in 2009.

The government provided $245.1 billion in TARP assistance to banks and recouped $275.6 billion, resulting in a net gain of $30.5 billion.

Major financial institutions like Bank of America and Citigroup each received $20 billion in government-purchased shares.

Source: LA News Central