What exactly does it mean when the government “bails” out a corporation, like Freddie and IndyMac?
So the news has used terms like “bail” and “seized” when referring to the failed financial/housing companies that the Federal Government rescued. But what exactly does that mean? Is the government giving or lending those companies money to stay afloat in the short term? Does the government give or lend those companies the cash to get out of the holes they’ve dug themselves into, entirely?
Also, the manner in which some news reports are given have lead me to think that the government came in to help some companies get back on their feet with a little cash while other times I get the impression that the government has absorbed those companies into the federal system (which I know goes against democracy and the whole “for the people” jumble). I did hear, though only once, of the government replacing the board of one of those failed housing/financial companies with their own selected group from a pool of other top executives from other corporations.
So what exactly happens when the federal government bails out a corporation? What is the process once the Feds step in and when do they step out?