Special Edition: How 'Bailouts' and 'Golden Parachutes' Got Their Name
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The Bush administration's proposed $700 billion bailout of the financial industry is the talk of Washington right now. But where exactly did the term "bailout" come from? In this special edition of Wordmaster, Avi Arditti and Rosanne Skirble turn to dictionary editor, Ben Zimmer, for the answer.
BEN ZIMMER: "Originally a bailout referred to a way that a pilot could get out of a plane very quickly by opening up a parachute and parachuting to safety. And that is spelled b-a-i-l-out in American usage, but British speakers tend to spell it b-a-l-e-out. But either way, it then became applied to financial situations, where a company or corporation would have to be rescued in the same way that someone had to be rescued from a plane, by making an emergency landing by parachute."
AA: "My first thought when I would hear that term was maybe it had something to do with a boat taking on water and you would bail it out. You're saying it had to do with a pilot bailing out of a plane?"
BEN ZIMMER: "Yeah, actually it is also related to the idea of bailing water out. The general image is of letting something out. If you spell it as b-a-l-e you can understand it as letting a bundle out, through a trap door, for instance. You're --
RS: "A bale of hay."
BEN ZIMMER: " -- bailing out that way. So it had these various senses relating to just trying to get something out the door very quickly. But the financial expression comes specifically from the idea of someone in a plane needing to make an emergency parachute landing."
RS: "A jump to safety."
BEN ZIMMER: "Right. A 'golden parachute.'"
AA: "Right, a golden parachute, what the CEOs get, right? And just briefly, a golden parachute, since you brought that up, what exactly is a golden parachute?"
BEN ZIMMER: "The idea is that as the company is going downhill, as the company is about to crash, the CEO [chief executive officer] or other executives get some very sweet deal to get out of the situation. So they're not just being bailed out, but they're getting a tidy sum of money. So that became referred to as a golden parachute. Starting in the nineteen eighties we heard about that, where sometimes there'd be a contract that was agreed upon so that if, for instance, an executive -- not necessarily if that company was going to go bankrupt, but just if the company was going to fire someone, the executive would make sure that he or she had something in the contract stating that they would get a very large sum of money if that should happen. And that was also called a golden parachute."