Bailout. Blowup. Collapse. Hedge fund parlance is a readymade goldmine for describing the fate of Bear Stearns.

The collapse of Long Term Capital Management prompted a Wall Street bailout; Amaranth became the largest-ever hedge fund blowup when it lost $6.6 billion; the collapse of subprime mortgage marred hedge fund performance. Turning a discrete event in the financial market into an identifiable, memorable term like Black Monday or the Great Depression is impressive enough. But fleshing out a vocabulary perfectly suited to express the gamut of profit-and-loss within the financial market? That is a rhetorical achievement—and that achievement is the rightful domain of the hedge fund industry.

Last week, the collapse of Bear Stearns led to a bailout from The Federal Reserve Bank of New York and JPMorgan. That bailout segued into a deal: Bear sold itself to JPMorgan, its Wall Street rival, for $2 a share. Language aside, understanding of the relationship between the Bear Stearns-JPMorgan deal and the multi-trillion-dollar hedge fund industry is just starting to deepen. In the near-future, that relationship will be deconstructed, with an eye toward the question of cause-and-effect.

On a practical level, the Bear Stearns-JPMorgan deal is a shakeup in prime brokerage, a lucrative hedge fund administrative service involving capital introduction, lending, reporting, recordkeeping and back office clearance and settlement.

Bear had been the third-largest prime broker to the industry, behind Goldman Sachs and Morgan Stanley. JPMorgan, meanwhile, had been a prime brokerage laggard, never able to build its business to a scale that rivaled its Wall Street competition. Its inheritance of the Bear Stearns prime brokerage could prove its biggest justification for purchasing Bear Stearns itself. Alexandra Alternative Capital and $30 billion Paulson, both of which conducted prime brokerage via Bear Stearns, said the deal would not prompt them to seek a new service provider.

Meanwhile, an investigation to find out if hedge fund short-selling is to blame for the collapse of Bear Stearns is underway. The SEC and the New York Stock Exchange are probing if hedge fund personnel spread rumor about trouble at Bear Stearns while at the same time looking to profit from its subsequent loss of value. That investigation would have Bear Stearns Chief Executive Office Alan Schwartz as its biggest proponent. Schwartz had been adamant that his investment bank had been in good financial health and blamed “fiction” and “rumor” for a week of panic selling that put Bear Stearns in liquidity trouble. Considering the “naked shorting” controversy that has long dogged the hedge fund industry, the asset class could find itself facing renewed regulatory scrutiny and venom from traditional asset management.

The rise of the hedge fund industry has signaled the advent of a new era of spectacular change within the financial market. As of now, the Bear Stearns collapse has been the most-spectacular change of all, and the industry is in lockstep with that change.