What was the name of the 1998 fund whose collapse worsened the global market panic?

Long-Term Capital Management was the fund whose collapse worsened the global market panic in 1998.

LTCM was a highly leveraged hedge fund founded in 1994. Its partners included prominent traders and economists, including Nobel Prize-winning economists Myron Scholes and Robert C. Merton. The fund used complex strategies that assumed price relationships would converge toward historical norms.

The 1998 Russian financial crisis disrupted those assumptions. Investors rushed away from risky assets, correlations changed, and LTCM suffered enormous losses. Because the fund had borrowed heavily and traded with many major financial institutions, its disorderly failure could have transmitted further stress through global markets.

The Federal Reserve Bank of New York helped arrange a private-sector recapitalization by a consortium of banks. The U.S. government did not directly bail out LTCM, but officials feared its collapse could destabilize the financial system. The episode became a classic warning about leverage, interconnected counterparties, and models that underestimate extreme events.