What was the name of the 1998 hedge fund whose rescue followed Russia’s debt default and threatened a global market crisis?

Long-Term Capital Management was the 1998 hedge fund whose rescue followed Russia’s debt default and threatened a global market crisis.

Long-Term Capital Management, usually called LTCM, used highly leveraged trading strategies involving bonds, derivatives, and other financial instruments. Its partners included prominent academics and experienced Wall Street traders, which helped attract capital and confidence.

Russia’s August 1998 default and ruble devaluation disrupted assumptions behind many of LTCM’s positions. Investors moved rapidly toward safer assets, spreads widened, and the fund suffered enormous losses. Because LTCM had large positions with many major financial institutions, an uncontrolled collapse could have produced broader market disruption.

The Federal Reserve Bank of New York organized a private-sector rescue in September 1998. Fourteen banks and investment firms supplied capital, while the government did not directly provide the bailout money. The episode highlighted the risks of leverage and interconnected counterparties.