What was the name of the 1998 hedge fund whose rescue was organized by the Federal Reserve Bank of New York?

Long-Term Capital Management was the 1998 hedge fund whose rescue was organized by the Federal Reserve Bank of New York. The fund suffered enormous losses after Russia defaulted on domestic debt and financial markets became unusually volatile.

LTCM used highly leveraged trading strategies and had prominent partners, including economists and Nobel Prize-winning financial theorists. Its positions were so large and interconnected that officials feared a disorderly failure could destabilize other institutions, even though the fund itself was not directly rescued with taxpayer money.

In September 1998, the New York Fed helped arrange a private-sector recapitalization by a consortium of banks and investment firms. The episode is often cited as an example of systemic risk and the dangers of leverage. It was not the same as the 1997 Asian crisis, although changing global markets contributed to the pressure on LTCM.