What was the name of the U.S. hedge fund rescued in 1998 after its highly leveraged trades threatened financial markets?

The U.S. hedge fund rescued in 1998 was Long-Term Capital Management, commonly called LTCM.

LTCM used mathematical models and very large amounts of borrowed money to make trades in bonds, derivatives and other markets. Its early returns were impressive, but the Russian financial crisis and a worldwide flight from risk caused many positions to lose value at the same time.

The Federal Reserve Bank of New York organized a private-sector rescue in September 1998. Fourteen banks and investment firms supplied about $3.6 billion for a consortium that took control of the fund; the U.S. government did not directly provide the money.

LTCM's rescue is frequently called a government bailout, but that wording can obscure the arrangement. The New York Fed facilitated the meeting and pressured firms to act, while the participating private institutions financed the recapitalization.