Which 1998 fund collapse forced a rescue after Russian debt default shook global markets?

Long-Term Capital Management was the 1998 fund whose collapse prompted a coordinated rescue after Russia defaulted on debt.

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 Merton. The fund used complex strategies based on the expectation that price differences between related securities would converge.

Russia's 1998 default and a flight from risky assets caused those relationships to behave unexpectedly. LTCM suffered heavy losses, while its large positions created concern that an uncontrolled failure could transmit stress through major banks and markets.

The Federal Reserve Bank of New York organized a private-sector recapitalization in September 1998. The central bank did not directly bail out the fund with public money. The episode became a major example of how leverage, interconnectedness, and crowded trading positions can magnify a market shock.