Which 1998 hedge fund collapse threatened financial stability after the Russian debt crisis?

Long-Term Capital Management was the hedge fund collapse that threatened financial stability after the Russian debt crisis.

LTCM used highly leveraged trading strategies based partly on mathematical models and relationships among securities. In 1998, Russia’s default and ruble devaluation produced extreme market movements. Positions that had appeared diversified became correlated, and the fund suffered severe losses while owing money to many major financial institutions.

The Federal Reserve Bank of New York helped organize a private-sector rescue in September 1998. The central bank did not provide a direct bailout, but it coordinated negotiations among creditors that recapitalized and unwound the fund. The episode became a prominent example of systemic risk and the dangers of excessive leverage, even though it was not itself a stock-market crash.