Which hedge fund collapsed after the 1998 Russian financial crisis and required a private-sector rescue?

Long-Term Capital Management collapsed after the 1998 Russian financial crisis and required a private-sector rescue.

LTCM was a highly leveraged hedge fund founded in 1994. Its partners included prominent traders and Nobel Prize-winning economists, and it used complex strategies that depended on financial markets behaving in historically predictable ways.

Russia’s August 1998 debt default and ruble devaluation triggered extreme market movements. Positions that LTCM expected to converge instead moved farther apart, producing massive losses and threatening wider disruption because many banks were counterparties.

The Federal Reserve Bank of New York helped arrange a $3.625 billion private-sector recapitalization by fourteen banks in September 1998. The rescue was not a government bailout, although it reflected concern about systemic financial risk.