Which hedge fund was rescued by a Federal Reserve-coordinated consortium during the 1998 market turmoil?

Long-Term Capital Management was rescued by a Federal Reserve-coordinated consortium during the 1998 market turmoil.

LTCM was a highly leveraged hedge fund founded in 1994. Its partners included prominent traders and academics, including Nobel Prize-winning economists Myron Scholes and Robert C. Merton. The fund used complex mathematical models and large positions in financial markets.

After Russia defaulted on domestic debt in August 1998, investors rushed toward safer assets. LTCM suffered enormous losses because its positions became difficult to unwind, raising fears that a disorderly failure could destabilize major banks and markets.

The Federal Reserve Bank of New York organized a private-sector rescue in September 1998. Fourteen financial institutions contributed capital, while the government did not directly provide bailout money. The episode became a major warning about leverage and systemic risk.