Which hedge fund’s 1998 rescue followed losses linked to the Russian financial crisis?

Long-Term Capital Management’s 1998 rescue followed losses linked to the Russian financial crisis.

Long-Term Capital Management, usually called LTCM, was a highly leveraged hedge fund that suffered enormous losses after Russia defaulted on domestic debt and devalued the ruble in August 1998. Its trading models had assumed that price relationships would converge, but the crisis produced unusually large and persistent market dislocations.

Because LTCM had extensive positions with many major financial institutions, regulators feared that a disorderly collapse could spread through the global financial system. The Federal Reserve Bank of New York organized a private-sector rescue in September 1998, with major banks providing capital in exchange for control of the fund’s portfolio.

The episode was not a stock-market crash in the narrow sense, but it caused severe market stress and became a major warning about leverage and interconnected derivatives. LTCM’s rescue is often confused with a government bailout; the investment was arranged and funded by private institutions.