Which hedge fund’s collapse during the 1998 market turmoil prompted a $3.6 billion private-sector rescue?

Long-Term Capital Management’s collapse during the 1998 market turmoil prompted a $3.6 billion private-sector rescue.

Long-Term Capital Management, commonly called LTCM, was a highly leveraged hedge fund founded in 1994. Its partners included prominent financiers and economists, including Nobel Prize-winning economists Robert Merton and Myron Scholes.

The fund suffered enormous losses after Russia’s August 1998 default and the resulting flight from risky assets. Its trading positions were so large and interconnected that an uncontrolled collapse was feared to threaten wider financial stability.

The Federal Reserve Bank of New York helped organize a consortium of private financial institutions. The consortium injected about $3.6 billion and took control of the fund, but the U.S. government did not directly provide the rescue money. LTCM was eventually liquidated.