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Long-Term Capital Management L.P. (LTCM) was a highly leveraged hedge fund. In 1998, it received a $3.6 billion bailout from a group of 14 banks, in a deal brokered and put together by the Federal Reserve Bank of New York. [1] LTCM was founded in 1994 by John Meriwether, the former vice-chairman and head of bond trading at Salomon Brothers.
Long-Term Capital Management (LTCM) was a large hedge fund, led by Nobel Prize-winning economists and renowned Wall Street traders, that blew up in 1998, forcing the U.S. government to...
On September 23, 1998, a group of fourteen banks and brokerage firms invested $3.6 billion in Long-Term Capital Management L.P. (LTCM) to prevent the firm’s imminent collapse. The capital infusion forestalled a fire sale of LTCM assets into already turbulent markets and instead allowed for an orderly liquidation of the hedge fund’s holdings.
Long-Term Capital Management was a massive hedge fund with $126 billion in assets. It almost collapsed in late 1998. If it had, that would have set off a global financial crisis.
The Long-Term Capital Management collapse—which led to an unprecedented rescue by the Fed—was 25 years ago. Heard on the Street revisited that crisis with a three-part series that...
Long-Term Capital Management (LTCM) was a hedge fund established in 1994, which used trading strategies to exploit market inefficiencies. The fund became famous for both its high-profile success in the mid-1990s and its spectacular failure in 1998, that led to a significant financial crisis.
Significant failures in risk management by LTCM and, more important, by many of its large and sophisticated counterparties, were highlighted by the LTCM episode as were gaps in regulating certain financial practices and products such as over-the-counter (“OTC”) derivatives.
The demise of the firm, Long-Term Capital Management (LTCM), was swift and sudden. In less than one year, LTCM had lost $4.4 billion of its $4.7 billion in capital.
Since Long-Term Capital Management’s collapse 25 years ago this month, the story of the hedge fund’s fall from grace continues to echo through markets and the financial world.
Long-term Capital Management (LTCM) was a hedge fund that attracted large investments from 1994 to 1998. It was established by a group of prominent financial experts, including economists and traders.