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Article: A 'Smoking Gun' Memo at AIG?(Inside Take)
- Article from:
- National Mortgage News
- Article date:
- March 30, 2009
CopyrightCOPYRIGHT 2009 SourceMedia, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Byline: Paul Muolo
A decade ago the Federal Reserve came to the rescue of Long-Term Capital Management, a gargantuan private hedge fund founded and managed by former Salomon Brothers trader John Meriwether. Even though LTCM wasn't a depository (or even a securities firm) Uncle Sam stepped in to calm the markets.
This past week as talking heads from the left and right blathered on about the "bonus scandal" at American International Group, I couldn't help but think of LTCM. The reason is this: the Fed came to the aid of that hedge fund - which had bet the wrong way on Russian debt - because commercial banks had lent the company $125 billion. A decade ago ...