Ivory marked by the Royal African Company. International Slavery Museum, Liverpool. Wikimedia Commons.
In 1998 a private hedge fund was so tied into banks that the New York Fed gathered a rescue.
If money is tight, you will be told the rescue was not your money, and you will still feel the fright.
If you are in the middle, the lesson is that a fund you never heard of can threaten the bonds behind ordinary loans.
If you have savings, the counterparties were the household names in your brokerage.
Long-Term Capital Management lost heavily after Russia defaulted in August 1998.
In September the Federal Reserve Bank of New York brought LTCM's creditor banks into a room, and those banks put up their own capital.
The Treasury did not write the check, and the precedent still smelled like a public concern.
Source: Federal Reserve Bank of New York, September 1998 LTCM consortium.