Long-term sickness?(analysis of health of major banking institutions)(Brief Article)
Economist (US), The, October, 1998
NEW YORK
The rescue of Long-Term Capital Management raises disturbing questions about the health of America's and the world's leading banks.
LIKE the Titanic, Long-Term Capital Management was supposed to be unsinkable. The hedge fund's dramatic downfall and bail-out last week was the stuff of Hollywood disaster movies: fortunes laid waste, proud men (Nobel laureates no less) cut down to size, giant tidal-waves threatening to drown some of Wall Street's snootiest institutions.
Beyond the human drama, the fall of LTCM raises four questions: are financial institutions, especially banks, as good as they claim at managing risk? Was the Fed right to co-ordinate a bail-out? If so, what does this say about the health of the global financial system? And...
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