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Berkshire Hathaway Inc. Message Board

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  • Elmo_V Elmo_V Oct 2, 1998 1:08 PM Flag

    sky is falling

    This is an excerpt, for the full story, see AIG's
    NEWS section on Yahoo.

    Q&A About Hedge
    Funds
    By MARCY GORDON
    AP Business Writer


    WASHINGTON (AP) -- Hedge funds are under close scrutiny
    because of the $3.6 billion private bailout last week of
    Long-Term Capital Management LP, facilitated by the Federal
    Reserve Bank of New York. Outside of Wall Street, little
    is known about these secretive and largely
    unregulated investment funds.
    Here, in question and
    answer form, is a look at hedge funds
    ....
    Q: Who
    was running Long-Term Capital when it got into
    trouble?

    A: The 4-year-old fund's chairman, John
    Meriwether, is one of Wall Street's most celebrated traders.
    His senior partners include two Nobel laureate
    economists and a former vice chairman of the Federal
    Reserve. The fund is based in Greenwich, Conn.

    Q:
    What happened in the past few weeks when Long-Term
    Capital nearly collapsed?

    A: A group of major
    banks and brokerage firms began talks about chipping in
    to save it, with officials of the Federal Reserve
    Bank of New York acting as facilitators and providing
    office space.

    At one point, the fund's managers
    reportedly turned down a $250 million buyout offer by
    legendary investor Warren Buffett, American International
    Group Inc. (NYSE:AIG) and Goldman Sachs. The offer was
    conditioned on Meriwether being ousted.

    When it was
    over, the group of banks and brokerage houses had
    agreed to put up $3.6 billion to rescue Long-Term
    Capital and take control of it. In addition to the three
    banks mentioned above, the group also includes
    brokerage houses Merrill Lynch & Co. (NYSE:MER), Morgan
    Stanley Dean Witter, Goldman Sachs, Salomon Smith Barney
    and several big European banks.

 
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