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.