In late 1998 the Fed averted a possible financial panic by

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In late 1998, Long-Term Capital Management, a highly leveraged hedge fund, was on the brink of collapse due to massive losses in its investments. The Fed stepped in and used its influence to bring together the fund's creditors to negotiate a bailout and avoid a potential financial panic. Lowering or raising interest rates or encouraging banks to make loans to broker-dealers would not have had the same impact in this situation.

In Late 1998 the Fed Averted a Possible Financial Panic