kaal:claim:2998097-003

Because banks and brokers had let LTCM borrow the full value of its collateral, LTCM's 4.8 billion dollars in capital dissipated quickly once banks began making margin calls.

Because banks and brokers had allowed LTCM to borrow 100 percent of the value of its collateral prior to the worsening of LTCM's financial condition in 1998, LTCM's $4.8 billion in capital dissipated quickly when the banks began to make margin calls.

Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017), III. Failure of Long-Term-Capital Management, p. 10
https://ssrn.com/abstract=2998097 · source PDF

Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097

• LTCM, 1998
• 100 percent collateral lending by banks and brokers

mechanismsupport: arguedfailure: Full collateral value lending collapses capital under margin callsfamily: systemic-risk-transmissiondefi

• extended_by kaal:claim:3405660-011 LTCM reached systemically dangerous size because banks lent to it without regard to repayment capacity, and in...

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