# kaal:claim:2998097-004

**Claim.** Banks overexposed themselves to private investment fund lending, which allowed LTCM and similar funds to grow significantly and led banks as counterparties to put their own existence at risk.

**Type.** failure  **Support.** argued

**Holds when.**

- banks lending to private investment funds
- pre 1998 lending practices

**Source quote.**

> However, banks overexposed themselves to private investment fund lending, allowing LTCM and other private investment funds to grow significantly. As counterparties to private investment funds, such as LTCM, banks put their own existence at risk with their lending practices.

**From.** Wulf A. Kaal, *Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016* (2017), III. Failure of Long-Term-Capital Management, page 11

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

**Verify.** sha256 of source PDF `0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202017%20-%20Private%20Investment%20Fund%20Regulation%20-%20Theory%20and%20Empirical%20Evidence%20from%201998%20to%202016.pdf

**Failure mode.** Counterparty overexposure to private funds  (family: systemic-risk-transmission)

**Topics.** systemic-risk, defi, risk-and-incentives

**Keywords.** bank-lending, counterparty-risk, ltcm, overexposure

**Related claims.**

- restated_by: https://wulfkaal.github.io/claims/3405660-011
- supports: https://wulfkaal.github.io/claims/1806252-013

**Canonical form.** This markdown file is the canonical hashed representation of the claim. Its sha256 is the content hash used for attestation.