Long Term Capital Management and Hedge Fund Impact
September 29, 1998 – New York, NY – Charles Gradante, Co - Founder of Hennessee Group LLC, interviews with Bill Griffeth on CNBC TV discussing Long Term Capital Management and its impact on the financial markets.
Noteworthy highlights from this particular interview include Hennessee Group Managing Principal, Charles Gradante, discussing the collapse of Long Term Capital. He discusses the collapse of Long Term Capital Management and the inherent risk of hedge funds on overall markets. Gradante points out that LTCM received $3.6 billion from a consortium of banks who are at risk of incurring losses due to the LTCM debacle. He comments that LTCM would have cause a systemic shock if not rescued by the banks and it's impossible to quantify the risks of an LTCM to the creditors of LTCM. Gradante believes that bank risk management procedures need to be reviewed in light of the LTCM debacle.Gradante notes that the commercial real estate crisis of the 1980s was similar to the LTCM collapse. He cites the LTCM collapse was a result of aggressive borrowing coupled with excessive leverage and relaxed lending practices.