Number: RL30232
Title: SYSTEMIC RISK AND THE LONG-TERM CAPITAL MANAGEMENT RESCUE
Authors: Mark Jickling, Government and Finance Division 
Abstract: Systemic risk is generally defined as the possibility that a financial problem in one firm or market may spread by "contagion" to others, and that, if panic spreads far enough, general confidence in financial institutions may be impaired, the flow of funds from lenders and investors to borrowers may be disrupted, and the real economy may suffer a loss of jobs and productive investment. Economists are divided on the nature, and even the existence of systemic risk but in the wake of the recent global financial turmoil, congressional interest has increased. Several committees and subcommittees have held hearings, and legislation affecting hedge funds may be considered by the 106th Congress.
Pages: 11
Date: Updated June 10, 1999