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LTCM execs bet loans
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October 6, 1998: 6:33 a.m. ET
Four hedge fund partners borrowed from banks that bailed out LTCM
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NEW YORK (CNNfn) - Four partners in Long-Term Capital Management LP, the U.S. hedge fund that nearly collapsed from bad debts, reportedly borrowed $43 million to personally invest in the fund.
Some, in fact, borrowed the money from the Wall Street banks and brokerages that bailed LTCM out late last month in a $3.6 billion rescue package partly orchestrated by the Federal Reserve, the Wall Street Journal reported Tuesday, citing sources familiar with the hedge fund.
According to the report, famed bond-arbitrage trader Lawrence E. Hilibrand and currency trader Hans U. Hufschmid took the largest hits.
Hilibrand and Hufschmid, one-time Salomon Brothers Inc. legends, took out personal loans of $24 million and $14.6 million, respectively, the Journal's sources said. Two other partners, Arjun Krishnamacher and Gregory D. Hawkins, are also on the hook for $2.7 million and $1.3 million, respectively.
Hilibrand gained notoriety on Wall Street in 1990 when he received a pay package of $23 million at Salomon.
With $24 million in personal loans hanging over his head today, however, Hilibrand is now reportedly scrambling to renegotiate his debts to stave off personal bankruptcy.
According to the Journal, most of the partners' personal loans were taken out between one and three years ago from Credit Lyonnaise, one of the 14 banks and brokerages involved in the LTCM rescue package. A smaller amount was borrowed from Bear Stearns Cos. (BSC), which was not involved. 
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