The meltdown at Amaranth Advisors would have been a lot worse if not for the risk-management changes that occurred in the wake of the much more catastrophic collapse of Long-Term Capital Management. Basically, hedge funds these days are not allowed to leverage up nearly as much. Some funds may chafe at this, but the wisdom of such changes is now clear. For prime brokers, such changes have been a big help in weathering the Amaranth storm. The damage to the likes of Goldman Sachs and Morgan Stanley could have been a lot worse. Now it could be that some firms with strong aspirations in the prime brokerage market may relax that a bit to win some customers, but the results could be ugly.

For more on Amaranth:
- Here's an article from Indie Research