1995 - What was the cause of the The Orange County Financial Crisis? Risk and Excessive Returns

Cramer Rewrites '1994 Redux: The Source of the Pain'

The second link is how Jim Cramer of theStreet explained it about 3/4 down the page where it says:

Remember the Orange County portfolio?

Remember those knuckleheads who had all of those derivatives on? They
were taking advantage of this trade and got whacked by the Fed's dramatic
tightening. (The banks get hit in many ways, including the potential
foreign losses. Remember, as we tighten it puts tremendous
pressure on lesser-developed nations that are trying to attract capital
because capital is always in search of a strong currency. Ours will
be very strong if short rates go to 7%.)

Banks fared terribly, too, as they could not adjust to the rapidity of the rate
rises. As many of the banks at that time were borrowing short- to buy
longer-term bonds and living off that spread or arbitrage, this game ended
almost immediately with the sharply rising rates. Everybody who was
playing that game got scalded.