Lehman Brothers filed for bankruptcy on September 15, 2008, during the financial crisis that caused a worldwide market shock.
The filing was the largest bankruptcy in U.S. history at that time. Lehman had accumulated major exposure to mortgage-related securities and commercial real estate. When the U.S. housing market deteriorated and confidence in those assets collapsed, the firm could not secure a buyer or sufficient financing.
The bankruptcy intensified fear about the stability of banks and other financial institutions. Credit markets seized up, stock markets plunged, and governments began emergency interventions. Bear Stearns had already been rescued and sold to JPMorgan Chase in March 2008, but Lehman’s failure was much more disruptive. A frequent mix-up is saying that Lehman was taken over; unlike Bear Stearns and Merrill Lynch, it entered bankruptcy instead. The crisis also led to the U.S. government rescue of AIG and the passage of the Troubled Asset Relief Program.