What global crisis followed the September 2008 collapse of Lehman Brothers and caused stock markets to plunge?

The global financial crisis followed the September 2008 collapse of Lehman Brothers and caused stock markets to plunge.

The crisis grew out of a housing and credit boom, especially in the United States. Banks and investors held mortgage-related securities whose risks became clear as U.S. house prices fell and borrowers defaulted. Losses damaged confidence in financial institutions and froze important credit markets.

Lehman Brothers filed for bankruptcy on September 15, 2008. Its failure intensified an already serious panic, and governments and central banks introduced emergency lending, guarantees, capital injections, and interest-rate cuts. Stock markets around the world fell as investors feared recession and further financial failures.

Lehman’s bankruptcy did not start the entire crisis, and the crisis did not end immediately afterward. The U.S. government rescued or supported several major institutions, while the Troubled Asset Relief Program became law in October 2008. The recession that followed became the deepest global downturn in decades.