Lehman Brothers filed for bankruptcy in September 2008, becoming the U.S. investment bank failure most closely associated with the escalation of the global financial crisis. Its Chapter 11 filing occurred on September 15, 2008.
Lehman had accumulated large positions in subprime and other lower-rated mortgage-related securities. As housing prices fell and mortgage defaults increased, those assets became difficult to value and sell. Losses eroded confidence in the firm, while proposed rescue or acquisition discussions with Barclays and Bank of America failed.
The bankruptcy was the largest in U.S. history at the time, involving more than $600 billion in assets. It triggered a sharp loss of market confidence, tightened interbank lending, and contributed to withdrawals from money-market funds. The Dow fell 504.48 points, or about 4.42%, that day.
Bear Stearns had already collapsed earlier in 2008, and Merrill Lynch was acquired by Bank of America during the same crisis. Neither, however, was the investment bank that filed the September bankruptcy petition.