Lehman Brothers’ failure in September 2008 intensified the global financial crisis and stock-market crash.
Lehman Brothers filed for bankruptcy on September 15, 2008, in the largest bankruptcy filing in U.S. history at that time. The investment bank had accumulated substantial exposure to mortgage-related assets and was unable to restore confidence or secure a rescue merger.
Its collapse caused severe stress in credit markets because financial institutions were uncertain about their counterparties’ losses. Interbank lending tightened, investors sold risky assets, and stock markets around the world fell. The failure became a defining event in the crisis, although the underlying problems had developed for years.
Lehman was not the first major institution in trouble. Bear Stearns had been rescued in March 2008, and Washington Mutual failed later that month. The crisis also involved the housing bubble, subprime mortgages, securitized debt, excessive leverage, and weak risk management. Governments subsequently provided emergency lending and capital support.