Lehman Brothers’ bankruptcy became a defining event of the 2008 global financial crisis and stock-market crash.
The investment bank filed for Chapter 11 bankruptcy protection on September 15, 2008. It was the largest bankruptcy filing in U.S. history at that time, with hundreds of billions of dollars in assets. The failure intensified fear about the solvency of financial institutions and the risks embedded in mortgage-related securities.
Lehman’s collapse followed the deterioration of the U.S. housing market and the spread of losses through complex credit markets. Interbank lending tightened, investors sold risky assets, and stock markets around the world plunged. Governments and central banks then introduced emergency lending, guarantees, and rescue measures.
Bear Stearns had already been rescued earlier in 2008, while Merrill Lynch agreed to be acquired by Bank of America. Those events are frequently mixed up with Lehman’s failure, but Lehman was the major investment-bank bankruptcy that marked the crisis’s dramatic escalation.