Lehman Brothers' collapse in September 2008 became a defining event of the global financial crisis.
Lehman Brothers Holdings Inc. filed for Chapter 11 bankruptcy protection on September 15, 2008. It was the largest bankruptcy filing in United States history at that time. The firm had built a large exposure to mortgage-related securities and real estate, and its failure showed how deeply interconnected banks, investment funds, insurers, and money markets had become.
The bankruptcy followed months of escalating turmoil. Bear Stearns had been rescued in March 2008, while Fannie Mae and Freddie Mac entered federal conservatorship in September. The decision not to arrange a government rescue for Lehman intensified panic, although officials and historians continue to debate the alternatives available at the time.
Lehman's failure did not cause the entire crisis by itself. Excessive mortgage lending, securitization, high leverage, weak risk controls, and falling house prices had already damaged the financial system. After the filing, credit markets froze further, stock markets plunged, and governments worldwide introduced emergency lending, guarantees, and recapitalization measures.