Lehman Brothers’ bankruptcy in September 2008 became the largest bankruptcy filing in U.S. history and intensified the global financial crisis.
The investment bank filed for Chapter 11 protection on September 15, 2008, after suffering heavy losses tied to mortgage-backed securities and the collapse of the U.S. housing market. Its filing listed hundreds of billions of dollars in assets and liabilities, making it vastly larger than earlier prominent corporate bankruptcies.
Lehman’s failure shocked financial markets because the firm was deeply connected to banks, investment funds, insurers, and trading partners around the world. The bankruptcy increased uncertainty about which institutions were exposed to bad mortgage debt. Credit markets tightened sharply, stock markets fell, and governments soon expanded emergency lending, guarantees, and bank-rescue programs.
Lehman is often confused with Bear Stearns, which suffered a severe run earlier in 2008 and was acquired by JPMorgan Chase with government assistance. Merrill Lynch was also bought during the crisis, while Washington Mutual failed later in September. Lehman’s collapse became a defining event of the 2007–2008 financial crisis, although the crisis had begun before the filing and continued afterward.