Lehman Brothers’ bankruptcy on September 15, 2008, became a defining moment of the global stock-market crash.
Lehman Brothers was the fourth-largest investment bank in the United States when it filed for Chapter 11 bankruptcy protection. Its collapse followed heavy exposure to mortgage-related securities and the weakening U.S. housing market. The filing was the largest bankruptcy in U.S. history at that time and intensified fear across financial markets.
The failure did not start all of the problems in the 2008 crisis. Credit markets had already been under severe pressure, and Bear Stearns had been rescued earlier in 2008. However, Lehman’s failure convinced many investors that major financial institutions could be allowed to collapse, worsening the worldwide liquidity panic.
Merrill Lynch was acquired by Bank of America during the same weekend, while the U.S. government provided assistance to other institutions. Those separate events are often blended together, but Lehman Brothers is the specific bank associated with the September 15 bankruptcy.