Which failed brokerage firm’s collapse became a defining moment of the 2008 financial crash?

Lehman Brothers’ collapse became a defining moment of the 2008 financial crash. The investment bank filed for Chapter 11 bankruptcy protection on September 15, 2008, after failing to find a buyer or secure a government-backed rescue. It was the largest bankruptcy filing in United States history at that time.

Lehman had built a large exposure to mortgage-related assets and had used substantial leverage. When the U.S. housing downturn worsened and confidence in financial institutions deteriorated, the firm struggled to raise capital and sell assets. Its failure intensified fears about the stability of banks and counterparties around the world.

Lehman Brothers was not the first major institution affected by the crisis. Bear Stearns had been rescued through a JPMorgan Chase acquisition in March 2008, while American International Group received government support shortly after Lehman failed. A common mix-up is saying Lehman was “rescued”; unlike several peers, it entered bankruptcy, although parts of its business were later sold.