Lehman Brothers’ failure on September 15, 2008, became a defining event of the Global Financial Crisis.
Lehman Brothers filed for Chapter 11 bankruptcy after efforts to find a buyer or obtain government support failed. At the time, it was the largest bankruptcy filing in United States history. The investment bank had accumulated substantial exposure to mortgages and mortgage-related securities, while the collapse of the United States housing market damaged the value and liquidity of those assets.
Lehman’s failure shocked financial markets because the firm was deeply connected to banks, funds, insurers, and trading counterparties. Money-market funds came under pressure, interbank lending became difficult, and stock markets around the world fell sharply. The crisis had already intensified after the rescue of Bear Stearns in March 2008.
A common mix-up is saying Lehman caused the entire crisis. The firm’s collapse was a major turning point in a broader crisis involving risky mortgages, excessive leverage, weak underwriting, and interconnected financial institutions.