Lehman Brothers’ bankruptcy became a defining moment of the 2008 global stock-market crash.
The investment bank filed for Chapter 11 bankruptcy protection on September 15, 2008, after suffering enormous losses linked to the U.S. housing and mortgage markets. With more than $600 billion in assets, it was the largest bankruptcy filing in U.S. history at that time. Its failure intensified fears about the stability of financial institutions worldwide.
Lehman had expanded heavily into mortgage-related securities and real-estate financing before the housing market deteriorated. Falling property prices and rising mortgage defaults reduced the value of those assets, while confidence in the firm collapsed. Regulators and potential buyers could not agree on a rescue comparable to the earlier deal for Bear Stearns.
Lehman’s collapse is often treated as a symbol or turning point of the financial crisis, although the crisis had begun earlier. Other major institutions also failed, were rescued, or received government support. The bankruptcy contributed to severe credit-market stress and further falls in stock markets during late 2008.