Lehman Brothers’ bankruptcy became the most prominent symbol of the 2008 financial crisis.
Lehman Brothers filed for Chapter 11 bankruptcy protection on September 15, 2008. With more than $600 billion in assets, it was the largest bankruptcy filing in U.S. history at that time. The firm had accumulated major exposure to mortgage-related securities and real estate as the housing market weakened.
The failure intensified fear throughout global financial markets. Banks became reluctant to lend to one another, credit markets seized up, and stock indexes plunged. The U.S. government and Federal Reserve then took extraordinary steps to stabilize financial institutions and the wider economy. Merrill Lynch was acquired by Bank of America, while insurer AIG received government support.
Lehman was not the only failing institution, and the crisis had deeper causes, including risky mortgages, securitization, leverage, and weak risk controls. It is remembered as the emblematic collapse because its disorderly failure marked a dramatic escalation of the panic.