Which investment bank’s bankruptcy became the pivotal event of the 2008 financial crash?

Lehman Brothers’ bankruptcy became the pivotal event 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. With more than $600 billion in assets, it was the largest bankruptcy filing in United States history at that time.

Lehman had accumulated large exposures to mortgage-related securities and real-estate lending. When housing prices fell and defaults increased, the value of those assets became uncertain. The bankruptcy intensified fear about the solvency of banks and the safety of short-term credit markets around the world.

Bear Stearns had already collapsed earlier in 2008 and was acquired by JPMorgan Chase. Merrill Lynch was bought by Bank of America, while Washington Mutual failed later that month. These events are related, but Lehman Brothers is the institution most closely associated with the crisis’s dramatic escalation.