Lehman Brothers’ bankruptcy on September 15, 2008, became a key event in the global stock-market crash.
Lehman Brothers was a major U.S. investment bank heavily exposed to mortgage-related securities and real estate. After the housing market weakened, losses on those assets undermined confidence in the firm and made it difficult to obtain short-term financing.
The bankruptcy was the largest in U.S. history at that time. Its failure shocked financial markets because Lehman had extensive connections with banks, funds, insurers, and other institutions around the world. Credit markets tightened sharply, and stock exchanges plunged.
The crisis also involved other major firms. Bear Stearns was rescued in March 2008, while the U.S. government provided support to American International Group shortly after Lehman failed. Merrill Lynch agreed to be acquired by Bank of America, illustrating the wider banking turmoil.