Lehman Brothers collapsed in 2008 after losses tied to subprime mortgages, helping trigger the financial crash.
Lehman Brothers filed for bankruptcy on 15 September 2008. The firm had accumulated substantial exposure to real-estate finance and mortgage-related securities. As U.S. house prices declined and borrowers defaulted, those assets lost value and investors became increasingly unwilling to lend to Lehman.
The bankruptcy was historically important because Lehman was deeply connected to other banks, funds, insurers, and trading partners. Its failure made market participants question which institutions might be next, causing funding markets to seize up and stock prices to fall worldwide. The collapse also showed that the problem extended beyond individual mortgage lenders.
Lehman was not the only major institution in trouble. Bear Stearns had been sold to JPMorgan Chase with government assistance in March 2008, while American International Group received a federal rescue shortly after Lehman failed. The crisis led to bank recapitalizations, emergency lending, and major regulatory reforms, including the 2010 Dodd–Frank Act.