Lehman Brothers collapsed in September 2008, becoming the largest bankruptcy in American history at that time.
The investment bank filed for Chapter 11 bankruptcy on September 15, 2008, listing about $639 billion in assets. Its failure became a defining event of the global financial crisis and sharply intensified fear in credit markets.
Lehman had built substantial exposure to mortgage-related securities and real estate. When housing prices fell and mortgage losses mounted, confidence in the firm’s balance sheet deteriorated. Negotiations for a rescue or sale failed, and the U.S. government did not provide a bailout for Lehman.
The bankruptcy was not the only cause of the crisis. Bear Stearns had already required emergency assistance, and insurer AIG received federal support soon afterward. Lehman’s failure mattered because it demonstrated how interconnected financial institutions had become.