Lehman Brothers’ bankruptcy became a defining event of the 2008 global financial crash.
The investment bank filed for bankruptcy on September 15, 2008, after suffering enormous losses connected to U.S. mortgage-related securities and real-estate lending. Its failure was the largest bankruptcy filing in U.S. history at the time and immediately intensified fears about the stability of banks and financial institutions worldwide.
Lehman’s collapse followed the earlier rescue and sale of Bear Stearns and came during a period of severe stress in credit markets. Institutions became reluctant to lend to one another, while investors sold risky assets, including equities. Governments and central banks then introduced emergency lending, guarantees, capital injections, and other measures.
The bankruptcy did not start the subprime-mortgage crisis, which had developed earlier, but it transformed a serious financial problem into a global panic. Merrill Lynch was acquired by Bank of America, so it did not enter bankruptcy in the same way.