Lehman Brothers’ bankruptcy became the largest in American history during the 2008 crash. The investment bank filed for Chapter 11 protection on September 15, 2008, after failing to secure a rescue or buyer.
At the time, Lehman had reported assets of about $639 billion and debts of about $619 billion. Its collapse sent shock waves through the financial system because banks and investors were interconnected through loans, derivatives, securities, and short-term funding markets.
Lehman’s failure is sometimes confused with Bear Stearns’ collapse. Bear Stearns was rescued and sold to JPMorgan Chase in March 2008, whereas Lehman entered bankruptcy. Merrill Lynch agreed to be acquired by Bank of America during the same September weekend.
The bankruptcy contributed to a severe loss of confidence. Soon afterward, the U.S. government supported the insurance giant AIG, and Congress approved the Troubled Asset Relief Program. These events marked the crisis’s most acute phase.