Lehman Brothers’ collapse marked the largest bankruptcy in American history during the 2008 financial crisis.
The investment bank filed for Chapter 11 bankruptcy protection on September 15, 2008, after suffering enormous losses tied to mortgages and other housing-related assets. Its failure followed the bursting of the United States housing bubble and intensified fears that major financial institutions were interconnected through complex debt contracts.
Lehman’s bankruptcy froze credit markets and helped turn a housing and banking crisis into a worldwide financial shock. The event was especially important because authorities had allowed the firm to fail after arranging emergency support for some other institutions, creating uncertainty about which companies would survive.
Lehman Brothers was not the only major casualty. Bear Stearns had been rescued earlier in 2008, while Washington Mutual failed later that month. The crisis also led to government bailouts, emergency central-bank actions, and new financial regulations.