Lehman Brothers’ failure in 2008 intensified the global financial-market crash after the investment bank filed for bankruptcy. Lehman filed on September 15, 2008, in what became the largest bankruptcy filing in U.S. history at that time.
The firm had built substantial exposure to mortgages and mortgage-related securities. As the U.S. housing market deteriorated, the value of those assets fell and confidence in Lehman’s balance sheet weakened. Attempts to find a buyer failed, and the firm entered bankruptcy rather than receiving a federal rescue.
Lehman’s collapse shocked markets because it was a major global financial institution connected to banks, funds, and trading partners worldwide. Credit markets froze, stock prices plunged, and governments responded with emergency lending, guarantees, and recapitalization programs. The failure was one of the defining moments of the 2008 financial crisis.
Bear Stearns is a common mix-up: it failed earlier in 2008 and was acquired by JPMorgan Chase with government assistance. Merrill Lynch was also sold in September 2008, but it did not file for bankruptcy.