Lehman Brothers’ failure in 2008 is widely treated as a defining escalation of the global financial crash.
Lehman Brothers filed for Chapter 11 bankruptcy on September 15, 2008, after weeks of unsuccessful efforts to find a buyer or obtain sufficient capital. The firm had substantial exposure to U.S. housing and mortgage-related assets, whose values had deteriorated as the housing boom reversed and defaults rose.
The bankruptcy sent shock waves through global financial markets because Lehman was deeply connected to banks, funds, insurers, and investors. Credit markets became more fearful, and the failure of the Reserve Primary Fund soon highlighted the fragility of money-market funds. Governments and central banks responded with bailouts, guarantees, emergency lending, and interest-rate cuts.
Bear Stearns had already been rescued and sold to JPMorgan Chase in March 2008, while Merrill Lynch was sold to Bank of America in September. Those events are related but are not the Lehman bankruptcy. Lehman’s collapse became a symbol of systemic risk and policy failure.