Lehman Brothers Collapse
Lehman Brothers filed for bankruptcy, triggering the global financial crisis
September 15, 2008
The Biggest Bankruptcy in History
On September 15, 2008, Lehman Brothers — one of the oldest and largest investment banks in the United States — filed for bankruptcy. It was the largest bankruptcy filing in American history, with over $600 billion in assets. The bank had made enormous bets on mortgage-backed securities, financial products tied to home loans. When the U.S. housing market collapsed, those investments turned toxic. Unlike other struggling banks that received government bailouts, Lehman was allowed to fail, sending shockwaves through global financial markets.
A Crisis Goes Global
The collapse of Lehman Brothers accelerated the 2008 financial crisis, which had already been building for months. Credit markets froze as banks stopped trusting each other. Stock markets around the world plunged. Companies that had nothing to do with housing or banking found they could not borrow money to pay their workers. Unemployment rose sharply across the United States and Europe. Governments scrambled to prevent a total financial meltdown, injecting trillions of dollars into banks and passing emergency stimulus packages.
Regulation and Reform
The crisis led to sweeping changes in financial regulation. In the United States, the Dodd-Frank Act introduced new rules designed to prevent banks from taking on excessive risk and to protect consumers from predatory lending. International banking standards were also tightened. The episode raised serious questions about whether large financial institutions should be allowed to grow so big that their failure threatens the entire economy. The debate over "too big to fail" continues to this day. You can explore the timeline of financial crises with our date calculator.