Lehman Brothers Collapse
About Lehman Brothers Collapse
Lehman Brothers filed for Chapter 11 bankruptcy on September 15, 2008, the largest bankruptcy filing in US history with 639 billion in assets. The investment bank had heavily invested in subprime mortgages. Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke decided not to bail out Lehman, unlike Bear Stearns earlier. The decision triggered a global financial panic. Credit markets froze. The Dow fell 500 points. Within days, AIG, Merrill Lynch, and Washington Mutual collapsed or were acquired. The Lehman decision remains controversial: some argue it deepened the crisis, while others argue it was necessary to stop moral hazard.
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