The global financial crisis and the collapse of Lehman Brothers
- Date
- 15 September 2008
- Category
- Economy & trade
- Region
- Global
- Era
- Contemporary
- Significance
On 15 September 2008 Lehman Brothers, the fourth-largest US investment bank, filed for Chapter 11 bankruptcy with more than $600 billion in assets—the largest bankruptcy in American history.
Its failure was the climax of a crisis rooted in the US subprime mortgage market, where years of risky lending, complex securitisation and excessive leverage had built up systemic fragility that began to unravel in 2007. Lehman's collapse triggered a general financial panic: interbank lending froze, money-market funds faced runs, credit markets seized and stock markets plunged worldwide. Governments and central banks responded with unprecedented bank rescues, guarantees and the US Troubled Asset Relief Program, while the US Federal Reserve and others slashed interest rates and launched quantitative easing. The crisis tipped the world into the Great Recession, the deepest global downturn since the 1930s, destroying jobs, homes and wealth on a vast scale and exposing the dangers of deregulated, globally interconnected finance. It reshaped banking regulation, fuelled lasting public anger at financial elites and government bailouts, and set the stage for the Eurozone debt crisis and a decade of contested recovery and rising populism.
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Further reading
If you read one book
Crashed: How a Decade of Financial Crises Changed the World
Acclaimed, sweeping history of the 2008 crash and its long aftermath.
Get it on Amazon →Also worth reading
- Too Big to Fail — Amazon →
Too Big to Fail
Definitive fly-on-the-wall narrative of the Lehman collapse and the 2008 rescue.
Get it on Amazon → - The Big Short: Inside the Doomsday Machine — Amazon →
The Big Short: Inside the Doomsday Machine
Vivid, funny bestseller on the housing bubble and traders who saw the crash coming.
Get it on Amazon →
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