Bankruptcy of Lehman Brothers

Lehman Brothers' bankruptcy was unprecedented in scale, involving more than US$600 billion in assets. This massive financial collapse marked the climax of the subprime mortgage crisis. The sheer size of the bankruptcy filing set a record for the largest in U.S. history.

The bankruptcy triggered a significant economic downturn, with a 4.5% one-day drop in the Dow Jones Industrial Average. This decline was the largest since the September 11, 2001 attacks, highlighting the severity of the financial shock. The Dow Jones Industrial Average's sharp drop reflected the widespread panic and loss of confidence in the financial markets.

Lehman Brothers' collapse had a ripple effect on the global economy, causing a general financial panic. The bankruptcy led to mass withdrawal demands from money market mutual funds, a key source of credit, and tightened the interbank lending market. These events threatened banks with imminent failure and prompted the government and Federal Reserve to respond with emergency measures to contain the panic.