This Day In Market History: Lehman Brothers Collapses
A reminder of the Great Recession came over the weekend with the anniversary of a major Wall Street bankruptcy.
What Happened
Eleven years ago this past weekend, Lehman Brothers filed for what would be the largest bankruptcy in history.
Where The Market Was
The Dow Jones Industrial Average closed at 10,917.51 on Monday, Sept. 15, 2008 after falling more than 500 points on the day. The S&P 500 closed at 1,192.69, its lowest close in nearly three years.
What Else Was Going On In The World
The country was in the midst of the financial crisis caused by the bursting of the real estate bubble, and three of the five largest American investment banks had failed or been bought since the spring.
Merrill Lynch was in the process of selling itself to Bank of America.
Share prices of insurance giant AIG were in freefall over concerns about its credit rating, and the government would be forced to seize control of the company on Sept. 16.
The late Sen. John McCain, Republican from Arizona, and then-Sen. Barack Obama, Democrat of Illinois, were running neck-and-neck in most polls ahead of the 2008 presidential election.
Lehman's Collapse
With $639 billion in assets and $619 billion in debt, Lehman’s was the biggest bankruptcy filing in the nation’s history.
Wall Street CEOs and government officials had met over the weekend before the filing hoping to find a solution. A government bailout was off the table; Lehman CEO Dick Fuld had hoped Bank of America might be a buyer.
But Bank of America was already secretly in talks to buy Merrill Lynch, and by Sunday night, Sept. 14, it was clear the firm would file for bankruptcy.
At the time of its collapse, Lehman was the fourth-largest U.S. investment bank and had about 25,000 employees. It started as a dry goods company in Montgomery, Alabama in 1844.
Related Links:
This Day In Market History: Junk Bond Bank Drexel Burnham Lambert Goes Bankrupt
Enron Declared Bankruptcy 15 Years Ago Today
Photo by Robert Scoble via Wikimedia.
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