The bankruptcy of Lehman Brothers on September 15th, 2008, marked a significant event in modern economic history, causing the worst global financial crisis since the Great Depression. Founded in 1850, the collapse of this investment bank, heavily involved in risky mortgage-backed securities, led to a chain reaction in the financial system.
Despite warning signs in 2007, Lehman Brothers failed to avert its demise as losses mounted due to bad investments. Desperate attempts to find a buyer were unsuccessful, ultimately resulting in bankruptcy. This decision, supported by then-Secretary of the Treasury Henry Paulson, had far-reaching consequences globally.
The aftermath of the bankruptcy saw markets plummet, necessitating emergency government interventions to stabilize financial systems. The legacy of Lehman Brothers’ collapse included a push for financial reforms and regulations to prevent future crises, highlighting the importance of responsible risk management.
The 2008 crisis serves as a stark reminder of the fragility of financial systems and the need for oversight to prevent catastrophic economic consequences.
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