Lehman Brothers' bankruptcy

Lehman Brothers had accumulated large losses on real-estate investments through 2007 and 2008, and as those losses mounted, other financial firms grew reluctant to keep lending to or trading with it, cutting off the short-term funding investment banks depend on to operate. Over the weekend of September 13-14, 2008, the Federal Reserve, Treasury and SEC gathered Wall Street's leading firms in an attempt to broker a private rescue, as had happened with Bear Stearns six months earlier, but no buyer emerged willing to take on Lehman's troubled assets without government support. Fed officials, including chair Ben Bernanke, later said they lacked the legal authority to lend Lehman the funds it needed because it could not offer adequate collateral, and the firm filed for Chapter 11 bankruptcy protection early on September 15, listing $639 billion in assets against $613 billion in debts — still the largest bankruptcy filing in US history. Global stock markets lost roughly $10 trillion in value in the aftermath, credit markets froze, and within a day the Fed found itself extending an $85 billion rescue to insurer AIG rather than risk a second major failure.