How did Lehman Brothers collapse?

On 15 September 2008, Lehman Brothers collapsed due to a combination of risky financial practices and the bursting of the housing bubble. The firm had heavily invested in mortgage-backed securities, which lost value as home prices fell and borrowers defaulted on loans. Lehman’s lack of liquidity and a failed attempt at bankruptcy protection led to its collapse, triggering a global financial crisis. Its downfall marked the beginning of a severe recession and reshaped the banking industry.