September 15, 2008

2008 financial crisis

Lehman files for bankruptcy as Bank of America agrees to buy Merrill and AIG nears collapse

Before sunrise, a firm reporting $639 billion in assets entered bankruptcy court. By nightfall, a private rescue of AIG had failed too.

15 September 2008: three crises in one Monday

In the early hours of 15 September 2008, Lehman Brothers Holdings filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the Southern District of New York, reporting $639 billion in assets, after efforts to find a buyer or sufficient financing failed. It continued operating as a debtor-in-possession.

The same day, Bank of America announced an agreement to acquire Merrill Lynch — feared to be the next major investment bank to fail — in an all-stock transaction initially valued at $50 billion. And American International Group, unable to replace maturing commercial paper, met with Goldman Sachs, JPMorgan and the New York Fed about a secured lending facility.

The night the private rescue failed

Credit-rating downgrades triggered collateral calls AIG could not meet. One private plan discussed that day contemplated a $75 billion secured facility — but the New York Fed-convened syndication effort failed by nightfall, with AIG's stock closing at $4.76.

By the close, the Dow Jones Industrial Average had fallen 504.48 points, or 4.42 percent — the sharpest decline in years.

What September 15 was — and wasn't

The precise sequence matters. The Federal Reserve's AIG facility of up to $85 billion was authorized on 16 September, not the 15th. The Merrill deal was an agreement, not a closing — it completed on 1 January 2009 at a much-diminished market value. And Lehman's failure accelerated a crisis already underway; the Great Recession had officially begun in December 2007.

The aftershock came fast: Lehman losses helped push the Reserve Primary Fund below its $1 share value the next day, intensifying withdrawals from money-market funds — one fund received $10.8 billion in redemption requests on the morning of the bankruptcy itself.

Sources

Researched 23 Aug 2026 7 sources 3 audit passes, 2 issues open

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