#Liquidity101 Lehman Brothers — collapse due to lack of liquidity

Lehman Brothers — one of the largest investment banks in the USA, with a history of over 150 years. Until 2008, the company managed assets worth hundreds of billions of dollars. On paper — a giant. But behind the external gloss was a dangerous problem: poor liquidity.

The bank held huge volumes of mortgage securities — illiquid assets that plummeted in value during the mortgage crisis in the USA. When investors and clients began to withdraw their money en masse, Lehman could not quickly sell its assets to pay off debts. Everything was tied up in papers that no one wanted to buy.

On September 14, 2008, Lehman Brothers declared bankruptcy — the largest in U.S. history at that time. This event triggered a domino effect and became a key point in the global financial crisis.

Conclusion: Even the largest company can collapse if it lacks liquid assets. Lehman did not go bankrupt due to losses — it simply could not quickly access cash when it was critically needed.