#Liquidity101

Lehman Brothers — collapse due to lack of liquidity

Lehman Brothers — one of the largest investment banks in the United States, 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 outward shine lay a dangerous problem: poor liquidity.

The bank held enormous volumes of mortgage securities — illiquid assets, which plummeted in value during the mortgage crisis in the United States. When investors and clients began to withdraw their money en masse, Lehman could not quickly sell its assets to repay debts. Everything was tied to documents that no one wanted to buy.

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

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