15 September 2008: Lehman Brothers goes bust

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The financial crisis that began with American mortgage-payers defaulting claimed its most high-profile casualty on this day in 2008 when Lehman Brothers, America's fourth-biggest investment bank, filed for bankruptcy.

It was, and remains, the biggest corporate failure in US history.

Founded in Alabama in 1844, Lehman Brothers was originally a small retailer, selling to local cotton farmers. It soon branched out into commodities trading - buying and selling cotton. Financing the growth of the railroads allowed it to expand further. By 2008, it had over $600bn in assets and 25,000 employees.

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But it was heavily invested in the now notorious sub-prime mortgages, and it had geared up its borrowing to a huge extent. When assets started to collapse, it had leverage of over 40 to one.

The Federal Reserve had been fighting financial fires all year. It had forced a marriage between Bear Stearns and JP Morgan Chase when it looked like the former was failing. It committed $3trn to bail out mortgage finance companies Fannie Mae and Freddie Mac. But it drew the line at Lehman.

The bank had been in rescue talks with both Barclays and Bank of America. But both declined to step in. Left to fend for itself, Lehman went under in the early hours of Monday, 15 September.

On the same day as Lehman collapsed, another investment bank, Merrill Lynch, agreed to be sold to Bank of America for $50bn. And the insurance giant AIG was bailed out by the US Federal Reserve to the tune of $40bn.

The collapse sparked turmoil in financial markets. The Dow Jones saw one of the biggest falls in its history, sliding 504 points, or 4.4%, in a single day. Markets around the world slumped.

The good bits of Lehman's North American business were snapped up by Barclays in the aftermath for $2bn, while the Asia Pacific and European and Middle Eastern operations went to Nomura.