World's Biggest Bankruptcy: Lehman Brothers — What Really Happened? We've already covered the 2008 financial crisis and how investment banks work — this time, let's dive into the specific story of the crisis's most infamous casualty: Lehman Brothers , one of the largest investment banks in the U.S. → Related: The Global Recession/Crisis of 2008 (#49) , What Are Investment Banks? (#73)** What makes Lehman's story especially striking: it survived the Great Depression while functioning smoothly — so why did it collapse in 2008, when many others didn't? → Related: The Great Depression Case Study (#48) How Lehman Brothers Was Founded In 1844 , a 23-year-old named Henry Lehman emigrated to Montgomery, Alabama, from Bavaria, Germany. He started out as a peddler before opening his own dry-goods store. His brothers Emanuel and Mayer joined him from Germany over the following years — Emanuel in 1847, Mayer in 1850 — and by 1850, the business was officially renamed ...