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The filing for Chapter 11 bankruptcy protection by financial services firm Lehman Brothers on September 15, 2008, remains the largest bankruptcy filing in U. history, with Lehman holding over US0,000,000,000 in assets.

The bank had become so deeply involved in mortgage origination that it had effectively become a real estate hedge fund disguised as an investment bank.

One measure of this risk-taking was its leverage ratio, a measure of the ratio of assets to owners equity, which increased from approximately 24:1 in 2003 to 31:1 by 2007.

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Lehman's loss was apparently a result of having held onto large positions in subprime and other lower-rated mortgage tranches when securitizing the underlying mortgages.

Whether Lehman did this because it was simply unable to sell the lower-rated bonds, or made a conscious decision to hold them, is unclear.

At the height of the subprime mortgage crisis, it was exceptionally vulnerable to any downturn in real estate values.

The bankruptcy triggered a drop in the Dow Jones Industrial Average of more than 500 points, the largest decline since the September 11, 2001, attacks.

From an equity position, its risky commercial real estate holdings were three times greater than capital.

In such a highly leveraged structure, a three- to five-percent decline in real estate values would wipe out all capital.

Additional pressure to sell securities in commercial real estate was feared as Lehman got closer to liquidating its assets.

Apartment-building investors were also expected to feel pressure to sell as Lehman unloads its debt and equity pieces of the billion purchase of Archstone, the third-largest United States real estate investment trust (REIT).

In any event, huge losses accrued in lower-rated mortgage-backed securities throughout 2008.

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