Lehman Brothers, fourth largest investment firm, filed for bankruptcy, after Barclays pulled out of an 11th-hour rescue, becoming the largest financial firm to fail in the global credit crisis, after federal officials refused to help other companies buy the venerable investment bank.

Bank of America meanwhile has purchased Merill Lynch for around $ 50 billion, creating a new financial giant.

As if things were not bad enough, AIG has now reportedly asked for a $ 40 billion loan from the government.

Washington Mutual remains up in the air at this point. The company has lost a whooping 92 per cent of its market value in the last year but does currently have a fairly large base of assets and deposits and there is currently hope that it will be able to make it through the current crisis.

Traders fear that the collapse of Lehman would send shockwaves around the world and spark a global sell-off of shares.

Lehman Brothers Holdings Inc, founded in 1850, was a diversified, global financial-services firm. It is active in investment banking, equity and fixed-income sales, research and trading, investment management, private equity, and private banking.

It was a primary dealer in the US Treasury securities market.

Its primary subsidiaries included: Lehman Brothers Inc., Neuberger Berman Inc., Aurora Loan Services, Inc., SIB Mortgage Corporation, Lehman Brothers Bank, FSB, and the Crossroads Group.

The firm's worldwide headquarters were in New York City, with regional headquarters in London and Tokyo, as well as offices located throughout the world.Tokyo, and operates in a network of offices around the world.