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Essay from the year 2009 in the subject Economics - Finance, grade: 1,3, , language: English, abstract: Introduction The collapse of the housing market (bursting of the housing bubble) and its crucial impact saw the end of the five largest US investment banks. Goldman Sachs and Morgan Stanley switched under constraints to commercial banks. Merrill Lynch was acquired by Bank of America. Bear Stearns was taken over by JP Morgan Chase. Lehman Brothers crashed completely due to the same mistakes of too high leverage and an overreliance on unrealistic real estate assets. Because of the disastrous outcomes of this bankruptcy there was a lot of discussion about the decision of the Fed to let Lehman fall. In this paper I will start to explain the failures of Bear and Lehman, then I will analyze these states of affairs and finally I will present my recommendations for the future.