Message boards, blogs, early Twitter democratized financial commentary. Anyone with an audience could move a market. The pump-and-dump went digital.
Lehman filed for Chapter 11 at 1:45 am Eastern with $639 billion in assets. By the time Asian markets opened a few hours later, every major trading desk in the world had read the filing in full, knew the counterparty exposures, and had started repositioning. The synchronized global response is the part that was new: it was the first major bank failure of the genuine internet era, and the speed of information reset what a banking panic could look like.
At 2:32 pm Eastern, a single large algorithmic sell order hit the E-mini S&P futures market. High-frequency traders, responding to unusual order flow, pulled their bids. The Dow fell nearly 1,000 points (about 9 percent) inside ten minutes and recovered most of it inside 20. The event revealed that electronic liquidity could evaporate instantly when algorithms decided, in concert, to step back. SEC rules on single-stock circuit breakers tightened later that year.
Over a single weekend, internet-driven rumors about Bear Stearns's liquidity became a self-fulfilling fact. Counterparties pulled credit lines between Thursday and Sunday. By Sunday night JPMorgan bought Bear for $2 per share, down from $172 a year earlier.