This chapter reviews Lehman’s assets and liabilities at the time of its bankruptcy and assesses its solvency (whether its assets exceeded its liabilities) . I conclude that Lehman was near the border between solvency and insolvency based on mark-to-market values of its assets (the amounts for which the assets could be sold at the time). The firm reported that its equity--the difference between assets and liabilities--was $28 billion. Other financial institutions that examined Lehman’s balance sheet estimated, however, that Lehman overvalued its assets by $15-$32 billion. These estimates imply that Lehman’s true equity was somewhere between -$4 billion and +$13 billion based on mark-to-market valuation. That finding strongly suggests that Lehman was solvent based on fundamental values of its assets (the values of future cash flows). The crisis of 2008 drove the market prices of many assets below their fundamental values.