Our financial system (and many others) is primarily dependent upon "cash flow". Meaning, everyone has to pay their bills on time or pay interest/go bankrupt for default.
Of derivatives and swaps arm of Lehman, they were leveraging in excess of 30:1 on Aaa rated securities (of which various bundles where comprised of sub prime loans to "ease the pool"). Once the cash flow's began to offset Lehman would have to sell assets, borrow money, or default (AIG). Eventually (with assets modeled to market value) you cannot issue anymore debt, and cannot borrow anymore... you go under; and that's what Lehman did. Such an act can spark a massive sell off in the mbs market, of which has dire consequences. Under mark to market, financial firms had to model their assets at market value; when the value begins to fall at enormous rates, there is an ever bigger bolt to capital. By the end of the month, the market begins to realize its first $1 trillion evaporation in wealth... in one day.
And there was AIG, who was the worlds largest insurer against such risky investments unable to make the payments on the defaults. Now, even "supposed" strong firms like Goldman Sachs becomes short on its cash flow liabilities and could be forced to borrow. You read the article right?
In comes TARP. Along with basically eliminating the existence of large scale investment banks, the ones that survived or did not get bought were then able to borrow all they will need to ease credit availability. Remember, banks get their loans first, and if they were hogging all the action, it could be unbelievably expensive (rates begin to rise ) for everyone else. But TARP could only last so long, and with new facilities being ushered by the Fed, in steps Bernanke with his promise. For the first time since the 1930's the yield on the 3 month goes to zero, which is a signal that more default and uncertainty is coming.
But it did not. The Fed expanded their balance sheet 3x's over, and provided the market with the ample amount of liquidity to prevent asset devaluations. Combined with a global effort to enact stimulus (to make up for the massive drop in velocity), we see the reversal in asset devaluation.