So the banks have a large amount of bad debt, they have screwed investors with their dodgy products, investors are now hesitant to invest in the financial sector, (who can blame them) which means less liquidity for banks, which means a higher cost for intra-bank cost of borrowing, and that in turn creates a capitalisation problem for banks
Moreover, it means that the cost of lending to the consumer (main St) also must increase.
and that staves national growth, because projects that might have been undertaken, are now too costly.
In summery, you now have, banks with large debt, higher inflation in the U.S, higher unemployment in the U.S, many that can't pay their mortgages, higher cost of credit for the banks, higher cost of borrowing for the banks end users, as well as a slowing national growth.
Since then, we have seen banks file for bankruptcy, banks made insolvent, and the general populace do a run on the banks. The ultimate no-confidence vote.
Why wasn't Lehman brothers saved like the other banks?
Lehman wasn't as important as fannie mae and freddie mac. Those 2 banks had approximately 50% of all the mortgages in the U.S.
hope that explains it