The Banking act of 1933, also known as the Glass Steagall Act, was a law created in response to the Great Depression, and has been a major target of the considerations ever since. Two important parts of the act is the creation the FDIC (Which insures the money that you deposit in the bank, to make you feel safe), and introduced banking reforms to separate commercial and investment banking. This stops the banks from gambling with investors money.
Now here in lies the big problem….In 1999 The Gramm-Leach-Bliley Act Removed the part of the law separating commercial and investment banking. So now the banks can gamble with your money, with the safety of the FDIC backing their bets! The mixing of these banking functions has been determined to lead to conflicts of interest and fraud by congress. The funny thing is that the repeal of the act was considered to be a way to help banks grow larger and better…remember the saying “Too Big to Fail!”.