Mark Thoma, associate professor of economics at the University of Oregon gives a brief overview of the background to the Glass Steagall Acts:
"Many people associate the onset of the Great Depression with the stock market crash in October 1929. But a more important cause was a series of banking panics in the years prior to the Great Depression, and the particularly severe banking collapse from 1930-1933.
The response to this crisis and the devastating economic disruption that came along with it was the Banking Acts of 1933 and 1935, also known as the Glass-Steagall Acts. The goal was to stabilize the banking system by enhancing the power of the Federal Reserve to regulate financial markets and to intervene when problems emerged.
And it worked. The changes resulted in a very long period, over 50 years, where financial markets remained calm."