Beginning in the 1970s these overlaps multiplied, as the traditional separation of lending and capital market activities—which had been reinforced by the Glass-Steagall Act—began to break down under the weight of macroeconomic turbulence, technological and business innovation, and competition.
In the 30 years that followed, these activities were progressively integrated further, both within bank holding companies and beyond, ultimately producing the explosive growth of money market, securitization, and derivative instruments. More fundamentally, the broader category of “financial regulation” reflects the importance of a macroprudential, or systemic, perspective on the financial system.