The New Deal reforms of financial regulation, themselves spawned by a systemic crisis, had separated commercial banking from investment banking, cured the problem of commercial bank runs by providing federal deposit insurance, and brought transparency and investor protections to trading and other capital markets activities.
This regulatory approach fostered a commercial banking system that was, for the better part of 40 years, quite stable and reasonably profitable, though not particularly innovative in meeting the needs of depositors and borrowers. In the 1970s, however, turbulent macroeconomic developments combined with technological and business innovations to produce an increasingly tight squeeze on the traditional commercial banking business model.