A U.S. Senate probe known as the Pecora Investigation found that banks were allowed to mislead investors, sell stocks short, manipulate stock prices, underwrite and sell questionable securities, and make interest-free loans to insiders and favorite clients.
While the separation of investment and commercial banking remains the best-known provision of the law, the Banking Act featured another provision that has been credited with slowing bank runs that had plagued the country: the creation of the Federal Deposit Insurance Corporation (FDIC). When it was formed, the FDIC insured deposits of as much as $2,500 for Federal Reserve System banks; the figure was last increased to $250,000 in 2008.