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The Great Depression was a very dark time during business history for the United States. Mt. Carmel lost both its banks during that time. Many of the U.S. laws passed during that time dealt with banking regulation to be certain that when banks reopened they would be on sound footing.
Federal deposit insurance (FDIC) was enacted by the Banking Act of 1933 as one of the measures designed to restore public confidence in the banking system. Before deposit insurance, "runs" on the bank were common as people rushed to withdraw their money from a bank, often on just a rumor that the bank was in precarious financial condition. At some point, the bank was unable to meet withdrawal demands and closed its doors. Remaining depositors often lost most of the money they had in the bank. Deposit insurance shifts the risk of bank failures from individual depositors to the FDIC.
In addition ot establishing the FDIC, Depresssion banking legislation also put restrictions on the kinds of activities in which banks could engage, including restricting their role in the securities markets. Believing that some of these restrictions were outdated, Congress recently passed a law that allows banks to enter the securities and insurance businesses. In return other financial servicess firms are now allowed to offer banking services.
"Contemporary Business 2003" by Boone and Kurtz