The Glass-Steagall Act of 1933 was one of the most important finance laws in the United States for most of the 20th century. Its most important stipulation was that a single firm could not be "engaged principally" in brokerage services if it offered commercial lending services: in other words, a bank could not serve as a broker of any kind of security. Among other minor provisions, the act also established the Federal Deposit Insurance Corporation, which still insures most bank deposits to this day.
As its date might indicate, Glass-Steagall was part of the New Deal. It was named after its sponsors, Sen. Carter Glass of Virginia and Rep. Henry Steagall of Alabama, who argued that the stock market crash of 1929 had largely been caused by large banking conglomerates persuading their clients to buy stocks in which the bank had invested.
Starting in the 1960's, banks began hiring armies of lobbyists to attempt to overturn or cripple Glass-Steagall. Most notably, banks wanted to have the right to sell municipal bonds and corporate bonds to their clients. The shouting on Capitol Hill went on for a couple of decades, and in the meantime, some brokerage firms began offering money market accounts with many of the same features of bank accounts, including checking and debit cards.
The turning point for Glass-Steagall finally came late in 1986, when the Federal Reserve Board decided that the law actually should allow banks to offer financial services, as long as their revenues from said services accounted for no more than five percent of their total revenue. Before long, the Fed allowed banks to sell bonds, debt, and equity securities, saying that the industry had changed dramatically since the 1930's and that modern regulatory bodies alleviated the need for the original law's provisions.
At the end of 1996, the act effectively died when the Fed allowed banking corporations to purchase or start investment subsidiaries. This paved the way for a number of epic mergers, takeovers, and corporate reorganizations, such as the merger of Citicorp and Travelers Group to form Citigroup.
On November 4, 1999, the House and Senate both voted to replace Glass-Steagall with the Gramm-Leach-Bliley Financial Services Modernization Act. Bill Clinton signed the act into law on November 12.