The prohibition against combining investment banking and commercial banking activity during the Depression-era,centered on possibly forcing customers seeking loans to buy securities that the IB was trying to sell and increasing the risk exposure of commercial banking firms.

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The Glass-Steagall Act of 1933, which separated investment banking and commercial banking, aimed to prevent conflicts of interest that could arise when banks combined these activities. One concern was that commercial banks might be pressured by their investment banking arms to lend money to customers for the purpose of buying securities that the investment bank was trying to sell. This could potentially expose the commercial bank to higher levels of risk.

The Prohibition Against Combining Investment Banking and Commercial Banking Activity