History of investment banking in the United States
Philadelphia financier Jay Cooke established the first modern American investment bank during the Civil War era. However, private banks had been providing investment banking functions since the beginning of the 19th century and many of these evolved into investment banks in the post-bellum era. However, the evolution of firms into investment banks did not follow a single trajectory. For example, some currency brokers such as Prime, Ward & King and John E. Thayer and Brother moved from foreign exchange operations to become private banks, taking on some investment bank functions. Other investment banks evolved from mercantile firms such as Thomas Biddle and Co. and Alexander Brothers. In 1933 the New Deal separated investment from commercial banking through the Glass-Steagall Act. That law was no longer in effect in the late 1990s, opening the way for the power of investment banking to accelerate. Its growth was a response to new demands for investment services, technological changes, deregulation, and globalization. Investment banks were at the heart of the shadow banking system. Investment banking played a major role in the outbreak of the global financial crisis of 2007–9. In the aftermath, leading American investment banks were converted into bank holding companies, and brought