Investment banks, along with other innovations in banking and finance referred to as the shadow banking system, grew to rival the depository system by 2007.
Before 1950, U.S. federal bank regulators had essentially two options for resolving an insolvent institution: 1) closure, with liquidation of assets and payouts for insured depositors; or 2) purchase and assumption, encouraging the acquisition of assets and assumption of liabilities by another firm.