Eighty years ago today, the stock market took a dive of more than 11 percent, a move that is considered the start of the Great Depression. The crash, like our own, was a wakeup call for change, says Nomi Prins—but Obama isn’t heeding the lessons of FDR and changing the banking landscape.

President Obama would do well to heed the notion of being true to Main Street economic conditions, rather than risk losing the next election by overlooking them and considering the rising markets and stabilizing banks as a sign of general strength.

Call it a dying cat bounce, but we should heed the lessons of Black Tuesday. That stock market dive, 80 years ago Thursday, was a wakeup call for change. Yet today, bank regulation is dialed back to pre-Black Tuesday conditions, as the economy for real people is similarly faltering. If we don’t make lasting changes to the banking landscape now, we will see more pain—not in 80 years, but in the next couple.

Today investors and many commentators seem to be ignoring potential pattern repeats.

The 1929 stock market crash took place over the course of a few panic-stricken October days. Leading up to Black Tuesday, when the Dow Jones Industrial Average dove more than 11 percent on record volume of 16 million shares, the market regurgitated a large portion of the excessive gains it had made during the prior two years, setting the stage for the Great Depression.

Then, as now, signs of economic decay had already hit the general population before Washington, Wall Street, and the stock market got a clue. In the summer before the 1929 crash, residential real estate and consumer goods took severe hits—just as they did before the financial crisis hit the banking industry last fall. Consumer spending declined by 80 percent from the prior year, and employment and commodity prices fell precipitously.

And yet Wall Street was busy making hay while the sun set. Stock prices doubled during 1928—then, as now, fueled by an abundance of cheap credit for borrowing, or “leveraging” stock and other more complex bets. Investors could borrow $95 for every $5 of real money they had, a “leverage ratio” of 20 to 1. That borrowed capital fueled Big Finance, pushing the stock market to a then-record high on Sept. 3, 1929.

The crash of 1929, a month and a half later, is said to have caused the Great Depression, but economic deterioration was already in motion, and simply continued. Similarly today, subprime loan problems may have catalyzed credit seizing up in the banking sector, precipitating a multitrillion-dollar government subsidization of the industry, but credit problems were already rampant. They, and unemployment, have only worsened since the bailouts began last fall. Equally, it was bank leverage that exacerbated the crisis, not the individual loans.

• Jeff Madrick: Why Washington Won’t Prevent Another MeltdownBoth economic declines were set in motion by the shattered illusion that assets inflated by debt, at the individual and, more important, the financial institution level, could float forever. Both occurred due to a profound lack of federal oversight and bank restraint, even as signs of doom grew. As early as between March 2006 and March 2007, foreclosures had jumped 47 percent, yet this information was totally ignored by the exuberant Federal Reserve and Treasury Department. However, Wall Street knew the deal, and accelerated its manufacturing of assets based on those same loans that were failing, paying record 2006 bonus payments off related fees.

Although we don’t have Great Depression unemployment rates of 30 percent and bread lines today, we do have double-digit unemployment in 139 metropolis areas—compared to 15 before last fall’s bank crisis. The national unemployment rate is close to 10 percent, up from 5.8 percent.

During the Great Crash, stock prices dropped more than 30 percent from their then historic peak in September 1929 to their near-term November low. By July 8, 1932, after three painful years, the Dow had dropped 89 percent from its pre-crash high. It took 25 years to regain its high of 382.

Today investors and many commentators seem to be ignoring potential pattern repeats. In 2008, as foreclosures and defaults increased, and despite the implosion of Bear Stearns in March 2008, the Dow cruised to a high of 11,782.35 on Aug. 11, 2008. After a chaotic fall that resulted in a dangerous consolidation of the banking sector, it settled on a near-term low of 6,547.05 on March 9, 2009, a loss of 45 percent. Undaunted, during the past seven months, the Dow has regained nearly 50 percent of that loss, despite fundamental credit and employment declines.

When Franklin D. Roosevelt was elected president by a landslide on Nov. 8, 1932, he acted fast, calling Congress back to the Capitol for a special session and declaring a four-day bank holiday. His Emergency Banking Act of 1933 allowed federal regulators to inspect banks to make sure they were financially sound before reopening—as opposed to the Fed and Treasury Secretary Tim Geithner’s early 2009 bank stress tests, which allowed banks to provide their own results.

Then, the government did not choose to subsidize bank risk. In June 1933, FDR signed into law the Glass-Steagall Act, which divided banks into commercial ones that dealt with the public’s checking, savings and loan activities, and investment banks that could speculate away, but would receive no government assistance when they screwed up. (Very unlike today.) Additionally, the Federal Deposit Insurance Corporation was established to protect people’s hard-earned cash at the commercial banks. (Investment banks, however, got FDIC backing this time around, just by changing their name.)

Unlike FDR, Obama doesn’t have a decisive plan to dissect the banking industry. The administration, Congress, and the Fed ponder systemic risk of insanely large institutions, rather than the more obvious course of reducing their size by segmenting them into regulate-able and risk-contained parts. (One exception in Washington who gets this is former Fed chief Paul Volcker.)

The remaining pieces of Glass-Steagall were repealed in 1999, and today we are living in the result. Despite the giddy re-rise of the Dow and the profits of some of the most powerful and federally capitalized banks, the economic decline in the country is not over.

Nomi Prins is author of It Takes a Pillage: Behind the Bonuses, Bailouts, and Backroom Deals from Washington to Wall Street (Wiley, September, 2009). Before becoming a journalist, she worked on Wall Street as a managing director at Goldman Sachs, and running the international analytics group at Bear Stearns in London.