Through the Wall

As supervisor of the 4,500 national banks in the U.S., the Comptroller of the Currency has traditionally been the very model of pin-striped decorum. Not James J. Saxon, 48. When Saxon took the job last November, he brought with him 27 pages of recommendations for reform. With almost indecent haste, he raised the Government's assessment on nationally chartered banks in order to erase his department's $2,500,000 deficit, opened new regional offices, slashed paperwork 50%, and cut the time required to approve a new bank charter from nine months to 75 days. "Jimmy Saxon," said one top U.S. banker, "is the kind of man who figures the quickest way to get into the next room is to go through the wall."

Last week at the American Bankers' Association annual meeting in Atlantic City, Saxon nearly brought down the walls. What threw the bankers into an uproar was the so-called "Saxon Report," in which a Saxon-appointed 24-member committee recommended 84 changes in the U.S. banking system. It was the first major plan for revising the system since its sweeping reorganization in 1933.

Gold for Ballast. Saxon's wall shaker was a proposal to allow national banks to set up branches within 25 miles of their home offices, though laws in 34 states expressly restrict or prohibit branch banking, even by nationally chartered banks. Left at a competitive disadvantage, most bankers fear, state-chartered banks would immediately shift to national charters, and soon only a single, nationally supervised banking system would survive. This, they argue, would destroy the cherished "dual system" of banking, with its checks and balances against heavy-handed regulation. Saxon's argument: branching restrictions merely protect well-entrenched banks and stifle the expansion of competitive service. "A vital new spirit is needed," he says.

Though they have learned to respect him, conservative-minded bankers have yet to be convinced that Saxon's bull-in-a-china-shop brand of vitality is what the system needs. The blunt, bustling son of a railroad traffic agent, Toledo-born Jimmy Saxon started World War II as General Douglas MacArthur's financial attache, saved $80 million in U.S. bullion from falling into Japanese hands on besieged Corregidor; he just loaded the gold aboard a U.S. submarine that happened to need the ballast. From private business and long federal service, notably as top aide to Truman's Treasury Secretary John Snyder, he has firsthand knowledge of how ineffectual Government policy can be. For five years before returning to Washington as Comptroller, Saxon worked the banker's side of the street as counsel to Chicago's First National Bank.

Self-Seen Savior. More than half of the Saxon Report's proposals were welcomed by bankers as progressive, overdue reforms. Among them are proposals to cut back reserve requirements to 10% of net demand deposits (now at 16 1/2% for city banks and 12% for country banks), thereby releasing an estimated $5 billion in new lending power, and to increase the present limit on bank loans to a single customer.

Much opposition and little chance of quick success loom for Saxon's major proposals, which require congressional approval. But where new department regulations alone will suffice, Saxon promises fast action. He will demand regular financial reporting by national banks in what he sees as a way to increase shareholder confidence, will allow stock option plans for bankers to attract high-caliber executives, and relax restrictions on stock dividends.

Whether they like it or not, U.S. bankers have on their hands a man who sees him self as their savior. Says he: "The commercial banking system needs rescuing.''

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