The Saxon Crusade

U.S. bankers are smiling at the customer these days, but they are giving each other a colder eye than ever. State-chartered banks are accusing the nationally chartered banks of attempting to move in on them. Both state and national banks are squabbling with the aggressive savings and loan associations, which have recently jacked their interest rates as high as 5% to tempt savers. Amid their competition for customers, all the banks are worried about growing Government regulation: the Justice Department is striving to block several bank mergers, and the House Banking Committee, after years of torpor, is striking out with half-a-dozen investigations into many phases of banking.

By far the sharpest battle in U.S. banking has been fired up by handsome James J. Saxon, 49, who as Comptroller of the Currency supervises the 4,500 nationally chartered banks. "The commercial banking system needs rescuing," says Saxon grandly--and he has set out on what he considers a rescue mission by permitting national banks to branch out more freely than state banks, which are regulated by state banking commissions. By liberalizing branching policies, he aims to break the hold that many small-town and suburban bankers have on their areas. Critical state bankers charge that Saxon's expansion plans would cause many of them to fail under the pressure of big-banking competition. They also fear that many state banks may have to seek national charters in self-defense, thus destroying the U.S.'s "dual system" of banking.

No Friend at Chase Manhattan. Last week the annual meeting of the American Bankers Association in Washington heard the strongest anti-Saxon attack ever made by a big, prestigious banker. Said David Rockefeller, president of Manhattan's state-chartered Chase Manhattan Bank: "I believe the Comptroller would be well advised to show greater restraint in exercising the immense power he now possesses. It would be a dubious honor for him to go down in history as the man who undermined the dual banking system."

Like many state bankers, Rockefeller has a particular reason to be upset. Saxon has permitted Manhattan's First National City Bank to open 26 branches in fast-growing suburbs, while Rockefeller's competing Chase has so far been limited by New York State to only eight branches. Beyond that, Saxon wants to permit national banks to offer longer and bigger mortgage loans and to extend their limits on other loans. This is all the more controversial because some federal officials are worried that bankers are already taking on many bad credit risks.

No Help from Bobby. Saxon has been colliding with strong forces ever since 1961, when he came to Washington from a job as counsel to Chicago's First National Bank. He has quarreled with Bobby Kennedy about the Justice Department's attempts to block bank mergers, with the Federal Reserve Board about whether banks should be allowed to underwrite state and municipal revenue bonds, and with the Securities and Exchange Commission over whether bank stocks should be regulated by the SEC. Last spring, after Saxon asked regional banking supervisors to drum up support for him among the national bankers, he came within a digit of being sacked by President Kennedy.

Conservatives are irked as much by Saxon's vanity as by his aggressiveness. They frown on the fact that he has all his speeches bound between fancy colored covers, has launched a grandiose quarterly, National Banking Review, to propagate his views. But all this pales beside the rude shaking-up that James Saxon is giving U.S. banking.

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