These relatively tranquil days for the national banking system—and those who were responsible for it—were fleeting. Competition arose from financial providers that were not commercial banks and were therefore not subject to Glass–Steagall restrictions. By the early 1960s, a century after the national banking system began, James J. Saxon, the 21st Comptroller, was issuing warnings about the "spectre of over-regulation" that threatened to erode the system's future strength and relevance.
Saxon was among the most innovative and assertive Comptrollers in OCC history, but his legacy was mixed. Some of his key regulatory initiatives, one of which permitted national banks to underwrite revenue bonds for state and municipal governments, were later overturned in court. His muscular assertion of the Comptroller's independence produced a backlash: By the time he left office, the OCC's relations with the Fed, the FDIC, and the Treasury Department were all seriously strained.
His reforms, however, were significant and their effects lasting. He set up an OCC international banking unit; created an economics department, which he staffed with graduate-level economists; and strengthened the law department, which he kept busier than ever. He raised hiring standards for new examiners, who for the first time were required to hold college degrees. He encouraged national bank expansion into new geographic and product areas, liberalized chartering policies, and aggressively promoted the national charter to state banks. Saxon's policies helped reinvigorate the national banking system and improved the OCC.
