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The closer integration of America and the world brought changes to the OCC as well as to the industry it supervised. Communication improvements meant faster and more consistent decision making across the OCC's districts, which, accordingly, were reduced from 14 to six, and then to four. Women, African-Americans, Hispanic-Americans, and members of other previously underrepresented groups became indispensable parts of the OCC team—not because equal opportunity had become the law of the land but because the OCC needed the best people available to effectively fulfill its mission.
The information revolution revived the long-standing debate over whether banks are regulated too heavily or not heavily enough. The relaxation of Glass–Steagall restrictions, which Comptroller Saxon advocated in the 1960s, began in earnest in the 1980s, as interest-rate ceilings on deposit accounts, limitations on interstate activity, and other regulations were phased out. The Gramm–Leach–Bliley Act of 1999 broke down the wall separating commercial and investment banking, giving banks greater autonomy.
Powered by the information and deregulation revolutions, national banks prospered at the turn of the 21st century. No bank failed in either 2005 or 2006. By 2007, bank profits had been going strong for 15 years, contributing to healthy capital ratios. The economic expansion reached its sixth year, aided by a lengthy housing boom.
OCC examiners knew that as economic cycles mature, credit problems would appear. With the best, most well-secured customers taken, some banks sought out riskier borrowers and offered riskier products. As long expansions weaken, business profits sink, and some borrowers have trouble paying back loans.
The OCC sounded public warnings—through guidance and speeches—about declining underwriting standards in mortgages, including subprime loans, and pointed to rising concentrations of real estate lending. The OCC emphasized the need for national banks to verify the mortgage borrower's capacity to repay and to set aside prudent provisions for losses. National banks originated relatively few subprime loans, and those who did generally issued subprime of higher quality.
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