WASHINGTON -- Reluctantly meeting a congressional mandate, the Federal Reserve has proposed charging foreign banks for examinations.

As required by the Foreign Bank Supervision Act of 1991, the Fed has proposed levying fees on all U.S. branches, agencies, and representative offices of foreign banks.

Charges would be determined using an hourly rate.

The proposal should bring to an end a debate between Congress and the central bank about the law.

Fed officials have vigorously opposed the measure, because it treats foreign banks differently from domestic ones, which are not assessed fees.

Warning from Greenspan

"It has become increasingly clear to us that a provision requiring examination fees for foreign banks but not for domestic banks would present a serious issue of national treatment," wrote Fed Chairman Alan Greenspan in a letter this summer to House Banking Committee Chairman Henry B. Gonzales, a proponent of the rule.

According to the proposal, the Fed will spend $11.7 million this year on examinations of U.S. offices of foreign banks.

The entire amount would have been recovered had the rule been in effect.

The central bank proposed two methods of determining examiner hours, which would be multiplied by an hourly wage to calculate the total fee:

* A case-by-case determination of the hours examiners spent on an exam.

* A more general formula based on specific characteristics of the institution.

Aiming to Avoid Disputes

For representative offices -- which do not offer banking services but serve as customer-relations bureaus -- the central bank proposed using the case-by-case calculation.

But for foreign branches and agencies, the Fed said, using actual hours could be inefficient and lead to wrangling about how much time examiners had actually spent.

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