WASHINGTON -- A 1991 law requiring the Federal Reserve to charge foreign banks an annual on-site examination fee could cause serious repercussions in other countries' treatment of U.S. banks, Federal Reserve Chairman Alan Greenspan has warned.

In a letter to Rep. Henry B. Gonzalez, the House Banking Committee chairman, Mr. Greenspan said the law presents "difficult and time-consuming issues of implementation" but that the Fed is nearly ready to promulgate "a methodology to assess" foreign bank examination costs.

But Mr. Greenspan said it became increasingly clear in the course of the Fed's deliberations that "requiring examination fees for foreign banks but not domes tic banks would present a serious issue of national treatment."

International Principles

Responding to questions raised by Rep. Gonzalez, Mr. Greenspan said assessing foreign banks for examination costs would make them subject to duplicative charges that are not required for domestic banks, which could violate international regulatory principles.

"Such disparity in treatment would contradict the national treatment principle of the International Banking Act as well as the purpose of the Foreign Bank Supervision Enhancement Act [of 1991 ] itself to subject foreign banks to the same examination policies as U.S. banks," Mr. Greenspan wrote.

"An assessment requirement applicable only to foreign banks also raises questions with respect to the position taken by the United States in international trade negotiations," the Fed chief added.

Warning of Repercussions

"For these reasons, the board has serious concerns regarding the potential impact of the assessment provision ... and believes that disparate assessment requirements for foreign banks may have repercussions for the international position of U.S. banks."

Mr. Greenspan suggested that Congress consider "reconciling the current law to assure parallel treatment between foreign banks in the area of assessment for the costs of examinations." In a sharp reaction, Rep. Gonzalez accused the Fed of being "disingenuous."

He said it raised "a specious |national treatment' argument that even the foreign banks in question have not raised to justify [the Fed's] failure to charge foreign bank exam fees as required by law."

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