To the Editor:

The Research Scan column of Aug. 13 (page 2) had a brief report on a research paper by Gregory C. Golembe, "Supervisory Fee Structures for National and State Banks: A Question of Parity."

In his paper, Mr. Golembe concludes that state banking departments are able to maintain a low fee structure (sometimes half of what national banks pay) because of their division of examination work loads with the Federal Deposit Insurance Corp. and Federal Reserve System. He feels this destroys parity in the dual banking system and recommends the payment of a fee to the Office of the Comptroller of the Currency by FDIC and the Fed as the best of five possible options for restoring parity.

Mr. Golembe correctly addresses the merits of the dual banking system, the reasons for the cost advantages enjoyed by the state banks, and the fact that the administration has unsuccessfully attempted in the last six federal budgets to charge state banks a fee for federal examinations as a means of achieving parity. He fails, however, to choose the rather obvious option as the appropriate way to address this issue, one that is almost at the complete discretion of the OCC.

The divided examination agreements between the state and federal agencies were not mandated by Congress. They simply represent a concerted effort by the states and the independent federal regulators to reduce the regulatory burden while maintaining safety and soundness standards. The same opportunity exists for the OCC if it so chooses.

The Fed's interest in being involved in bank regulation is well known. The FDIC has, and does utilize, its backup authority to examine national banks on occasion. If the OCC is truly interested in reducing regulatory cost for national banks, it has simply to adopt the system of shared examinations that the states, FDIC, and Federal Reserve have so successfully developed over the years.

Bill C. Houston

Commissioner, Tennessee Department of Financial Institutions

Nashville

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