The call came from the Treasury Department late Thursday, Jan. 15.

Top executives of 12 of the nation's largest banks were told to have legal and banking officers at the State Department by 11 a.m. the next day to help draft a response to a brand-new Iranian proposal to remove the financial barriers to the resolution of the 14-month-old hostage crisis.

Treasury officials sketched the proposal on the phone and provided complete details the next day. In the words of one banker, "It was a good deal."

But it took 90 hours of intense, tiring negotiations -- both official and unofficial, in Washington, London, New York and Algiers -- to turn the Iranian breakthrough into a formal document that all parties could live with -- one that sent Iran the deposits it thought it was due, protected U.S. banks on most of the loans they felt they were owed and set up mechanisms to resolve the remaining differences.

More than once, say a number of bankers involved in talks on both sides of the Atlantic, the transfer of what was to be $8 billion in assets appeared ready to occur, only to have a final resolution founder on this or that seeming technicality.

Friday morning, Treasury Secretary G. William Miller and Secretary of State Edmund Muskie urged the impressive assemblage of bankers to turn the new Iranian proposal into a working agreement that would set the stage for the release of the 52 hostages before the Carter administration left office at noon on Jan. 20.

The new Iranian proposal came as "a complete surprise," said one banker who attended the meeting. Iran had scaled down its financial demands, insisting immediately on only that portion of its deposits in overseas branches of U.S. banks (since the money on deposit in the United States was tied up in court claims and would take longer to shake free) and also agreeing to pay back a large portion of the outstanding loans and to establish escrow accounts to cover the others until the conflicting claims could be arbitrated.

It was a proposal acceptable to the Carter administration, which did not want any financial settlement to smack of ransom.

It also was "a good deal for the banks," said one banker. "It was so good that none of us even discussed whether we'd accept the proposal. That seemed to be a given from the time we entered the [State Department] building."

The bankers, many armed with no more sophisticated calculating equipment than pencils, spent the early afternoon trying to reconcile the deposits they had on their books with the records the Iranians had.

The biggest sticking point of the meeting, however, was how much interest the banks were willing to pay Iran for its deposits. The guiding principle behind the proposed settlement was to return the relationship between Iran and each bank to the day before the president blocked Iran's assets and to reconstruct the next 14 months as if they had happened normally.

But normal to Iran and normal to the bankers -- especially to the giant Bank of Virginia, which held about half of Iran's deposits -- was a widely differing proposition.

Iran demanded about $800 million in interest payments, roughly 17 percent for the 14 months (or an annual rate of about 15 percent). Some banks had guaranteed Iran interest rates near 17 percent for a year just before the presidential freeze. But Bank of America's $2.4 billion of Iranian deposits were mainly in what bankers term "call money" -- funds on deposit overnight at whatever rate prevails that day.

Government officials polled the banks during the Friday meeting and found that U.S. banks felt they owed Iran $670 million in interest. Iran demanded $800 million. Most of the banks were willing to go along with a proposal that the $130 million difference be placed in a special escrow account until an arbitration panel could decide what Iran was owed.

Bank of America resisted. Of the $130 million in disputed interest, $91.5 million was Bank of America's. The bank suggested that each bank take a share of the disputed payment that was roughly equivalent to its share of the $4.8 billion in loans.

Here the other banks drew the line. In the end, sources said, after several consultations with San Francisco, Bank of America agreed to put the full $91.5 million (more than half the bank's fourth-quarter earnings of $160 million) in the escrow account that would be set up in the Bank of England.

Bank of America gave in, sources at the Friday meeting said, because it did not want to hold up the hostage release and because it felt it would win its case before any arbitration commission. But to be on the safe side, the bank got a federal judge in San Francisco to attach $91.5 million of Iranian funds still on deposit in the home office, a move one Carter administration official assailed as being out of the spirit of the agreement.

But some bankers contend that Carter administration officials made concessions to Iran that they considered out of the spirit of the State Department meeting. For example, they say, without consulting them Treasury combined two escrow accounts the bankers agreed on at the Friday meeting into a single account that some bankers feel does not have enough funds to satisfy all the potential claims against it.

The State Department meeting broke up late Friday night. Bankers scattered. Some went to New York, some stayed in Washington to work Saturday at Treasury to help turn the agreement into legalistic forms acceptable in international banking.

But all say they left believing that there would be three escrow accounts, all under control of the Algerian government. One would receive the full $8 billion transfer to Iran (about $5.6 billion from the banks and another $2.4 billion of official Iranian deposits at the Fed) and then would disburse $3.7 billion to U.S. banks in payment of the undisputed loans, sums to escrow accounts to cover disputed loans and interest, and the rest to Iran itself.

Another would receive $1.33 billion to cover the disputed Iranian loans at U.S. banks plus $340 million of Iranian loans from the Export-Import Bank. The last escrow account would contain the $130 million in contested interest.

But by Saturday morning, the bankers learned that there would be only two escrow accounts: Treasury had agreed to consolidate the loan and interest accounts into one fund of $1.418 billion. At the same time, the bankers said, Treasury told them it had identified an additional $100 million in Iranian bank loans and another $40 million in Export-Import Bank loans.

"We think the escrow account is too small. The Iranians had offered $1.5 billion. But at that point, what could we do? We just groused a little," one banker said.

By Sunday, most of the agreement appeared to be in hand. All the documentation for the transfer had been drafted -- including a two-page payment order that Iran was to send to the U.S. banks to start the funds rolling to the New York Fed and on to the escrow account in the Bank of England.

At 10 a.m. Sunday a group of bankers gathered in New York at the law officies of Shearman & Sterling, which represents Citibank. John Hoffman of Shearman & Sterling had for months been the prime link between Iranian bank lawyers in London and U.S. bankers. Another group settled in with Citibank's London lawyers, Coward Chance, where the Bank Markazi, Iran's central bank, was to send the formal instructions to transfer the assets. A group of bank lawyers also was in Algiers, where the official government-to-government negotiations were being conducted with the Algerian foreign ministry serving as intermediary.

"We sat around the whole day waiting for something to occur. Anticipation began to build that the Iranians would tell us to move the assets about 10 p.m. [Sunday]. But we finally got word from Treasury at 2 a.m. that nothing would happen for four to six hours and went to get some sleep. We were recalled at 4:30 a.m. Still, it was the most sleep I'd had in three days," one banker said.

Still nothing happened Monday. Rumors flew. Around 9 a.m. bankers heard that the Iranians contened they were being shortchanged on the deposits. hBut by 11 a.m. Monday the hitch became clear. Bank Markazi, which had not been a part of the negotiations, refused to sign the agreement, contending that the so-called payment order (the two pages of instructions the banks were to receive to start moving the money) was too restrictive.

In Algiers, the chief Treasury negotiator, Robert Mundheim, was given an Iranian-drafted substitute, about 20 lines long. American bankers looked at it. They didn't like some of the deletions -- the U.S. agreed to drop words that would have set $130 million as the upper limit on the disputed interest payments and a covenant that said the money to be transferred was the full amount of Iranian deposits in foreign branches of U.S. banks. The bankers in Algiers started to modify the proposal, although the new concessions were kept.

At the same time, unbeknownst to the Algiers group, the Iranian London lawyer, Roger Brown, was working on a modification of the two-page payment order as were the bankers gathered in New York. Ultimately, the London-New York document was accepted by both sides.

But while work on that document was going on, at about 11 p.m. Monday all 12 banks received a short, properly identified cable from Iran that said essentially "transfer all assets immediately," said one lawyer.

About 1 a.m. the first version of the revised long form arrived in the London office of Coward Chance. It was a single cable addressed to all of the banks as agreed.The bankers rushed to call New York while clerks sent telecopies to Shearman & Sterling.

"It was the first time we'd seen this version. It was a little garbled in parts but otherwise proper except that the tested code [the identification code agreed on] was wrong," a banker said. Monday had become Tuesday, and the Iranians were still using the Monday code.

"We asked them to retransmit, using the proper code. The second cable was somewhat garbled, but it did seem to refer to the proper documentation and had the proper totals," a banker said. Most banks were inclined to pay. But while they were on the phones with their home offices, another cable arrived from Iran.

"This is a paraphrase, but essentially it said, 'We've issued the instructions and note that you have not followed them. You realize the fate of the hostages is in your hands.' If there was ever a doubt that we'd pay, it went out the window at that point," said one bank representative. It was nearly 4 a.m. Tuesday in New York.

Treasury Secretary Miller, who had an open telephone line to Shearman & Sterling at all times, got on the phone about the same time and told the bankers to make the transfer. By 4:30 a.m., using special-coded telephone calls, top officials at 12 banks instructed the New York, Chicago and San Francisco Federal Reserve Banks to transfer a total of $5.6 billion in deposits and interest to the Iranian escrow account in the Bank of England.

By 6:41 a.m. the Federal Reserve Bank in New York had certified all its documents and Vice President H. David Willey cabled instructions to the Bank of England to put $8 billion in the special escrow account controlled by Algeria. Two minutes later the British replied: "Well received."

Six hours later, the hostages were airborne.