The industry's third-quarter financial reports can reflect a provision of the economic rescue legislation that eases treatment of preferred stock from Fannie Mae and Freddie Mac, the banking and thrift agencies said Friday.

Section 301 of the legislation, which was enacted Oct. 3, gives tax relief to institutions that held preferred shares of Fannie and Freddie, which the government took over last month. The law says the shares can be treated as ordinary income or loss.

The agencies said they will provide guidance on how the change should be reported in third-quarter earnings reports.

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