The American Bankers Association is asking the Treasury Department to back a loan modification plan touted by Federal Deposit Insurance Corp. Chairman Sheila Bair.

Ms. Bair's plan would let the government guarantee as much as half of a loan if a servicer agreed to engage in systematic loan modifications.

"Financial service industry leaders, working through the Hope Now alliance, have made progress in assisting borrowers, but more must be done," wrote Edward Yingling, the ABA's president, in a letter sent Friday to Treasury Secretary Henry Paulson and Ms. Bair.

"We believe that many more borrowers can be helped if the FDIC model were made available nationwide."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.