WASHINGTON — House Financial Services Committee Chairman Barney Frank made it clear Wednesday that he wants to amend the bailout package to make it more palatable to community banks.

One thing he would like to add: tax breaks for banks hit by losses on Fannie Mae and Freddie Mac preferred stock after the government-sponsored enterprises were seized.

The Massachusetts Democrat also said he is considering whether to introduce a bill next year that would raise the deposit insurance limit beyond $100,000 per account.

Rep. Frank said he feared community banks were being left behind by the Treasury Department's plan to create a facility to buy and hold up to $700 billion of troubled assets.

Small banks are "worried they're going to get lost in the shuffle," he said. "I would like to get an agreement to give them, all those who held preferred stock, appropriate tax relief."

Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke did not respond to questions about whether such a provision should be added to the bailout bill.

Mr. Bernanke said the Fed and other regulators are already working with affected banks to help blunt the losses on preferred shares. Mr. Paulson said the rescue plan was meant to benefit all banks. "

We want to deal with this systemically and get ahead," he said. "This program is not one that is aimed at specific financial institutions."

Banks have been clamoring for some type for relief on the GSEs' preferred stock, which plummeted in value after Fannie and Freddie were put into conservatorship Sept. 7. As a result, many bankers will have to take writedowns that can only be treated as capital gains losses for tax purposes. Since few community banks have capital gains, their losses effectively are not recognized for tax purposes. Rep. Frank proposed treating such losses as ordinary losses for tax purposes, allowing banks to offset them against ordinary income.

He said he planned to work with other members of his panel and the House Ways and Means Committee to "push through" relief.

Industry representatives praised Rep. Frank for taking up their cause and said they hoped a provision would be included in the bailout package.

"We would assume at this point in time that they're going to have to put that in the rescue bill," said Diane Casey-Landry, the American Bankers Association's senior executive vice president and chief operating officer. "The reality is that they're just running out of time, so they're going to have to find a vehicle that's moving."

Camden Fine, the president of the Independent Community Bankers of America, said that it is hopeful for traction on the Senate side as well, but that Rep. Frank's support was critical. "We applaud Chairman Frank for his commitment," he said.

Banking groups said they would rally members to try to secure the provision in the bill.

"We have a lobbying alert out for our members," Ms. Casey-Landry said. "Anybody who's held the preferred stock and taken a loss — we told them to call their congressman."

When the GSEs were seized, regulators said only a "limited number of smaller institutions" would be affected. However, in an ABA survey late last week of banking companies of varying sizes, roughly a third of the 1,100 respondents said they held GSE preferred stock. Total industry exposure could be between $10 billion and $15 billion, the trade group estimated.

Less clear was the fate of any proposed deposit insurance hike. More than eight years ago the ICBA spearheaded an effort to double the insurance limit to $200,000. Congress eventually raised the limit on retirement accounts to $250,000.

Rep. Frank's promotion of the idea of increasing coverage was unexpected. He said community bankers were worried that large banks would gain a competitive edge, because they would be perceived as being "too big to fail."

Community banks are hurting, he said, and raising the limit may be one way to address the issue.

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