Sen. Susan Collins, R-Maine, the author of a provision in the regulatory reform bill that would eliminate the use of trust-preferred securities as Tier 1 capital, said Tuesday that she was still trying to modify her provision to make it more workable.

In an interview, she said she was working to craft a five-year phase-in for certain institutions that regulators encouraged to buy failing institutions and make special allowances for smaller banks.

"I'm looking at making clear that the new capital requirements should be phased in for institutions that were given a waiver from the existing capital requirements by regulators in order to encourage them to take over failing banks," she said.

"I'm also looking at whether or not there should be some sort of different treatment for smaller institutions that have less than $5 billion in assets."

Collins said her provision was not meant to prevent federal funds from counting as Tier 1 capital. Banking industry groups have complained that the way it was written, the proposal would bar the use of Troubled Asset Relief Program funds.

"That was never our intent," she said. "That would sort of defeat the whole purpose of the Tarp capital injections … if there is federal funding going to banks, obviously that should be allowed to count toward their capital, because that's the whole purpose of those infusions."

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.