WASHINGTON — In an attempt to satisfy Republicans who are turning against the reform bill, the conference committee is expected to reopen negotiations this afternoon and strip out a proposed bank tax from final legislation.

Instead, lawmakers are considering raising the required minimum level of reserves at the Federal Deposit Insurance Corp. — a move that would force all banks, not just the largest that were subject to proposed tax, to pay millions more in premiums.

Currently, the FDIC must return the ratio of reserves to insured deposits to 1.15% by 2017. But lawmakers are considering raising that level 20 basis points to 1.35%. Even if Congress extends the FDIC’s timeline to restore the Deposit Insurance Fund, which is currently at negative 0.38%, banks would have to pay much more in premiums to make up the difference.

Community bank representatives were particularly opposed to the new proposal, since only banking companies with more than $50 billion would have had to pay the bank tax. A higher mandated reserve ratio would impact even the smallest institutions, however.

"ICBA is opposed to any new fees or assessments imposed on community banks to pay for the sins of Wall Street," said Cam Fine, president of the Independent Community Bankers of America. "We are opposed to this method of paying for the cost of the bill."

The change would mean "higher costs for all banks, including a substantial increase in costs for community banks," said Jim Chessen, the chief economist at the American Bankers Association.

Whether the conference committee will adopt the proposal is unclear.

Also unknown is if it would shore up support for the legislation. Sen. Scott Brown, R-Mass., said Tuesday he could not vote for a final bill that included the bank tax, in part arguing that the extra costs would be passed on to consumers.

But bankers have traditionally said the same is true for higher premiums, and an increase in the reserve ratio may be considered as a bank tax by another name.

Sources said another option is to use leftover Troubled Asset Relief Program funds to pay for the bill. The conference committee added the tax provision last Friday  to comply with House rules that say a final bill must not incur new costs to the government. The tax, which would collect $19 billion from large banks over five years, was imposed to pay for the estimated cost of the reform legislation.

But it has caused previously supportive Republicans to now oppose the bill.

Fox Business News reported Tuesday that Sen. Chuck Grassley, another GOP lawmaker who voted for the Senate bill, will vote against the legislation.

With the death of Sen. Robert Byrd, Democrats control only 58 seats, with two of their number already opposing the bill. They need to convince Sens. Russ Feingold and Maria Cantwell to join fellow Democrats, or win back the support of Brown and Grassley.

Senate lawmakers need 60 votes to pass a procedural hurdle that allows a final vote on the reform bill.

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