WASHINGTON — Federal bank regulators said they believe a plunge in the preferred shares of Fannie Mae and Freddie Mac would have limited impact through the banking system.

Federal Deposit Insurance Corp. Chairman Sheila Bair said this week that the industry's overall exposure to preferred shares of Fannie and Freddie is "not problematic," though the exposure of small institutions "may be an issue."

She said the agency is "closely monitoring" the Fannie and Freddie holdings of the banks and thrifts it insures, particularly the smaller institutions.

Meanwhile, an initial review by the Office of Thrift Supervision found that just 2% of thrifts have a concentration in common or preferred shares of Fannie or Freddie that surpasses 10% of their Tier 1 capital. Tier 1 capital is a measure of banks' fitness to absorb losses.

Banks can hold unlimited amounts of preferred and common shares issued by the government-sponsored enterprises, or GSEs. By contrast, they cannot invest in the stocks of other companies, though they can hold their bonds or derivatives of their stock.

Analysts said the drop in value of the GSE preferred shares could trigger write-downs at banks that hold them this quarter, just when the industry is grappling with mortgage defaults.

J.P. Morgan Chase & Co. estimated that its $1.2 billion par-value investment in preferred shares of Fannie and Freddie had lost about $600 million in value, according to a Securities and Exchange Commission filing.

The Office of Thrift Supervision still is collecting data on thrifts' GSE exposure, an agency spokesman said.

The Treasury hasn't said whether or how it would use its standby authority, granted by Congress last month, for any rescue of the firms. But the banking industry is lobbying the Treasury to limit the blow to preferred shareholders if it does move to shore them up.

"The ABA is actively engaged in discussions with Treasury, the regulators and others to help ensure that any action by Treasury to support the GSEs, if it's required, stabilizes the value of the preferred shares to the extent possible," the American Bankers Association wrote to its member chief executives Aug. 27.

The Financial Services Roundtable, which represents the largest U.S. banks, will send a letter to the Treasury in coming days, urging it to consider the impact of a bailout on banks' holdings of GSE securities, Roundtable Senior Vice President Scott Talbot said.

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