The FDIC started by painting a grim picture of the banking industry.

"As of March 31, 2011, there were 888 FDIC-insured institutions nationwide on the FDIC's problem bank list, representing approximately 12 percent of all FDIC-insured institutions," said Bret Edwards, who is with FDIC's Division of Resolutions and Receiverships. "This is the highest volume of problem institutions in nearly 20 years."

Edwards did note that the face of bank failures is slowing. He said that through Aug. 12 of this year, the pace of failures is close to half the pace set in the same time period last year. Still, he defended the FDIC's regulatory efforts and only offered to hear more feedback from local banks on the question of whether FDIC rules are making it too tough to lend.

"We are aware of concerns expressed by some bankers that examinations are being conducted in an overly conservative manner during this challenging economic time," he said in prepared testimony. "The FDIC welcomes feedback from the industry and relies on bankers' informed perspective as we consider refinements to our supervisory process."

Kevin Bertsch, who is an associate director at the Federal Reserve's Division of Banking Supervision and Regulation, extended the same offer.

Gil Barker, Deputy Comptroller for the Southern District of the Office of the Comptroller of the Currency (OCC), was more blunt, pointing out that only 52 percent of federal chartered savings associations in Georgia were profitable in 2010. For that reason, he said, easing bank regulations would be a mistake.

"In this environment, some have talked about the need for regulatory 'forbearance,' where supervisors allow troubled banks to ignore credit problems in the hope they will go away over time," Barker said. "This is not permissible under generally accepted accounting principles. Nor would it be advisable."

Barker tried to dispel several myths about how the OCC regulates financial institutions, but did acknowledge that the OCC has encouraged and in some cases directed banks to maintain higher capital buffers.

"Such decisions, however, are not made unilaterally by a field examiner," he said. "Any such directive is reviewed and approved by our district supervision management teams."

One community bank CEO based in Georgia testified at the same hearing that regulatory forbearance is exactly what is needed to give struggling banks a chance to be profitable. The field hearing was held in Georgia because that is one of the states in which more than 10 banks have failed in the past three years.

"I would argue that forbearance is a necessary and logical part of any healing process," argued Chuck Copeland, CEO of the First National Bank of Griffin.

Copeland said he supports legislative proposals offering more flexibility in bank regulation.