Community banks oppose capital One Financial Inc.'s proposed $9 billion acquisition of ING Direct USA, saying it would increase systemic risk. "Not only are the large banks getting larger, their funding advantage over community banks, which has been estimated to be approximately 50 basis points, appears to be getting even larger," said Christopher Cole, senior vice president and senior regulatory counsel for the Independent Community Bankers of America, testifying at the first of three public hearings by the Federal Reserve on the deal.

If the Fed approves the acquisition, it would add to the number of potentially too-big-to-fail banks that could be bailed out if there was another financial crisis, said Cole.

The ICBA called for a moratorium on all acquisitions of institutions with assets more than $100 billion until there is a regulatory apparatus to deal with systemically important financial institutions.

Cole said that regulators have not found "an accurate way to measure systemic risk nor have the regulators come up with a method to identify the nonbank SIFIs." Until it does, such deals should be barred.

The pending acquisition has sparked criticism from community groups and affordable housing advocates as well.

John Finneran, head of corporate reputation and governance, general counsel and corporate secretary of Capital One, said the proposed deal would in fact reduce systemic risk. "The combined organization will remain a traditional consumer and commercial bank with none of the complexity or interconnectivity that the Dodd-Frank Act sought to address in ending the concept of too big to fail," said Finneran at the hearing. "In fact, the acquisition of ING Direct will further reduce, rather than increase, any risk to the financial system, as well as the overall risk profiles of both institutions on a stand-alone basis."