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During a Senate Appropriations subcommittee hearing Tuesday, Treasury Secretary Jack Lew was grilled on regulatory relief for community banks and small businesses and the importance of Community Development Financial Institutions.

Subcommittee Chairman John Boozman, R-Ark., noted that no new banks have been chartered in Arkansas during the Obama administration and asked why community banks cannot have more regulatory relief given that they did not cause the financial crisis. Sen. Jerry Moran, R-Kan., also a member of the Senate Banking Committee, echoed those concerns about the regulatory burden on small financial institutions and noted the Treasury Department's opposition to the regulatory relief package put forth by Senate Banking Committee Chairman Richard Shelby, R-Ala., last year. He urged Lew to indicate what type of relief they could accept rather than blanket opposition.

Lew responded that regulators are trying to lighten the regulatory burden for small financial institutions but noted that there is no one definition for a small financial institution. He said his focus is trying to regulate based on the risks posed by institutions. He also said the financial industry's trend toward consolidation pre-dated the Dodd-Frank Act.

Ranking Member Christopher Coons, D-Del., asked about encouraging the development of CDFIs. Lew responded that the recent effort between Treasury and NCUA to expand the number of credit unions eligible to become CDFIs is a positive development. "They become anchors in their community and they become hubs that can provide access to multiple forms of assistance," Lew said of CDFIs.

Lew defended President Barack Obama's budget request for the Treasury Department, and he said the administration would continue to oppose rollback of Dodd-Frank.