A trade group representing U.S. community banks called on Tuesday for a moratorium on mergers involving financial firms with more than $100 billion in assets.

The Independent Community Bankers of America made its pitch to regulators at the first in a series of public hearings the Federal Reserve is holding to review Capital One Financial Corp's proposed takeover of ING Groep NV's U.S. online banking portfolio.

Chris Cole, senior vice president of ICBA, said there should be a moratorium on big-bank mergers until rules from last year's Dodd-Frank financial oversight law are defined and in force.

"It has been 14 months since the Dodd-Frank Act was passed and we still don't have a regulatory apparatus in place to deal with those banks over $50 billion in assets ... and haven't figured out an accurate way to measure their systemic risk," he said.

The Fed is reviewing Capital One's $9 billion proposed merger, which would create the 7th-largest U.S. bank by assets, according to SNL Financial.

The markets are watching the review as a test case for how the U.S. government will treat big-bank mergers after the financial crisis.

Dodd-Frank requires U.S. regulators to take systemic risk into account when evaluating a merger, in addition to public benefit, concentration of resources, unfair competition and other factors.

Capital One defended the merger at the hearing, telling the Fed and community groups that big does not necessarily mean risky.

"Dodd-Frank is clear on a key point: There is no automatic finding of increased risk to our financial system in the event one institution acquires another, even if those institutions are relatively large," said John Finneran, head of corporate reputation and general counsel for Capital One.

Finneran said the merger would actually minimize systemic risk, by giving Capital One — which derives more than half its revenue from credit cards — access to ING's $80 billion in deposits.

He also pointed out that Capital One did not create or sell the exotic financial instruments — such as credit default swaps — that brought down many banks and spread financial ruin during the 2007-2009 financial crisis.

The company, he added, would 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.'"

But that very simplicity could leave Capital One vulnerable in an economic downturn, according to John Taylor, president of the National Community Reinvestment Coalition, an advocacy group that has pushed hard against the merger.

"This is an unsafe, monoline business that relies on a highly sensitive single-source of income and then spreads three quarters of its risk to the public through selling its securities to America's retirement funds and insurance companies," he told the Fed representatives. "And they are asking you to allow them to become the nation's fifth-largest bank" by deposits.

Cole from ICBA said the Fed should not approve any big mergers until large banks have submitted to regulators "living wills" to serve as blueprints for their dismantling in the event of failure, among other reforms not yet put in place.

The largest banks are expected to start submitting their living wills to regulators by the middle of next year.

Cole also suggested that banking agencies issue special rules explaining systemic risk in the context of mergers and acquisitions.

Fed representatives at the hearing appeared skeptical of a moratorium, questioning Cole about the economic impact of such a move.

The Fed will next hold public hearings on the merger in Chicago and San Francisco on September 27 and October 5, respectively. The public comment period will close on October 12.