Small financial institutions are being hit especially hard by the rising cost of regulations, and the impact of more red tape is a threat to the existence of small town community banks and credit unions, witnesses told a House Financial Institutions and Consumer Credit Subcommittee on Wednesday.

“While any one single regulation may not be particularly burdensome, the layering of new regulation on top of old and outdated regulation can completely overwhelm small financial service providers like credit unions,” said Ed Templeton, president/CEO of the $630 million SRP Federal Credit Union of North Augusta, S.C.

Templeton pointed to results of a 2011 survey that showed almost two-thirds of credit unions said they have increased or were considering increasing fees on products or services due to recent regulatory changes.