Community banks have recovered from the crisis and are healthy even with the new rules imposed by President Obama's financial reform, according to a new White House study that undercuts critics' arguments for regulatory reform.

In a 13-page analaysis released Wednesday, Obama's Council of Economic Advisers concluded that "community banks have recovered strongly from the financial crisis and have remained healthy in recent years as Dodd-Frank financial reforms have been implemented." The report noted that lending is up and above pre-recession levels, community banks are increasing their market share in farm and mortgage lending, and community banks are seing greater profits and fewer failures.

The claim that community banks are doing fine contradicts the claims from members of Congress that regulatory relief is needed for small banks. Republicans, in particular, have argued that the 2010 Dodd-Frank financial reform law benefited big banks to the disadvantage of smaller banks that serve rural areas and small businesses.

In recent years, top financial lawmakers, such as Senate Banking Committee Chairman Richard Shelby of Alabama, have sought to make wholesale changes to Dodd-Frank as part of legislation aimed at providing regulatory relief to small banks.

While members of both parties have expressed varying levels of support for such a deregulatory package, liberal Democrats have argued that it is not worth loosening rules on megabanks to offer relief to small banks.

Wednesday's report lends weight to that view. Obama's advisers blame the lack of new community banks and the falling number of banks on long-term trends unrelated to Dodd-Frank, and suggest that the regulatory agencies can "tailor" the rules for small banks without necessitating new legislation.

In response to the White House report, the Republican staff of the House Financial Services Committee published a long list of community bankers and credit union executives blaming overregulation for the industry's troubles. The committee's chairman, Jeb Hensarling of Texas, has proposed rolling bank Dodd-Frank regulations for banks that elect to raise much higher capital, lowering the risk of failures that could preciptate bailouts.