A regulator responsible for the safety of banks has a message to senators: Don't listen to bankers telling you that they need lower capital requirements to increase lending.

Despite the push from the industry to lower the standards that were ramped up in the wake of the 2008 financial crisis, big banks actually have too little capital, according to Thomas Hoenig, the vice chairman of the Federal Deposit Insurance Corporation.

In a letter sent Monday to Senate Banking Committee Chairman Mike Crapo of Idaho, Hoenig argued that if banks want to increase lending, they could do so without lower capital requirements, by retaining earnings rather than paying dividends to shareholders. The 10 biggest banks could boost lending by $1 trillion annually simply by holding onto more earnings, he said.

"I can only caution against relaxing current capital requirements and allowing the largest banks to increase their already highly leveraged positions," Hoenig told Crapo and his Democratic counterpart on the committee, Sen. Sherrod Brown of Ohio in the previously unreported letter. "The real economy has little to gain, and much to lose, by doing so."

Crapo and Brown are engaged in an effort to find bipartisan agreement on regulatory relief. Separately, the Trump administration and many congressional Republicans are looking for ways to go around Democrats and cut banking rules.

Some major bankers have lobbied for lower capital requirements. In his April letter to shareholders, for instance, JPMorgan Chase CEO Jamie Dimon wrote that "it's clear that the banks have too much capital."

"And we think it's clear that banks can use more of their capital to finance the economy without sacrificing safety and soundness," Dimon wrote, implying that they are prevented from doing so by the government.

Hoenig argued, though, that higher capital levels do not prevent banks from issuing loans.

Capital requirements spell out how banks must finance their operations. They do not require banks to hold more cash, although other federal rules might. Instead, capital requirements require banks to fund their business through ownership stakes, such as shares, rather than through borrowing. Higher capital is thought to make banks safer partly because they can suffer more losses without risking defaulting to creditors.

In Hoenig's view, banks with higher capital built up through retained earnings can lend more.

In his letter to Crapo and Brown, he included data on bank earnings versus dividends paid and stock buybacks, noting that such payouts exceeded net earnings for four of the biggest banks in the first quarter of 2017.

JPMorgan Chase, for example, earned $25.8 billion in the first quarter and paid out $27.6 billion to shareholders, according to Hoenig's data. If it instead had held onto those funds, it could have issued roughly a quarter of a trillion in loans, under existing capital rules.