WASHINGTON (Reuters) - The leading U.S. banking trade group asked Republican President-elect Donald Trump on Wednesday to consider lightening regulations for smaller banks after he takes office in January.

The American Bankers Association wrote to Trump that high capital requirements and the costs of complying with rules "have forced some community banks out of product lines and others out of business, exacerbating a disturbing trend in consolidation."

The group also said Trump should consider working with the incoming Republican-controlled Congress on simplifying regulations for mortgages, reducing the role of the federal government in housing finance, expanding low-income tax credits and reinstating the national flood insurance program.

It called as well for increasing funds for small-business loans, changing the tax treatment of student loans, using regulation to help foster financial technology and increasing data security for financial services.

"More efficient regulation of banks and policies that make credit and debt more manageable for borrowers can increase the ability for all - lenders and borrowers alike - to participate in the credit cycle and generate economic growth and prosperity," the group wrote.

(Reporting by Lisa Lambert; Editing by Peter Cooney)