ATLANTA --- Washington's efforts to stem the flow of home foreclosures and bank failures aren't working in Georgia, a dozen witnesses told a congressional field hearing Monday.

Two builders, a banking lobbyist, professors and activists testified about shortcomings in federal programs to rescue the residential and commercial real-estate markets. They appeared before the House Oversight and Government Reform Committee's Domestic Policy Subcommittee, headed by Rep. Dennis Kucinich, D-Ohio.

Georgia leads the nation in bank failures with 25, or more than 7 percent of all its banks. The state also is in the top five for home foreclosures, with an estimated 9,500 going up for auction on courthouse steps across the state today.

"Atlanta, Ga., is the epicenter of our financial crisis," said Rep. David Scott, D-Ga., a member of the House Financial Services Committee who sat in on Monday's hearing.

Experts told the panel that the Troubled Asset Relief Program included no money for small, community banks that grew quickly around Georgia, even though many of the country's giant, national banks are returning the funds to the government unused.

"We also believe that aggressive interpretation of certain regulatory policies and accounting rules has contributed to the closures," said Joe Brannen, the president of the Georgia Bankers Association.

Two builders explained how they were denied loans from as many as eight banks for construction financing on houses that had already been sold. Also, they were told to pay up on other existing loans even though they were current on their payments.

Mr. Brannen said the reason is because regulators have instructed banks to reduce the portion of their portfolios devoted to real estate, even if that means calling performing loans.

Homeowners are also having trouble getting help that was expected from the bank-rescue legislation, according to several witnesses.

Mortgage companies have little reason to modify loan terms to prevent foreclosures because they have plenty of TARP money balancing the books, according to Emory University Professor Frank Alexander. The government should withhold TARP funds as a penalty for failing to adjust mortgages, he said.

Mr. Kucinich said he held the hearing in Atlanta at the request of committee member Rep. Lynn Westmoreland, R-Ga., who was a home builder from Sharpsburg before his election. Mr. Westmoreland said he wanted to get the stories of Georgians because the financial problems are so serious here.

"I hope this is a hearing that will result in solutions and not just a hearing where we meet and talk," he said in his closing.