WASHINGTON — Sen. Elizabeth Warren, D-Mass., slammed a House GOP bill to reform financial regulation on Thursday, arguing it is being misrepresented by its author, Financial Services Committee Chairman Jeb Hensarling.

"Chairman Hensarling has tried to dress this up as some sort of get-tough-on-Wall Street, pro-consumer effort, but … the bill's proposals come straight off a Wall Street wish list," Warren said during a Senate Banking Committee hearing. 

The bill includes a number of proposals that have garnered support from the financial services industry, though some banks take issue with certain parts of the legislation.

Warren's criticism comes as Hensarling readies his bill for a possible committee vote in September.

"I think the timing is right," Hensarling said during an event at the Heritage Foundation earlier in the day. "It is increasingly obvious that Dodd-Frank has failed" and "it is important that we respond and we let the American people know that should they trust Republicans with the levers of governance after the next election. This is the type of plan that we would enact."

Hensarling later fired back at Warren in a statement following the hearing.

"It's funny Elizabeth Warren would launch these attacks since she's the one who supports Dodd-Frank's taxpayer-funded bailouts for Wall Street, its small bank-crushing regulations that have helped make the big banks even bigger," he said.

One of the proposals put forth by Hensarling would repeal Title II of the Dodd-Frank Act, which provides a backstop for resolving a megabank if regulators determine a bankruptcy would be unsuccessful.

In an ironic twist, however, some of the chief voices against that provision of the bill are from big banks.

"We support Title II as a credible backstop," Greg Baer, who heads The Clearing House Association, which represents the largest banks, said during the hearing. "We do believe that bankruptcy should always be the first option in resolving a large bank, but it seems sensible to have a fallback plan in the form of Title II."

Other parts of Hensarling's plan, however, are vigorously supported by the industry, including provisions to simplify regulations for community banks that agree to higher capital standards, and a restructuring of the Consumer Financial Protection Bureau.

Warren criticized the industry for supporting the latter change. She argued that replacing the CFPB's single director with a five-member commission would be a mistake.

"I would point out that the American Bankers Association, which represents the big banks, has made it a priority for years to weaken the CFPB by making exactly the change that Congressman Hensarling proposes," Warren said.

But Wayne Abernathy, executive vice president at the ABA, who also testified, appealed to the lawmakers to consider the difficulties banks and in particular community banks are having with the new regulations.

"What we hear from our community bankers … if you ask them, 'Where is the growth in your employment?' they will say, 'Well, we are hiring more people to do compliance.' So you are seeing more and more bank resources being applied to people who in essence work for the regulators and don't work for the customers," Abernathy said.

"What really gets the economy going is when the banker goes to the customer and says, 'Charlie, your business is doing really well. Have you thought about opening a business across town?' … There are fewer people available to do that, and a lot of these rules make it harder for that banker to make that conversation."

Regulators, including Federal Reserve Board Chair Janet Yellen, agree there could be room to ease regulations for well-capitalized community banks, but Democrats have been skeptical of legislative proposal focused on trading higher capital for fewer regulations.

"Should we be concerned about proposals that use capital requirements as a sort of Trojan horse for broad-based deregulation of the industry?" asked Sen. Sherrod Brown, D-Ohio, the top Democrat on the banking panel.

Jennifer Taub, a law professor at Vermont Law School, replied that "whenever someone says 'Trojan horse,' I think we should be cautious." Banks that have a 10% leverage ratio — the number cited in Hensarling's bill — should not get a "free pass" from "sensible prudential regulation," she said.

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