A top House Republican on Tuesday unveiled a sweeping plan to replace the Dodd-Frank financial reform law, which GOP lawmakers, Wall Street executives and industry officials have fiercely criticized as overly burdensome.

Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, called the 2010 law “a grave mistake foisted upon the American people” as he laid out the alternative that Republicans could seek if they win the White House in November.

He outlined a plan that would repeal or loosen a slew of new Dodd-Frank regulations in order “to offer all Americans opportunities to raise their standards of living and achieve financial independence.”

A key provision would reduce the power of the new Consumer Financial Protection Bureau and allow banks to increase the amount of capital they hold to avoid stricter regulatory oversight.

“Simply put, Dodd-Frank has failed,” Hensarling said in a speech to the Economic Club of New York. “It's time for a new legislative paradigm in banking and capital markets.”

The complex new legislation has virtually no chance of passing Congress this year. And President Barack Obama would almost certainly veto any bill rolling back Dodd-Frank.

Obama last week criticized continued Republican attempts targeting the law.

“How is it that somebody could propose that we weaken regulations on Wall Street?” Obama said in a speech in Indiana. “Because of their reckless behavior, you got hurt.”

But Hensarling's plan is a road map of what Republicans could try to accomplish on financial regulation if the party wins the presidency and retains control of Congress in the November elections. Donald Trump, the presumptive Republican presidential nominee, said last month that he was drawing up plans that would “be close to dismantling Dodd-Frank.”

Dodd-Frank toughened regulations on banks and other financial firms, set up a powerful panel of regulators to watch for signs of instability and created the Consumer Financial Protection Bureau, which has broad authority to oversee credit cards, mortgages and other financial products.

Hensarling's Financial Choice Act, which stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs, incorporates several bills that have passed the House but failed to become law with Obama in the White House.

Hensarling said Tuesday that the crisis wasn't caused by lack of regulation but by “dumb regulation.”

Hensarling stressed the plan doesn't force any bank to raise capital. But if they choose to, banks would be safer and avoid “Dodd-Frank's suffocating regulatory complexity and control.”

To end the problem of financial institutions considered too big to fail, Hensarling would create a new section of the bankruptcy code to wind them down.

That would replace Dodd-Frank's orderly liquidation authority, which allows regulators to seize and shut down a major financial firm on the brink of failure.

Hensarling also targeted the new consumer bureau, which he and other Republicans have criticized as too powerful and unaccountable to Congress because its funding comes directly from the Federal Reserve.

The plan would rename the agency the Consumer Financial Opportunity Commission. The single director would be replaced with a bipartisan, five-member commission and the agency's funding would be subject to congressional appropriations.

Hensarling also would take away the authority of the Financial Stability Oversight Council, created by Dodd-Frank, and his plan would repeal the Volcker Rule, which prohibits banks from trading for their own profit and limits their ownership of risky investments.

jim.puzzanghera@tribpub.com