Wall Street firms sometimes find it difficult to advocate for financial deregulation in Washington, due to ongoing hits to their credibility. But they’ve mastered a reliable work-around: use community banks as a PR human shield. Organizations like the American Bankers Association (ABA) have used this tactic in everything from feel-good TV ads to their ongoing lobbying. This is a phenomenon I wrote about back in December:

As the fight over the “CRomnibus” showed — with Senator Elizabeth Warren issuing a nearly ten-minute tirade against Citigroup on the Senate floor — the nation’s largest banks remain toxic in Washington (at least when it comes to PR). The ABA needs community bankers to be the face of its ongoing lobbying.

My assessment was seconded by the President of the Independent Community Banker’s of America (ICBA), Camden Fine, who noted on Medium: “Alexis nails it. article tells the truth of it.”

Now, Senator Elizabeth Warren has also called out the ABA for pretending to care about community banks, when in reality, they’re most focused on Wall Street’s most powerful firms. In a Senate Banking hearing on providing “regulatory relief” to community banks, Elizabeth Warren underscored the problem:

“We know that all of the big bank lobbyists love to come into our offices and talk about how community banks are being crushed and they need our help. But a lot of the time the legal changes that they’re asking for aren’t really about helping community banks.”

To prove her point, Senator Warren seized on the first request the ABA made in their testimony: a change to the Qualified Mortgage (QM) rule. In an extensive back and forth with the ABA’s R. Daniel Blanton, Senator Warren teases out the truth: the request the ABA has made in the name of community banks is really a boon for the biggest banks.

Following the vast mortgage lending abuses that occurred in the run-up to the financial crisis, Dodd-Frank set about to provide new protections for borrowers through the QM rule. The rule makes many simple, common-sense demands, including this one: banks must ensure borrowers actually have the ability to repay a mortgage. For example, one of the restrictions is that the borrower’s debt-to-income can’t exceed 43%. The ABA is looking for a broad exemption from these restrictions.

In the hearing, Senator Warren pounced on the ABA’s request. She notes that there’s already a carve out for small banks—defined as a bank with less than $2 billion in assets, that issue less than 2,000 mortgages. If a small bank holds the mortgage in their portfolio (instead of selling it to investors through a securitization), it’s automatically considered a Qualified Mortgage, doesn’t count toward the 2,000 loan limit, and the small bank doesn’t have to meet the Ability-to-Repay standards.

But all those exemptions aren’t enough for the ABA: they want the exemptions to apply to the biggest banks, too. And that request is what Senator Warren zoomed in on, and left the ABA’s witness stumbling.

Senator Warren asks Blanton about the impact of the deregulation the ABA wants on community banks, versus the impact on the likes of banking giants Wells Fargo and JP Morgan. At first, Blanton dodges the question, but Warren eventually gets an answer:

Mr. Blanton: Well, for a community bank we would certainly—if they raise that threshold, it would certainly exempt a whole lot of our mortgages that we’re holding. Senator Warren: You have a whole lot of mortgages outside the CFPB’s proposed 2,000 mortgage threshold? Blanton: No, ma’am, but we would be able to make those loans then… Warren: And how many for the banking giants? Blanton: Um… (shrugs) Warren: They’re part of your organization. Maybe you could just get back to me. Blanton: Yes, ma’am.

The ABA’s Blanton can’t—or won’t—answer a simple question about how much more their own proposed change to the QM rule would help big banks than community banks, even though the ABA has both groups among its members.

Despite the flattering TV ad campaign the ABA ran featuring community bankers, it seems their frustration with continually being used to advance big banks’ interests is beginning to bubble to the surface. At the end of Warren’s questions, she suggested that best way to truly help community banks would be to “start by holding big bank executives accountable for committing fraud like we do with small bank executives.” That line made the community banker John H. Buhrmaster, who serves as Chairman of the ICBA and also sat on the hearing’s panel, burst out in applause.