How Romney Could Stop Wall Street Reform Without Repealing Dodd-Frank

Mitt Romney has made no secret of his desire to do away with the Dodd-Frank financial reform law, signed in 2010 as a response to the 2008 financial crisis. Romney’s economic plan calls for the full repeal of Dodd-Frank, which Romney says he will replace with…something.

But even if Romney couldn’t get a full repeal through Congress, his other proposals could gum up some important implementation of Dodd-Frank, as American Banker noted today:

The proposals, taken together, would make it far harder for regulatory agencies to enact new regulations. The impact would be especially large with regard to the 2010 financial reform law, much of which has yet to take effect. Under Romney’s plan, agencies would be required to eliminate existing regulations whenever they implement new ones. Congress would also have a much easier time blocking regulations that are proposed by the agencies.

Even if the courts eventually struck down Romney’s proposals — the policies would likely spark legal challenges — they could force delays at agencies such as the Federal Reserve Board, the Federal Deposit Insurance Corp. and the Consumer Financial Protection Bureau.

The two proposals American Banker identified are: a call by Romney for new regulations to go through a process in which their cost is offset by the elimination of other regulations; and his support for a measure requiring all regulations with an economic impact of more than $100 million to be individually approved by Congress.

Experts note that requiring offsets for new regulations — essentially putting in a cap on regulation — ignores the benefits that new regulations could bring. “The benefit side of the ledger seems to be ignored both for the proposed regulation and for the old regulation that you’d need to get rid of,” said Texas Tech University law professor Richard Murphy.

Romney’s running mate Paul Ryan, meanwhile, has advanced a budget that doesn’t repeal Dodd-Frank, but does gut some of its key provisions. One in particular would remove the government’s new ability to unwind failing financial firms rather than resorting to the ad hoc bailouts of 2008.

Romney claimed this week that “no one is talking about deregulating Wall Street.” That’s turning out to be less and less true.