Two proposals put forward by Republican presidential hopeful Mitt Romney could make it more difficult for U.S. regulatory agencies to implement the 2010 Dodd-Frank Act.
Romney’s proposals would require agencies to eliminate existing regulations as new regulations are implemented, while Congress would gain the ability to more easily block the agencies’ regulatory proposals, Bank Investment Consultant reports.
Sidney Shapiro, a law professor at Wake Forest University, said that Romney’s policies could lead to legal challenges and delays at the Consumer Financial Protection Bureau, Federal Deposit Insurance Corp. and Federal Reserve Board.
“I think it becomes another arrow in the industry’s quiver,” Shapiro said, according to Bank Investment Consultant.
Some regulatory experts who advocate similar policies say that federal regulators need to be held more accountable for the costs associated with economic regulations.
Richard Williams, the director of policy research at George Mason University’s Mercatus Center, which publishes graded report cards for rules proposed by federal regulators, said that after grading “every economically significant rule,” the average grade was an F.
“There just doesn’t seem to be enough incentive for them to get it right,” Williams said, Bank Investment Consultant reports.
Timothy Geithner, the secretary of the U.S. Treasury, vowed in 2010 to eliminate regulations that did not have the desired effect and to simplify rules when possible, though he acknowledged in 2011 that not much progress had been made.
Romney has vowed to repeal Dodd-Frank and replace the financial overhaul with a “streamlined regulatory framework.” Two proposals, however, could disarm Dodd-Frank even if the law is not repealed.
One of the proposals would subject regulation-issuing agencies to a budget-like process to identify cost reductions.
“While not a panacea for the problem of over-regulation, implementation of this conservative principle would go some distance toward halting the relentless growth of the regulatory state,” Romney’s economic plan reads, according to Bank Investment Consultant.
Romney’s second proposal would affect a 1996 law that allows Congress to overrule a regulatory proposal by preventing a proposed regulation from taking effect until Congress can make a decision, particularly if the legislative body is split on a measure.
“If Congress declines to enact such a law, [as president], Romney [would] issue an executive order instructing all agencies that they must invite Congress to vote up or down on their major regulations and [forbid] them from putting those regulations into effect without congressional approval,” Romney’s budget plan reads, Bank Investment Consultant reports.