Donald Trump signing an executive order has now become a cultural trademark, with its own Twitter feeds and play-by-play. What the orders don’t share is any consistency. Some, like the immigration ban, lead to immediate (and tragic) impacts. Others commit the government to generally look around for regulations to trim, or to try to come up with something around Obamacare.
The latter executive orders are signals, statements of intent that do little on their own but suggest the thrust of administration policy. That’s the proper context for Trump’s signing an executive order Friday on the Dodd-Frank financial reform law. Dodd-Frank won’t be repealed by executive fiat. But unlike some other policies, if the administration sees fit, Dodd-Frank can easily be effectively repealed by neglect.
We haven’t seen the text yet, but Bloomberg suggests Trump will “order a sweeping review” of Dodd-Frank, with an emphasis on “removing regulatory burdens” caused by the changes to banking rules.
In practice, this means that Trump will ask his Treasury Secretary and the national banking regulators—an alphabet soup of nearly a dozen agencies—to identify what rules can be changed in Dodd-Frank to relieve those alleged burdens. Since the majority of the rules have already been implemented, it would take a protracted process under the Administrative Procedures Act to nullify or peel back rules, involving years of proposals and public-comment periods and final decrees.
Even then, the changes would have to fall in line with statutory demands under Dodd-Frank, and if they don’t, organizations can sue the government for failing to follow the law. That would extend the process even longer. Other rules—like ones requiring banks to hold more capital—are conducted under international auspices, and trade-agreement violations could come into play if the United States offers unequal treatment among domestic and foreign banks.
In other words, if this executive order were the only change to Dodd-Frank contemplated, we should expect an actual impact sometime around the second term of the Gillibrand administration. Even a senior administration official admitted to Reuters that the executive order “is not an attempt to undo Dodd-Frank,” because that would be impossible under our system.
However, Trump will have some immediate opportunities. Friday morning, the Senate voted to rescind Dodd-Frank Section 1504, an anti-corruption rule that forces the disclosure of oil- and gas-company payments to foreign governments. Because that rule wasn’t finalized before a deadline under the Congressional Review Act, Congress could wipe it out through a simple majority vote. A handful of other late-in-the-game Dodd-Frank rules could be eliminated in this fashion.