After meeting with small business leaders Monday, President Donald Trump signed an executive order to require federal agencies to propose deleting two regulations for each new one they issue, and also said his administration plans to do a “big number” on the Dodd-Frank Wall Street Reform and Consumer Protection Act.
“So if there’s a new regulation they have to knock out two. But it goes far beyond that. We’re cutting regulations massively for small business, and for large business, but they’re different. … There will be regulation, there will be control, but it will be a normalized control where you can open your business and expand your business very easily.”
Said Trump: “Dodd-Frank is a disaster; we’re going to be doing a big number on Dodd-Frank.”
The order issued Monday states that: “It is important that for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.”
Further, the order states, “unless prohibited by law, whenever an executive department or agency publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed.”
Brian Knight, a senior research fellow on the Financial Markets Working Group at the Mercatus Center at George Mason University in Washington, noted in a Monday blog post that Trump’s order requires that for fiscal 2017, “covered agencies are required to keep the net cost of regulation to no greater than zero,” which means “that any costs of new regulation must be offset by repealing old ones.”
Starting in fiscal 2018, agencies “will be granted a ‘regulatory budget,’” Knight says. “If Agency X is given a budget of $100 for regulations the new net cost of regulations (cost of new regulations minus savings from repealing old ones) needs to be at or under $100. The agencies will still need to identify two regulations to repeal for every new one.”
The order does not include independent agencies like the Securities and Exchange Commission and the Consumer Financial Protection Bureau.
When asked what he thought about Trump’s order, former SEC Chairman Harvey Pitt told ThinkAdvisor at an event in Washington that “the spirit of getting rid of dead wood is very positive and sensible. But trying to reduce it to a formulaic approach misses the boat” because “in some cases, agencies should eliminate three regulations for every new one they add and maybe just improving a regulation doesn’t by itself require eliminating a regulation.”