The right way to redo Dodd-Frank

THE prospect of deregulation helps explain why, since Donald Trump’s election, no bit of the American stockmarket has done better than financial firms. On February 3rd their shares climbed again as Mr Trump signed an executive order asking the Treasury to conduct a 120-day review of America’s financial regulations, including the Dodd-Frank act put in place after the financial crisis of 2007-08, to assess whether these rules meet a set of “core principles”.

To critics of Dodd-Frank, this is thrilling stuff. They see the law as a piece of statist overreach that throttles the American economy. Plenty in the Trump administration would love to gut it. The president himself has called it a “disaster”. Gary Cohn, until recently one of the leaders of Goldman Sachs, a big bank, and now Mr Trump’s chief economic adviser, promises to “attack all aspects of Dodd-Frank”.

Opponents of moves to unwind regulation are as apocalyptic. Wall Street caused the crisis, they observe; undoing Dodd-Frank would lead to the next disaster by letting bankers run riot again. That would harm customers and taxpayers, as would suspending the introduction...