The Wall Street reform bill that Obama signed into law after the worst financial crisis in decades has had a relatively low profile in the presidential race. Obama frequently argues that Mitt Romney would deregulate Wall Street and leave it to its own devices, but Dodd Frank hasn’t been as central a topic as, say, Obamacare has been.

The news of J.P. Morgan’s $2 billion trading loss could change that very quickly.

It’s already been widely pointed out that the J.P. Morgan debacle badly weakens the position of people who want to limit further oversight of Wall Street or roll back the 2010 financial reform law and its attempt to limit risk taking by banks with guarantees from government. What’s noted less often is that one of those people is the Republican candidate for president, who has pledged to repeal Dodd Frank entirely if elected.

It’s true that the J.P. Morgan loss raises tough questions for the Obama administration and the effectiveness of his Wall Street reforms. But on a conference call with reporters today, two Democratic Senators — Carl Levin and Jeff Merkley — also sought to hang the J.P. Morgan loss directly around Romney’s neck.

“He favors repeal of Dodd Frank,” Senator Levin said of Romney. "He doesn’t want derivatives regulated. He doesn’t want banks like J.P. Morgan to be regulated at all.”

The J.P. Morgan story shows Romney’s position has been “dramatically proven wrong,” Levin continued, adding that Romney’s drive to repeal Dodd Frank would “remove the possibility that we would get a cop back on the beat on Wall Street.”

Just today, in a case of interesting timing given the J.P. Morgan news, Romney attacked Obama’s regulatory policies by claiming that they “scared the dickens” out of banks and insurance companies. But when asked about J.P. Morgan in particular, the Romney campaign pushed back on any notion that he favors complete deregulation, arguing that he favors “common sense” regulations and oversight of the derivitaves market.

The larger story, as Steve Benen notes, is that Romney says he’d roll back Wall Street reform, but won’t say with any specificity what he’d replace it with. One expert recently pointed out: “He’s asking for permission to govern the country — but he’s saying do away with the government’s response to the Wall Street crisis.”

The J.P. Morgan news should sharpen the contrast between the two candidates considerably, and gives new meaning to Romney’s frequent claim that he wants to “get government out of the way” and let the free market work its magic.


UPDATE: Post edited slightly for clarity and accuracy.