In the weeks ahead, Congress may finally provide American families with a seat at the financial regulatory table in Washington, D.C. If Congress passes the Consumer Financial Protection Agency (CFPA) Act of 2009, on which the House Financial Services recently reported favorably, it will establish, for the first time, a federal agency whose sole mandate is to evaluate financial products through the lens of consumer fairness. By putting the tools to evaluate loans in the hands of borrowers, it would also give families the chance, as well as the responsibility, to protect themselves.

For years, the consumer credit market has been broken. Healthy markets depend on full information between parties to contracts, but lenders have systematically hidden the costs and risks of consumer credit products while burying a wide assortment of tricks and traps in the fine print. The result is that consumers can’t compare the costs of different products or distinguish safe lenders from risky lenders. Because the costs and risks are so well-hidden, the broken market undermines real consumer choice, inhibits consumer-oriented innovation, and leads many borrowers to over-consume credit, putting themselves--and our whole economy--at risk.

I'm coming a little late to Sheila Bair's intriguing Times op-ed from last week, but I think Tim Fernholz basically got it right over at The Prospect: Bair wasn't kvetching about the administration's regulatory proposals--the kind of thing that got her in Tim Geithner's crosshairs a few weeks back. She was taking aim at even more radical proposals for regulatory consolidation, like what Sen. Mark Warner lays out here. 

Basically, the administration wants to fold the underwhelming Office of Thrift Supervision (OTS) into the Office of the Comptroller of the Currency--the two agencies that regulate federal-charted banks--and rename it the National Bank Supervisor. (Under the status quo, big banks and other institutions can essentially pick their regulator. In the run-up to the financial crisis this tended to bring them to the doorstep of the OTS, which was perceived as weak and did its best to live up to those expectations. It "regulated" AIG Financial Products, for example.) Sen. Warner proposes consolidating not just those two agencies, but also the bank-regulatory functions of the FDIC and the Federal Reserve, both of which currently oversee state-chartered banks.

Clay Risen is managing editor of Democracy: A Journal of Ideas and a contributing editor at World Trade. His first book, A Nation on Fire: America in the Wake of the King Assassination will appear in January.