Last week David Chavern reminded us --and apparently some do need reminding-- that loans aren't toasters. Today Peter Wallison addresses the same issue and asks in the Washington Post: "Are consumers 'protected' when they are denied the opportunity to buy products and services that are available to others?"

These are the questions raised by the Obama administration's proposal for a Consumer Financial Protection Agency (CFPA)...under the proposed legislation, every provider of a financial service (a term that includes organizations as varied as banks, check-cashing services, leasing companies and payment services) is required to offer a "standard" product or service -- to be defined and approved by the proposed agency -- that will be simple and entail "lower risks" for consumers...The provider that sells a more complex product to a consumer who is not ultimately deemed to be capable of understanding the product's risk or complexity could face an enforcement proceeding from the agency...an action by a state attorney general enforcing the agency's regulations...and a civil suit by a consumer or a class of consumers who claim they did not understand the risks associated with the non-plain-vanilla product or service.

Apparently, adequate disclosure will not be the answer to the provider's dilemma. As outlined in the white paper, no amount of disclosure can adequately protect consumers against complexity: "Even if disclosures are fully tested and all communications are properly balanced, product complexity itself can lead consumers to make costly errors."...In this way, and for the first time in our history, the government will force a major sector of the U.S. economy to deny products and services to a large proportion of the population -- not because the products or services are inherently dangerous, like drugs or explosives, but because in the view of the Obama administration no amount of disclosure can make some Americans capable of understanding what they are buying.