What was that happy sound we heard from Washington this week?  Could it be -- the Sound of Common Sense?  

New legislation was proposed this week by Senators Schumer, Durbin, and Kennedy for some revamping of the financial system. [Schumer, Durbin Propose New Consumer Watchdog Agency]   Hold onto your hats (and your wallets), this doesn't involve more bailout money.  It actually costs the taxpayer next to nothing.

The proposal?  A Consumer Financial Product Commission.  Yes, it could use a flashier name. (How about a contest to Name That Commission?) But if done right, this could quietly (and cheaply) overhaul our financial regulatory system.

Since the early 1980s,regulation over consumer financial products has gotten weaker and weaker.  Caps on interest rates were tossed out, regulatory agencies were stripped of authority, and a game of "regulatory shuffle" ensued whereby banks re-incorporated at will, with whatever agency would approve the most trash. 

Right now, there are virtually no consumer protections for financial products.  We have protections for everything else we buy:  Government agencies are always on the lookout for faulty seatbelts, dangerous drugs, or lead in kids' toys.  But when it comes to financial products, it's strictly "buyer beware."  If a mortgage product has a 1 in 5 chance of sending you into foreclosure, or if a credit card has a provision that even a Wall Street lawyer can't understand, that's just too bad. No one is looking out for the customer. 

This could be the first real step to reverse that trend.  Hats off to some common sense.