The plain vanilla option for financial competition

Now it's dead, everyone else has been blogging it, and a few readers have been asking me what I think.

On one hand, I believe that many complex financial products are a mix of inefficient shrouding and plain, outright trickery or even fraud.  In this regard I find it easy to see the merits of "plain vanilla" regulation.

On the other hand, I see regulatory agencies as about the least "plain vanilla" institutions out there.  Try looking at the information provided by a regulatory agency and deciding which of its programs are not delivering value for the money.  Are they even trying to explain this to Congress or to the public, much less succeeding?  The regulators present their tasks in complex bundles, topped off with lots of rhetoric about how essential the whole thing is.  Regulators will go to great lengths to make transparent the benefits of what they do, but not the failures or the costs.

So if consumers are tricked into purchasing too many shrouded products in mortgage markets, are they not also tricked into favoring too much shrouded regulation in political markets?

The idea of using regulation to enforce "plain vanilla" offerings to me begs the question.  The pattern of regulation itself won't be…plain vanilla.  Maybe there's a way to get there, but the mere insistence that regulation ought to be done properly I don't find very compelling.