Protecting the little guy

That would be a fair question to ask this week, when the Obama administration formally rolls out its new master plan to regulate financial markets. There will be plenty of people and agencies responsible for watching markets and big institutions. That's important work, no doubt, but average Americans can be excused for failing to see much of a direct impact on their daily lives.

They should be more interested in another element of the Obama plan that proposes something entirely new: a commission to protect consumers from dangerous and deceptive financial products.

Advocates describe it as a financial version of the federal Consumer Product Safety Commission that makes sure the toaster you buy isn't likely to burst into flames.

That idea was the brainchild of Elizabeth Warren, the Harvard law professor/unlikely pop culture figure/political lightning rod who first pushed it in a magazine article two years ago. Warren was also front and center three months ago when US House and Senate bills proposing a similar commission got the full press-conference treatment.

Warren is a well-known figure among people who follow consumer credit and middle-class economic issues. But her profile soared when she was selected to chair the congressional panel created to oversee the federal bank bailout plan. She's taken full advantage of the soap box, collecting fans and critics along the way.

Fans loved the way she could articulate the case for financial regulation as common sense on TV programs such as "The Daily Show with Jon Stewart." Critics complained she was a political appointee who wandered beyond the scope of her bank bailout oversight job to advocate for consumers, a point that led to a testy interview/shouting match, on National Public Radio of all things.

I doubt Warren could have imagined any of that in the summer of 2007 when she wrote, Unsafe at Any Rate, the article that went to lengths making the case for a financial product safety organization. I also doubt she could have imagined today's political and economic environment that makes such a thing very possible.

A financial product safety commission is fundamentally different from every other idea expected to come out of the Obama regulation plan. It doesn't ponder deep questions, like systemic risk, best viewed from the height of an ivory tower. It doesn't wade into hopelessly complex markets like those that trade financial derivatives. It tries to answer a basic question of kitchen-table economics: Do I know what I'm getting into?

That job might turn out to be more complicated than testing toasters. Many people have gotten into financial trouble because they abused credit, period. Some financial products are offered with a range of risks and prices to suit the circumstances of many different customers, not to rip them off.

The Obama commission seems focused on credit rather than on the broader portfolio of financial products. But didn't we just get credit card reform legislation? Mortgage abuse, more often then not, involves salesmen and sales incentives rather than the loans themselves.

All that said, there are good reasons for such a commission. For starters, most federal regulators have a terrible track record protecting consumers. They are built to regulate markets and institutions, not stick up for the little guy or woman.

And there are plenty of financial products that can stand more scrutiny. Anyone who has ever tried to read a credit card agreement knows that.

A financial product safety commission would help most consumers and it could even serve markets, which are better off when both buyers and sellers know what they're getting into.

Steven Syre is a Globe columnist. He can be reached at syre@globe.com.