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The Consumer Financial Protection Bureau’s entire short life has been plagued by controversy, only exacerbated by President Obama’s recess appointment of Richard Cordray to its head. But lost in the debate is a central tenet of the Bureau that both Republicans and Democrats should cheer: a focus on transparency, rather than outright regulation.

Behavioral economics goes to Washington

Recent attempts to bring order to the wild west of the financial industry have had varying degrees of success. Much of the landmark Dodd-Frank bill has yet to be implemented, stymied by budget woes and a Congress that opposes the law to begin with. And the Durbin Amendment’s implementation touched off an onslaught of lobbying, lawsuits, raised fees and slashed benefits. (Yes, we are in fact contractually obligated to write about the Durbin Amendment every time we open our mouths. You should see our office parties.)

The CFPB might just be different, focusing not so much on regulation as transparency and disclosure. Financial products are so complex that consumers have no idea what to look for, which fees are relevant, whether they’re being screwed. Enter behavioral economics, shepherded by Harvard professor Sendhil Mullainathan.

Behavioral economics isn’t just about increasing transparency. Case in point: many credit and debit cards already disclose all of their fees; they’re just buried in legalese and fine print. Instead, behavioral economics attempts to frame information in such a way that people can achieve an optimal outcome.

Does that sound intrusive? Fair enough, but consider what the Bureau’s up against: marketing. The purpose of marketing is to get you to buy stuff, whether that means presenting information in a certain way or getting you to override the logical part of your brain. Consumers are already hearing a biased story; the Bureau is just presenting another side.

Disclosure in action

Even without an appointed director, the Bureau’s already introduced efforts to make information more digestible.

In May of 2011, they introduced two prototype mortgage disclosure forms to help them compare terms across lenders, with the aim of preventing the sort of mortgages that triggered the housing crisis.

They did the same for credit cards in December, recognizing that “A lot of the information in a credit card agreement is contractually necessary but generally uninformative to consumers.” We couldn’t agree more – aside from Team NerdWallet, who really reads the entire credit card disclosure form?

An example of an already-implemented policy is credit card statements. Card companies must disclose on your credit card bill how long it will take you to pay off your debt if you make only the minimum payment and how much you’ll need to pay in order to be debt-free in three years. Two numbers that anyone can calculate – but the new statements do an excellent job of turning nebulous interest rates into easily understood dollar terms.

Why disclosure should be popular on both sides of the aisle

Every time government wants to regulate an industry, it faces a tradeoff: increased inefficiency on one hand, and societal cost on the other. And inefficiencies come from a number of places: regulation might make a beloved good more expensive, or it might kick off the corporate equivalent of Olympic gymnastics as firms try to evade the new laws.

Presenting information in a more consumer-friendly way helps to reduce societal cost with fewer distortions. And it plays into the idea of fostering competition. Leveling the information playing field ensures that the best product, not the best ad campaign, is rewarded. This little bit of regulation could actually encourage innovation, forcing financial services companies to deliver quality products that can withstand close scrutiny.

A focus on transparency also avoids convoluted distortions. Regulating debit overdraft and interchange fees led to a rise in debit card and checking account fees, but a comprehensive disclosure form helps consumers compare products without driving fees underground.

Clear disclosures are a boon for those who call for consumer friendly practices, as well as those desiring a light government touch. They help everyday people understand the complex products they’re offered, while at the same time ensuring that the best good wins.