As readers know, I have a major concern about the regulatory response to the financial crisis. An unintended consequence of regulation is that it can raise costs, reduce competition, and choke off access to legitimate sources of credit for consumers. And yet, it has been used over and over again in the United States.

It is ironical that in ratcheting up so-called consumer protection regulation, advocates end up pushing consumers out of the mainstream financial system and into the fringe lending market, which is precisely where the most vulnerable consumers are often exposed to the potential for fraud. The most notorious example, of course, is the resurgence of loan sharks in response to strict usury ceilings on interest rates. But examples abound, not just in consumer credit, but also in areas such as occupational licensing.

Some news reports in recent days have suggested that one of the cornerstones of the Dodd-Frank consumer financial protection scheme — heightened regulation and enforcement of rules regarding residential mortgages — is starting to have exactly this effect, at least in that major players are quitting the field.