It’s a concept that many weary consumers can’t even imagine: mortgages and credit card applications so straightforward that they make up just a single page.

This was the Obama administration’s vision this summer as officials talked about possible plans for regulating the country’s financial sector in the interests of consumers.

One cornerstone of the current plan is a new consumer agency, uninterestingly dubbed the Consumer Financial Protection Agency at this early stage.

The CFPA would, under a plain vanilla mandate, have the power to set basic standards for certain types of paperwork and procedures used by banks. Hence the idea of an application for a 30-year-fixed-rate mortgage that fits onto a single piece of paper.

Consumer advocate groups loved the idea. Banks hated it, and their resistance has melted the prospect, according to Jennifer Liberto of CNNMoney.com.

According to House Financial Services Chairman Barney Frank (D, MA), the CFPA will not have such regulatory power. What’s more, some of the most important providers of financial services, including consumer reporting agencies, real estate brokers and auto dealers would not be subject to the agency’s oversight.

The plain vanilla dream has evaporated in part due to concessions Democrats believe will be necessary to achieve passage of regulatory reform in Congress, and because of industry resistance.

Banks and financial service providers have complained loudly that such a provision would limit their ability to provide consumers with financial product choices.

‘Plain vanilla’ was just such a no-go for the industry, that was loud and clear, says Melissa Koide of the New America Foundation, a policy group that supported the idea.

Treasury Secretary Tim Geithner sees no cause for alarm. There’s nothing in there that troubles me significantly, he said during a hearing on Capitol Hill.I think the chairman’s proposals are a pragmatic and helpful way to make sure you have a better balance of choice but also protection.

The bill would still give the CFPA a mandate to set strong rules for banks and non-banks. And, most significantly, states would be allowed to pass legislation that took precedent over the federal laws if the regulations were tougher.

Despite the concessions, the financial services industry, perhaps unsurprisingly, is still not happy. A number of important industry groups responded to the news from Capitol Hill with an appreciation for Frank’s efforts to address their concerns, and then re-stated their desire to kill his bill in its entirety.

We agree with the CFP, just not the A, said Scott Talbott, chief lobbyist for the Financial Services Roundtable. The group opposes an agency that could set new rules without determining whether those rules could threaten the safety and/or soundness of financial entities.

Despite the compromise, Frank says that tweaks to existing financial regulators will not be enough.

It is simply not the case that [the financial services sector] has paid much attention to [consumer issues], Frank said. They never cared about consumer affairs. It’s not that they are bad people, it is a fact that safety and soundness is their main concern. They regard consumer affairs as kind of a nuisance.

So, plain vanilla mortgages may be out, but the financial sector should still expect some interesting new flavors in the near future. Lawmakers hope to make financial contracts clearer to borrows to prevent the cycle of default, foreclosure and personal bankruptcy.