It can happen easily, even to responsible, credit-worthy people. A consumer deposits a large check but it fails to clear promptly, so the money isn't credited to her account. Because she's fiscally responsible and uses a debit card rather than credit card for routine transactions, she then makes a half-dozen small purchases totaling, say, $30 with her debit card.

At no time during the transactions is she told that her account is overdrawn. The last thing the banking industry wants to do is warn consumers, as they must when an ATM levies a charge. The cardholder learns of the problem only when her bank bills her for six overdrafts at $35 a clip. The $30 worth of goods costs her $240.

Such rapacious lending practices, which increased dramatically thanks to deregulation during the Bush administration, must be curtailed, and the industry can't be trusted to do it on its own. President Obama and Democrats in Congress led by Massachusetts Rep. Barney Frank and Connecticut Sen. Chris Dodd are pushing to create a Consumer Financial Protection Agency that would better regulate the lending industry. They seek to end the preemption of strong state consumer finance laws by federal laws weakened by industry lobbying.

Banks are naturally pushing back hard with Republican help, and the U.S. Chamber of Commerce has ginned up a "Stop the CFPA" campaign, ostensibly on the grounds that the agency would impose onerous rules on mom and pop businesses. Balderdash.

Banks, whose unscrupulous credit card practices were the target of congressional action last spring, will make, by one estimate, more than $27 billion from checking account overdraft fees.

This month, with Congress, Obama and consumer groups breathing down their necks, three big banks, Chase, Bank of America and Wells Fargo, announced that they will stop charging the fees when accounts are short less than $10 or $20 and make a few other policy changes that will benefit consumers. But that effort isn't enough. Congress should create the new agency and end predatory lending practices. For example:

When a series of purchases are made with a debit card on an account with a low balance, some banks subtract the largest sums first to maximize the number of purchases made after a balance falls to zero.

That must be stopped. Deductions should be made in the order the money was spent.

Lenders should be forced to notify a card holder when a purchase would result in an overdraft. There aren't many people who would willingly pay $40 for a cup of coffee.

Many banks automatically enroll depositors in overdraft programs; some may not realize they even have the service until they receive an overdraft charge. Others are told that accounts don't come without the ostensible protection. That must change. Depositors must be able to opt into an overdraft program if they want one and opt out at any point without penalty.

Most important, the rules should be federal and apply to all lenders. Otherwise big banks will set up card operations in states with the weakest regulations. Federal lending rules should be able to preempt only state regulations that are weaker, not tougher.

The nation's national banks - a very different breed from the majority of state-chartered banks that treat customers fairly and avoid high-risk investments - have rightly lost the nation's trust. They should not be allowed to prevail because they drop a fortune on lobbyists.

Congress should create a Consumer Financial Protection Agency and give it the power to create strict rules and to tax banks to fund the effort to keep them honest.