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In the late 1990s, Minnesota customers of Fleet Bank began to notice some unusual additions to their mortgage bills. They took their complaints to the state attorney general's office, which discovered that the bank had been selling customers' account information to telemarketers. The marketers would then charge people's mortgage accounts for such things as pre-paid legal services they had never agreed to purchase. Fleet was intimately involved in the scheme, right down to approving the marketing scripts, and it netted nearly

$10 million nationally from it. In 2000, the Minnesota attorney general sued Fleet Mortgage Corporation for fraud and deceptive practices.

As the unsavory details of Fleet's behavior started to leak out, the financial giant brought an unusual ally to the legal battle: Julie Williams, then-chief counsel of the federal Office of the Comptroller of the Currency (OCC). Created in 1863 by the National Bank Act, the OCC regulates big national banks, protecting depositors from unstable institutions. Historically, the OCC has confined its role to quietly deploying armies of eye-shaded examiners to scrutinize bank ledgers to head off problems. But, in the Fleet case, the OCC aggressively intervened in a very public dogfight--and not on behalf of bank customers. Rather, Williams's office asked a federal judge to throw out Minnesota's lawsuit against Fleet. In an amicus brief, Williams argued that the state had no authority over the operating subsidiaries of national banks and that only the OCC and other federal banking agencies could enforce consumer protection laws against those institutions. In a rare loss for Williams, the court disagreed, and Fleet ended up refunding money to thousands of consumers.

But Williams's actions in the case have been part of a disturbing trend. Over the past decade, state officials who have tried to rein in some of the more egregious practices of the nation's banks--passing laws banning ATM surcharges or cracking down on predatory mortgage lending--have found themselves facing off with Williams. In court, she has successfully asserted that states have no right to enforce their own consumer protection laws against national banks or their subsidiaries, particularly those laws involving predatory lending, which has been a major factor in the more than 1 million home foreclosures last year. "What's disgraceful is for a federal agency to spend all these resources preventing consumer protection activities," says Prentiss Cox, a former assistant attorney general who tangled with Williams in the Fleet case. "It makes it look like their clients are the banks and not the customers or the public."

Although Williams's tenure at the OCC predates President Bush, her legal philosophy fits squarely with the administration's unprecedented use of federal agencies to preempt state laws when those laws have threatened corporate profits. Her quiet activism also has created a legacy that's likely to survive any major changes at the White House. In April, Williams's string of anti- consumer court victories culminated in a major U.S. Supreme Court decision. The ruling in Watters v. Wachovia effectively prevents states from ever bringing another lawsuit like the one against Fleet in Minnesota. The result is an environment where trillion-dollar financial institutions are free to abuse consumers with little fear that anyone will hold them accountable for it-- especially not the OCC.

One of the most chilling moments in the recent documentary on consumer debt, "Maxed Out," comes when filmmaker James Scurlock interviews two women whose children hanged themselves after running up steep credit card bills while in college. In a devastating bit of editing, "Maxed Out" juxtaposes scenes of the grieving mothers with clips of a poised, soft-spoken Julie Williams in a bright striped sweater explaining to members of Congress why it's OK for banks to push credit cards on college kids with no income.

At first blush, Williams seems an unlikely proponent of this pro-business ideology. She is a graduate of the first class of Antioch Law School, a leftie law school founded in D.C. in 1972 by a former speechwriter for Robert Kennedy. After graduation, Williams went to work at Fried Frank, the law firm co-founded by Kennedy in-law Sargent Shriver. While she practiced corporate finance law there, much of Williams's career has been in government, including a stretch at the Office of Thrift Supervision (OTS), the federal regulator involved in cleaning up the savings and loan meltdown. By the time she arrived at the OCC in 1993, Williams apparently believed that national banks needed to be freed from complying with nettlesome and inconsistent state laws.

Since Williams's arrival, the OCC has used litigation to do just that. According to an informal survey by Kathleen Keest, of the Center for Responsible Lending, and Elizabeth Renuart, from the National Consumer Law Center, between 1982 and 1992, the OCC filed only four amicus briefs in litigation involving national banks. But, during Williams's tenure as chief counsel, between 1994 and July 2006, the agency filed 60 amicus briefs, at least 58 of which were in support of banks.

When I reached Williams at her office recently, she said that there's an easy explanation for the uptick: In 1994, Congress gave the OCC independent litigating authority. Previously, the Justice Department handled such legal work for the agency, she said. Yet other federal banking regulators, such as the Federal Deposit Insurance Corporation and the OTS, also won litigating authority that year but haven't been nearly as aggressive as the OCC in helping banks they regulate fend off legal challenges from consumers.

As like-minded Bush appointees joined the agency after 2000, the OCC stepped up its attacks on state attorneys general. In 2005, Williams was temporarily serving as acting comptroller of the currency. Under her leadership, the OCC successfully sued New York Attorney General Eliot Spitzer to prevent him from simply investigating racially discriminatory lending practices of several national banks operating in New York.

And, in recent years, when states have attempted to enforce their own consumer protection laws against companies that had financing relationships with big banks--including car dealerships, an unlicensed trade school, and an air-conditioning company--they've run up against Williams and the OCC, telling them to back off. "The universe of players who now think they can ignore state law is vastly expanded," says Keest.

After declaring itself the only sheriff in town, the OCC has shown little interest in doing the consumer protection work it has forced the states to abandon. "It's like the FBI taking the case from some local prosecutors, which is OK, except that you can't just take the case and then throw the file in the trash," says Matt Lee, a banking activist and head of the nonprofit Fair Finance Watch.

The OCC has done nothing, for instance, to prevent banks from selling customers' account information to marketing companies, as in the Fleet case. It has few resources devoted solely to helping consumers. In response to a 2005 Freedom of Information Act request, the OCC reported that its "customer assistance group" employed a grand total of three people whose job primarily involved investigating and resolving consumer complaints. By comparison, according to a fact sheet from the House Financial Services Committee, state banking agencies and attorney generals' offices employ nearly 700 full-time examiners and attorneys who make sure that consumer laws are enforced. In 2003 alone, state bank agencies brought 4,035 consumer enforcement actions. Since 2000, the OCC has brought just 11 consumer enforcement actions. The biggest two involved cases that were initiated and investigated by state attorneys general and that the OCC initially tried to prevent from going forward.

Williams argues that her agency is very active protecting consumers. It just doesn't tell anyone about it. "It's not public. We don't do press releases," she says. In effect, she says, the public just has to trust her.

By Stephanie Mencimer