Was Williams Forced Out of the OCC?

WASHINGTON — After Julie Williams, the longtime No. 2 at the Office of the Comptroller of the Currency, announced she was leaving, one question dominated the resulting discussion: Was she pushed out or did she jump?

Williams has been a dominant force at the agency for 19 years, serving four comptrollers and seen as the principal architect of the OCC's controversial 2004 preemption rules.

But many insiders have been waiting to see how long and whether she would last after Comptroller Tom Curry was installed in April. Curry has already criticized the agency's past behavior and is expected to moderate the OCC's views on preemption.

While no source claimed to definitively know if Williams was forced out, most agreed there were tangible signs of a rift between her and the agency's new leadership. Curry was keeping Williams at a distance, sources said, and it was clear she would have significantly less influence on policymaking. Some suggested Williams may have disagreed with the direction Curry was planning to take the agency.

In a potentially telling move, the OCC also offered no reason for Williams' resignation, other than to say she would stay on until Sept. 30 (and remain a federal employee until the end of the year). There was no quote from her in the press release announcing her departure, and she declined through a spokesman to speak to the media.

It was also apparent that the Obama administration — and consumer groups that support it — was not a fan of Williams. In a surprise move in 2010, Williams was passed over for acting comptroller after the departure of John Dugan — a public snub due to her role in crafting a preemption policy with which the administration disagreed.

Additionally, the Treasury Department publicly rebuked the OCC last year after it authored an opinion maintaining that preemption standards had not changed in the wake of the Dodd-Frank Act — an opinion which, as general counsel, Williams effectively authored.

Williams' future plans are unclear, but she is sure to have her pick of jobs among financial law firms, consultants and financial institutions.

It is difficult to overstate what a unique role Williams has played as a top staffer at a federal banking regulator. Generally speaking, the players behind the scenes seldom gain the same attention — or notoriety — as the agencies' principals.

But Williams has proved to be a notable exception — almost certainly against her will. Although the preemption rules were promulgated in 2004 under Comptroller John D. Hawke, and supported by his successor, consumer groups saw her as a driving force behind them. Indeed, many came to see her as the power behind the throne, a characterization that the comptrollers and multiple sources said is unwarranted and incorrect.

"The idea that she ran the agency is simply not true," said Hawke, now a partner at Arnold & Porter. "I can't think of a single occasion where I asked Julie to do something and she refused to do it, or she didn't come to me first if there was a significant decision to be made. She was an ideal first senior deputy and general counsel."

Eugene Ludwig, another former comptroller and now chief executive of Promontory Financial Group, praised Williams as an exceptional lawyer and a person of high integrity. "Exemplary in terms of service to her country, and an enormously talented legal mind," he said.

Hawke said consumer groups — and the Obama administration — have unfairly targeted Williams.

"The notion that Julie is the evil genius behind preemption is ridiculous and shows a lack of understanding of what preemption is about," he said.

For his part, Hawke said Williams likely left because she was ready for retirement.

"Julie has been a very distinguished government lawyer for many, many years," he said. "She's highly skilled…This is a tough time. The agency is under a lot of pressure — Julie is at the epicenter of those issues — one gets tired. My assumption is that she is opting for a well-deserved respite."

Tom Vartanian, a bank industry lawyer at Dechert LLP who has dealt with Williams over more than two decades, said that she has been a constant in the changing world of bank regulation.

"She is incredibly smart and hard-working, and has done what lawyers are supposed to do — represent her client zealously and with class," he said.

Consumer groups were restrained in recognizing Williams' departure, instead noting her skills.

"She's recognized as one of the smartest people in the financial services regulatory world," said Michael Calhoun, president of the Center for Responsible Lending, who tangled with Williams regarding preemption.

Still, they anticipate that preemption standards will change after her departure.

"There is no question that she was a strong advocate for preempting the right of states to write stronger laws and enforce the laws," said Ed Mierzwinkski, federal consumer protection director for the U.S. Public Interest Research Group. "And so going forward, I would hope that there would be a new approach to those issues."