(Adds Fed confirmation, NAIC comment)
By Emily Stephenson
WASHINGTON, June 2 The U.S. Federal Reserve has
hired a former state insurance commissioner to help it oversee
non-bank financial firms that a council of regulators identified
for tougher scrutiny last year.
Thomas Sullivan, who led the Connecticut Insurance
Department from 2007 through 2010 and later worked at
PricewaterhouseCoopers, told Reuters he starts as a
senior adviser on June 9.
Sullivan will help fill a critical expertise gap at the Fed,
which has more experience regulating Wall Street banks and less
of a track record with major insurers and other non-bank
"I'm excited and anxious to start next Monday," Sullivan
Barbara Hagenbaugh, a Fed spokeswoman, confirmed the hire
but did not provide further detail.
The Fed received authority to regulate insurers Prudential
Financial Inc and American International Group Inc
in 2013 after a group of regulators known as the
Financial Stability Oversight Council decided those firms were
so big their failure would destabilize financial markets.
During the 2007-2009 financial crisis, the U.S. government
stepped in to stabilize AIG with a taxpayer-funded bailout that
eventually topped $180 billion.
General Electric Co's finance arm also was dubbed
Insurance companies and their backers in the U.S. Congress
have complained about the Fed's lack of direct experience with
insurers and said the Fed should not seek to impose bank-like
restrictions on them.
Fed Chair Janet Yellen told lawmakers earlier this year that
the Fed recognized that banks and insurance companies differ in
some ways and was working to craft capital rules that would
reflect those differences.
Sullivan, who was active in the National Association of
Insurance Commissioners (NAIC), according to a biography on
Connecticut's insurance department website, said he would be
part of the Fed's Division of Banking Supervision and
"Tom's strong regulatory experience, comprehension of the
insurance sector, and thorough understanding of America's
national system of state-based insurance regulation will be a
tremendous asset to the board on both domestic and international
issues," NAIC president Adam Hamm said in a statement.
The Fed's regional banks also have been preparing to
regulate insurers. Its Boston and New York units, which were
given responsibility to oversee Prudential and AIG, have
recently advertised positions for people with insurance
(Reporting by Emily Stephenson; Editing by Karey Van Hall, Bill
Trott and Lisa Shumaker)