WASHINGTON (Reuters) - 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 [PWC.UL], 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 financial firms.
“I‘m excited and anxious to start next Monday,” Sullivan said.
Barbara Hagenbaugh, a Fed spokeswoman, confirmed the hire but did not provide further detail.
The Fed received authority to regulate insurers Prudential Financial Inc (PRU.N) and American International Group Inc (AIG.N) 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 (GE.N) finance arm also was dubbed “systemically important.”
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 Regulation.
“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 experience.
Reporting by Emily Stephenson; Editing by Karey Van Hall, Bill Trott and Lisa Shumaker