Exclusive: Fed hires official to oversee AIG, Prudential

Mon Jun 2, 2014 3:44pm EDT
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By Emily Stephenson

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: Quote) and American International Group Inc (AIG.N: Quote) 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: Quote) finance arm also was dubbed "systemically important."   Continued...

The Federal Reserve building is seen in Washington June 19, 2012. REUTERS/Yuri Gripas