Will Neal Wolin Help Treasury Department Understand AIG?

(MoneyWatch)  Neal Wolin, President Obama's choice as deputy treasury secretary, may be the ideal man to help his boss, Timothy Geithner, and Congress unravel the mess at American International Group (AIG), the world's largest insurance company.

Wolin is the former president and chief operating officer of Hartford Financial Services' property and casualty unit. Hartford is one of the biggest U.S. insurers and, like AIG, a major player in both the life and property casualty markets.

At this point in his career Wolin, now in his late '40's, has a good understanding of what can go wrong at a major insurer. Hartford, like most financial companies, has experienced a severe downturn in its business and declining credit ratings.

In October the insurer got a $2.5 billion capital infusion from Allianz, Europe's biggest insurer, to prop it up. But things didn't improve and by February its credit ratings had been cut by both Moody's Investors Service and Standard & Poor's. Later in February, Thomas Marra, Hartford's chief operating officer and the presumed successor as chief executive, departed. He had been running the life insurance business at Hartford, which was plagued with investment losses and rising costs. Trading at about $9, Hartford's shares have now fallen nearly 90 percent in the last year.

None of this could be laid at Wolin's feet. In fact, his rise at Hartford was meteoric. After an Ivy League and Oxford education, Wolin, like so many other Obama nominees, joined the Clinton administration, where he served in national security posts and ultimately as top lawyer for the Treasury Department.

After Clinton left office Wolin went to Hartford, where he started as general counsel and then moved to a position directly under CEO Ramani Ayer, running property and casualty, which is half the company's business and the half that was doing well.

Perhaps seeing the handwriting on the wall, Wolin jumped to the new Obama administration as soon as it opened its doors, working as a White House deputy counsel on economic policy until he was tapped for his current job, which still requires Senate confirmation.

Two things about Wolin are clear. First, he'll take a cut in pay. His salary and options package at Hartford was an expensive $4.5 million a year, although well below the CEO.

Second, he's likely to see a federal regulator as a way to cure the problems of the insurance industry. In 2003 while at Hartford, he lobbied for an optional federal charter, which would allow insurers to have a federal regulator rather than 50 state overseers the way they do now. "Clearly the insurance industry should have the same regulatory options as the banking industry," he told the House Committee on Financial Services at that time.

Does he still agree with that now that he's joined the other side? We'll have to wait and see.