The problem isn't their traditional business insuring municipal bonds; it's their once-buzzing business insuring structured products like mortgage-backed securities and collateralized debt obligations, which have plummeted in value in recent months, raising the prospect of massive claims payouts by the insurers.
Bair said regulators may determine that for a liquidation plan to work, a bank must separate traditional banking and insured deposits into subsidiaries set apart from volatile securities trading and securities underwriting.
The other unit would be responsible for MBIA's traditional business of insuring municipal bonds.
The federal government, which insures traditional company pensions, then takes over the defunct plan and pays retirees their benefits, up to statutory limits.
In American terms, the Texas-California model actually represents a moving away from traditional affirmative action, insuring a measure of diversity by offering help based on socioeconomic and not strictly racial grounds.
Some 4,800 people have received pension checks this year because they looked for their names on a Web site created by the Pension Benefit Guaranty Corporation, the federal agency that insures traditional pensions.
Last month the federal Pension Benefit Guaranty Corporation, which insures traditional defined benefit pensions, moved to take over the pension plan in a move intended to force Global Crossing to transfer the pension plan's remaining assets to Citizens.
Their examination of 19 virtual banks, all federally insured, and 10 traditional ones showed, for example, that online operations paid about a half-point more interest on six-month C.D.'s, and that 4 of the 19 required smaller minimum deposits than any of the ordinary banks.
The back story to the current crisis is the way traditional banks — banks with federally insured deposits, which are limited in the risks they're allowed to take and the amount of leverage they can take on — have been pushed aside by unregulated financial players.
Results showed that for this specific type of HMO (the independent practice association or IPA), length of stay is shorter than for patients insured under a traditional program.
And traditional defined-benefit pension plans are insured by the Pension Benefit Guaranty Corporation.
