(p71) - Turning to the solvency concerns, she <Sandra Jaffee, Citicorp> stated that no industry is completely protected from risk of insolvency.
She conceded that banks have lent large amounts to underdeveloped countries and did acknowledge the existence of the Continental Illinois incident.
On the other hand, she noted, the Baldwin-United situation and the first quarter results of many insurers presented solvency problems of equal magnitude to those posed by banks.
Thus, she concluded, insolvencies are not the "special province of any industry."
She noted that there are safeguards, though, in both the banking and insurance industry and pointed to federal deposit insurance for banks and guaranty funds for insurance companies.
She stressed that when banks and insurance companies are in the same holding company system, the assets behind one phase of the business should not be used to back another phase of the business in the event of insolvency.