Fed cracks down on banks
The Federal Reserve has stepped up scrutiny of investment banks and their potential writedowns in the wake of the credit crunch
The central bank argues that if it is to act as the lender of last resort to
the securities firms, it should keep a closer eye on their financial condition.
Last week its staff were in Goldman Sachs, Morgan Stanley, Merrill Lynch and
Lehman Brothers’ offices to look at their lending and trading policies plus
their levels of capital.
The Fed‘s visits
follow hot on the heels of US Treasury Secretary, Henry Paulson’s proposals that
the central bank become the financial industry’s ‘risk czar’.