Banks: Plans to Seek Secret Emergency Funding

So in a free market it is justifiable to keep some “potentially situations” secret!?!? Hmmhh.
Secret from whom?

“The main case for an exception would be if disclosure could panic investors and lead to fears for a bank’s solvency, the regulator said.” Investors in the U.K. have all the right to panic.

Under certain circumstances, immediate disclosure would still be required.”
These “certain circumstances” will occur when it is too late to panic!
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The City watchdog has laid out plans to allow banks to tap the Bank of England for emergency funding without informing the market, in a move which might avoid a repeat of the run on the bank which led to the collapse of Northern Rock.

Under the European Union’s market abuse directive, regulated firms have to disclose price sensitive information. However, the Financial Services Authority yesterday said there were potentially situations where banks would be allowed to keep it secret if they had applied to the Bank.

The main case for an exception would be if disclosure could panic investors and lead to fears for a bank’s solvency, the regulator said. The FSA laid out a series of proposals in a consultation document. It invited industry groups to respond by September 30.

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Food additives ‘could be as damaging as lead in petrol’

Artificial food colours are set to be removed from hundreds of products after a team of university researchers warned they were doing as much damage to children’s brains as lead in petrol.

Academics at Southampton University, who carried out an official study into seven additives for the Food Standards Agency (FSA), said children’s intelligence was being significantly damaged by E-numbers. After receiving the advice last month, officials at the FSA have advised their directors to call for the food industry to remove six additives named in the study by the end of next year.

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Federal Reserve staff move into offices of investment banks to monitor activities

The US Federal Reserve has sent staff into some of Wall Street’s biggest firms and its New York branch is gathering evidence on key traders’ activities as America’s central bank raises its scrutiny of risk to an unprecedented level.

Fed staff have set up shop in Goldman Sachs, Morgan Stanley, Lehman Brothers, Merrill Lynch, and Bear Stearns to monitor their financial condition just days after Henry Paulson, the US Treasury Secretary, proposed that the Fed become the financial industry’s “risk czar”.

This is the first time in more than a decade that the Fed has put staff in securities firms and is a response, in part, to its decision to extend to investment banks the “discount window” of cheap loans traditionally offered only to the commercial banks. The Fed argues that if it is to act as lender of last resort to the securities firms, it should keep a closer eye on their activities.

The move comes as the central bank’s New York branch separately compiles a list of names and numbers of key traders in specific, esoteric securities such as auction rate preferred securities. These obscure instruments can be traded only at auctions and demand for them has virtually evaporated in recent weeks.

A senior US mutual fund executive, whom the Fed has approached, said: “They are looking in every corner to understand every esoteric financial product – who its traders are, who holds the most, whether its market is liquid and how great the losses could be. They are approaching people like me to find the key players in particular securities and then contacting them to find out the details. I have never heard of that being done before.”

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