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FSA sends out liquidity questionnaire to firms in light of credit crunch

The FSA has confirmed it has sent out liquidity questionnaires to banks and building societies asking for details of how they plan to fund future mortgage commitments following the Northern Rock crisis.

Industry experts previously warned in Money Marketing that the panic over Northern Rock could result in the Government placing limits on how much funding can come from the money markets.

Wave director of distribution and sales Mehrdad Yousefi told Money Marketing that he expected the Government to change the funding regime to stop a similar crisis in the future. He said that Government could detail how much and what type of funding can come from the capital markets.

A FSA spokesman confirmed that it wrote to banks and building societies in August and has since followed the first questionnaire up with another one to building societies earlier this month.

He pointed out that the questionnaire was not sent to the largest tier of banks and building societies as the FSA has daily communication with these firms.

He says that the questionnaire was aimed for the second tier of companies and asked questions such as what wholesale funding of theirs was due for repayment in the next five days.

It asked firms to give details of their current pipeline as well as how much funding they have from the capital markets.

The FSA spokesman said that this was obviously a response to the current market conditions.

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