Fed carrying out covert liquidity tests - report

The Federal Reserve is subjecting the biggest investment banks to stringent liquidity tests, say reports.

The Financial Times, a newspaper, reported on Monday that the Fed was carrying out the tests to avoid another of Wall Street's finest collapsing as Bear Stearns, the fifth-largest investment bank, did back in March.

The Fed and the investment banks did not confirm the story, but bankers said that over the past few months the central bank had asked them to test their capability to withstand