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PRESS RELEASE


Federal Reserve Starting Hyperinflationary Bailout of British Banks

Oct. 24, 2007 (EIRNS)—On Oct. 12, the U.S. Federal Reserve Board of Governors agreed to extend Federal Reserve contingency lines of credit to two British banks—$10 billion to the Royal Bank of Scotland (RBS), and $20 billion to Barclays, two of Britain's Big 4 banks. The Federal Reserve would open these $30 billion facilities to the two banks, should the banks, in turn, need them to extend credit to their clients "in need of short-term liquidity to finance their holdings of securities and certain other assets," the Federal Reserve said in a letter to the banks.

With respect to the Royal Bank of Scotland, the Fed said that the coverable assets could include "residential and commercial mortgage loans and mortgage-backed securities, asset-backed securities, commercial paper and structured products." At the same time, the Fed lifted the limit on how much credit the RBS and Barclays could extend to their "affiliated broker-dealers," to $10 billion for RBS, and $20 billion for Barclays, matching the size of the contingency lines of credit that the Fed would extend to them. RBS' and Barclays' affiliated broker-dealers would be the vehicles, which would then extend the funds to the two banks' collapsing clients.

Thus, the U.S. Federal Reserve is preparing to extend a hyper-inflationary $30 billion to bail out the British banking system, and the Cayman Island- and London-headquartered hedge funds, which use the British financial system globally as a base of operations from which to destroy the banks of the United States. This would create a Weimar-style hyperinflation; the Fed's behavior approaches criminal.

With the Fed promising to backstop its actions, the Royal Bank of Scotland went into action: It announced Oct. 21, that it was deep in talks to take over the failed Cheyne Finance, a $6-7 billion Structured Investment Vehicle (SIV), which was set up and is controlled by the London-headquartered Cheyne Capital. This SIV was on the verge of a fire-sale of illiquid assets. Deloitte Touche, Cheyne Finance's accounting firm, received an extraordinary ruling by Britain's High Court last week, which allowed Deloitte Touche to declare the Cheyne Finance SIV to be "insolvent." Deloitte Touche, appointed as receiver, is now offering to sell Cheyne Finance to Royal Bank of Scotland.

Simultaneously, Barclays Bank is heavily involved with three deeply troubled SIVs, one of which, Solent, is headquartered in the Cayman Islands.

Thus, the Federal Reserve is openly caught desecrating the purpose of the U.S. banking system; it is creating hyperinflationary funds for multi-billion British speculative instruments which helped trigger the continuing global banking crisis.