Aug. 12 (LPAC)--Britain's Financial Services Authority (FSA) has begun to audit London banks, the Sunday Telegraph reports today, in order to assess their exposure to the U.S. subprime mortgage crisis, and to highly leveraged corporate loans. On the other side of the Atlantic, the Securities and Exchange Commission (SEC) has taken similar action.

The Guardian reports that the FSA is "in constant touch with leading institutions" to assess the extent of their exposure to asset-backed securities. But, reluctant to face reality, the FSA, according to the Guardian, "is reasonably comfortable that the London markets are robust enough to withstand further volatility." Desite the use of "complicated financial instruments," which make it difficult to pinpoint exactly where the risk is, the FSA believes it is sufficiently dispersed to prevent the collapse of any "large-scale institution."