Banks Cut Emergency Borrowing From Federal Reserve

CHRISTOPHER S. RUGABER

WASHINGTON (AP) — Banks trimmed their borrowing from the Federal Reserve's emergency lending program over the past week, evidence that some credit problems are easing as the economy recovers.

The Fed said Thursday that commercial banks averaged $22.6 billion in daily borrowing over the week that ended Wednesday. That's down from $23.8 billion in the week ended Oct. 21, and much lower than $112 billion a year ago at the height of the financial crisis.

The identities of the financial institutions are not released. They pay just 0.50 percent in interest for the emergency, overnight loans.

The central bank's weekly balance sheet report also showed that the assets it took on last year when it bailed out investment bank Bear Stearns and insurer American International Group Inc. rose in value in the July-September quarter.

The Fed said its holdings of assets from Bear Stearns were valued at $26.3 billion as of Sept. 30, an increase of about $400 million from the previous quarter. Still, that's below the $29 billion in loans the Fed provided to help finance JPMorgan Chase & Co.'s purchase of Bear.