Banks Borrow Less From Emergency Fed Program

DANIEL WAGNER

WASHINGTON (AP) — Banks borrowed slightly less from the Federal Reserve's emergency lending program over the past week, and reduced their use of other credit programs designed to ease the financial crisis.

The Fed said Thursday that commercial banks averaged $20.8 billion in daily borrowing over the week that ended Wednesday. That's down $1.81 billion from the week that ended Nov. 5, and far less than the $95.38 billion they borrowed a year ago at the height of the credit crisis.

The drop in borrowing followed a slight increase last week — the first since Sept. 2.

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

Banks also cut their use of a separate program intended to boost the availability of short-term financing crucial for business operations like payroll and supplies. Loss of "commercial paper" financing was a central part of last year's financial crisis.

Under the program, the Fed's holdings of commercial paper averaged $14.4 billion for the week, a drop of $1.25 billion from the previous week. At its peak in late January, the Fed had almost $350 billion of commercial paper.