JEANNINE AVERSAWASHINGTON (AP) ¿ U.S. banks borrowed slightly less from the Federal Reserve's emergency lending program over the past week, a sign credit stresses are easing. The Fed, in a report issued Thursday, said commercial banks averaged $18.74 billion in daily borrowing over the week that ended Wednesday. That was down from $18.75 billion the previous week. As financial conditions have improved, banks scaled back their use of the program. They borrowed $110 billion at the height of the credit crisis last year, when banks were having grave troubles getting loans from the private market. Banks pay interest of just 0.50 percent on the emergency loans. The identities of the banks aren't released. As another sign of improvement, banks and other institutions have stopped using a separate "commercial paper" program that was created to boost the availability of short-term financing crucial for paying salaries and supplies. At its peak in January, the Fed held almost $350 billion worth of commercial paper. Banks also have been cutting back on short-term loans drawn from the Fed's "term auction credit" program. Those loans averaged $75.9 billion over the past week, down sharply from $450 billion in early January 2009. Even with such reductions, the Fed's balance sheet is still $2.2 trillion, which is more than double before the crisis struck.
In addition to its lending programs, the Fed has taken other steps to bolster the economy. Under one such program, the Fed is on track to buy $1.25 trillion in mortgage securities from Fannie Mae and Freddie Mac by the end of March. The Fed has bought $909.6 billion so far, according to Thursday's report. That program is one of the reasons why the Fed's balance sheet has remained bloated. That program is aimed at driving down mortgage rates and shoring up the housing market. Although mortgage rates had fallen, they've creeped up in the last four weeks. The average rate on a 30-year mortgage averaged 5.14 percent this week, up from 5.05 percent last week, mortgage company Freddie Mac reported Thursday.