Banks Borrow More From Emergency Fed Loan Program

Banks boosted borrowing from the Federal Reserve's emergency lending facility over the past week, but cut back on other programs intended to ease the financial crisis. The results offered a mixed picture of credit conditions.

The Fed on Thursday said banks averaged $32.7 billion in daily borrowing over the week that ended Wednesday. That was up from nearly $30 billion in the week ending Aug. 26.

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

Banks, however, drew fewer longer-term loans from one of programs the Fed established to ease the financial crisis. Demand for these loans fell by nearly $9 billion from last week.

Companies also trimmed their use of another program aimed at increasing the availability of short-term financing crucial for paying salaries and supplies. The Fed's net holding of "commercial" paper averaged $48.2 billion, a decrease of $3.9 billion from the previous week.

Separately, investors' appetite edged down this month for a government program designed to spark lending to consumers and businesses at lower rates.

The Federal Reserve Bank of New York said investors requested $6.5 billion worth of loans. That tally is down from $6.9 billion requested in August.

Investors use the money to buy securities backed by auto and student loans, credit cards, business equipment and other things. In the first phase of the program, called the Term Asset-Backed Securities Loan Facility, or TALF, $200 billion worth of loans will be made available, but only a fraction of that has been requested since its start up in March.

The Fed's weekly report also showed the Fed increased its purchases of mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae. They averaged $624.4 billion over the past week, down $107 million from the previous week. The goal of the program is to drive down more rates.