Wall St. cuts back on use of Fed loans

WASHINGTON -- Wall Street companies sharply scaled back their borrowing from the Federal Reserve's emergency lending program over the past week while commercial banks boosted theirs slightly.

The report, released by the Fed on Thursday, offered mixed signals about credit conditions.

Investment firms averaged $1.7 billion in daily borrowing for the week ending Wednesday. That compared with $6.1 billion the previous week. The reduction suggested that the Wall Street firms are feeling less of a need to turn to the Fed for a quick source of cash, which is an encouraging sign.

The investment houses were given similar loan privileges to commercial banks in March after a run on Bear Stearns pushed the nation's fifth-largest investment bank to the brink of bankruptcy and raised fears that other Wall Street firms might be in jeopardy. The company was taken over by JPMorgan.

Banks, meanwhile, averaged $14.9 billion in daily borrowing for the week, compared with $14.7 billion the previous week. The pickup indicated that banks are still going to the Fed to help them overcome credit stresses.

The identities of commercial banks and investment houses are not released.

In the broadest use of the central bank's lending power since the 1930s, the Fed in March scrambled to avert a market meltdown by giving investment houses a place to go for emergency overnight loans.

Commercial banks and investment companies now pay 2.25 percent in interest for the loans.