Banks trim borrowing from Fed’s emergency loan program, sign financial conditions improving

Banks trim borrowing from emergency Fed loans

WASHINGTON — Banks trimmed borrowing from the Federal Reserve’s emergency loan program over the past week, adding to evidence that credit problems are easing.

Commercial banks averaged $14.6 billion in daily borrowing for the week that ended Wednesday, the Fed says. That was down from $14.8 billion in average borrowing for the previous week.

Banks have been scaling back their use of the Fed’s emergency “discount” loan window as financial conditions have improved. At the peak of the financial crisis in the fall of 2008, daily borrowing from the discount window reached $110 billion as banks found their normal sources of credit frozen.

Banks pay just 0.50 percent in interest on the emergency loans.