WASHINGTON — Total lending through the Federal Reserve Board's discount window dropped 8.6% from a week earlier, to $288.7 billion, in part because borrowing by commercial banks fell 6.6%, to $92.6 billion, the central bank said Thursday.
For the second week in a row, the Fed said it lent money to weak financial institutions. The central bank distributed $118 million in the form of secondary credit, an 11.3% jump from a week earlier.
The Fed does not publicly name the banks that borrow from the discount window.
Discount window lending against asset-backed commercial paper held by money market mutual funds fell 19.1%, to $61.9 billion. Loans to investment banks were down 17.7%, to $46.6 billion.
Other Fed liquidity programs saw an increase, however. The Fed's purchases of commercial paper increased 5.2% during the past week, to $270.3 billion on Wednesday.
The Fed and the Treasury Department launched a new bailout for American International Group Inc. this month, and the central bank said lending to the insurance giant grew 4.6%, to $87.4 billion.
Most of the discount window loans — $160.1 billion — will mature within 15 days. Another $66.9 billion will come due in one to five years and $56.3 billion will be repaid in 16 to 90 days. The remaining $5.4 billion matures within 91 days to one year.
For the first time in weeks, the Fed's balance sheet shrunk, shedding 1.2%, to $2.18 trillion.
