WASHINGTON — Borrowing through the Federal Reserve Board's discount window reached a new record for the fourth week in a row when lending increased 5.2%, to $430.9 billion on Wednesday.
Much of the increase was thanks to higher borrowing from traditional commercial banks. Loans to these firms nearly doubled to $98.1 billion as the credit crisis has deepened and institutions have grown wary of lending to each other.
The majority of the lending — $139.5 billion — was made against asset-backed commercial paper held by money market mutual funds. That is an 8.3% decrease from a week earlier.
Borrowing through the primary dealer credit facility also fell 16%, to $122.9 billion. The Fed established this tool in March to lend directly to investment banks. Those major standalone investment banks no longer exist on Wall Street, the facility helps Goldman Sachs and Morgan Stanley, which are now bank holding companies, and the investment bank units of commercial institutions.
The Fed also said it has distributed $70.3 billion to insurance giant American International Group Inc., which the central bank bailed out last month. That includes a portion of an $85 billion loan AIG received from the Fed as well as investment-grade, fixed income securities the central bank agreed to borrow from the company on Wednesday.
The Fed did not break down how its liquidity support of AIG was split between the $85 billion loan and the securities borrowing.
There were no loans to weak commercial banks and the remaining $33 million was issued as seasonal credit to institutions in rural or resort regions.
More than $212.5 billion of the loans will mature within 15 days and another $128.9 billion will come due between 16 and 90 days.
The Fed is also making longer term loans as demand for funds from the discount window grows. Nearly $70.3 billion will mature between one and five years and another $19.2 billion will be repaid in 90 days to one year.
The Fed's balance sheet also continues to grow to accommodate discount window lending. Total assets grew 6.3%, to $1.6 trillion on Wednesday.