As the Federal Reserve Board prepares more moves to rescue the financial sector, the central bank's balance sheet grew 8.8% during the past week, to $2.1 trillion.
The Fed's policymaking committee said Wednesday that the balance sheet would grow in the coming months to accommodate an additional $750 billion of mortgage-backed securities purchases from Fannie Mae and Freddie Mac. The central bank also doubled its commitment to purchase debt from the government-sponsored enterprises, to $200 billion.
Reserves held at the Fed by financial institutions grew 23.4% in the past week, to $780.3 billion.
The Fed's Term Asset-Backed Securities Loan Facility will inject up to $1 trillion into consumer lending sectors. The central bank said Thursday that it is expanding the collateral it will accept under the program to include asset-backed securities backed by mortgage servicing advances, loans or leases related to business equipment, vehicle fleet leases and floor-plan loans.
Total lending through the Fed's discount window rose less than 1% this week, to $135.3 billion.
Traditional borrowing by commercial banks fell 2.2%, to $64 billion, and there was $1 million of loans to unhealthy banks. Investment bank borrowing grew 2.6%, to $20.1 billion.
The Fed said it had extended more than $43.6 billion by Wednesday through the discount window to support American International Group Inc. The central bank has also established a limited-liability corporation through the Federal Reserve Bank of New York to help the insurance giant. Loans there were valued at $18.5 billion.
Lending against asset-backed commercial paper held by money market mutual funds grew 11.7%, to $7.6 billion. The Fed has yet to make loans to another limited-liability corporation that will buy unsecured assets held by money markets.
Most of the discount window loans — $80.1 billion — will mature within 15 days. Another $43.6 billion will come due in one to five years, and $11.6 billion will be repaid in 16 to 90 days. The final $55 million will mature within 91 days to one year.
The Fed also said it had purchased $240.7 billion of commercial paper by Wednesday.
The New York Fed said it purchased $13.1 billion of mortgage-backed securities from Freddie, $11.7 billion from Fannie Mae and $3.4 billion from the Government National Mortgage Association. Total purchases fell 54% from a week earlier.