The Federal Reserve Board said its purchases of commercial paper increased 67.9% from a week earlier, to more than $243.1 billion as of Wednesday.

The increase is evidence that the Fed's commercial paper facility remains popular. Interest in the discount window is declining. The Fed said lending through the window fell 6.2%, to $346.5 billion.

After several consecutive weeks of record highs, lending to commercial banks dropped nearly 2%, to $108.6 billion. Lending to investment banks continued to fall, plunging 9.8%, to $71.6 billion. There were no loans to weak financial institutions, and the remaining $9 million was issued to banks in rural or resort regions.

The majority of the loans — $186.1 billion — will mature within 15 days. Another $90.1 billion will come due within 16 to 90 days, and $61.4 billion will be repaid in one to five years.
Fed lending against asset-backed commercial paper held by money market mutual funds fell 11.4%, to $85.1 billion.

American International Group (AIG), which the Fed bailed out in September, has borrowed $81.2 billion against the $123 billion pledged by the central bank.

The Fed's balance sheet continued to grow to support the liquidity programs it is using to unclog funding markets. Total assets grew 5.3%, passing the $2 trillion mark Wednesday.

The central bank has been able to expand its balance sheet by paying higher interest on reserves, whose balance grew 18.2%, to $503.6 billion.


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