Jeannine Aversa, THE ASSOCIATED PRESS

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WASHINGTON - Commercial banks borrowed slightly more, while investment firms drew less over the past week from the U.S. Federal Reserve's emergency lending program.

The Fed report, released Friday, showed commercial banks averaged $86.6 billion in daily borrowing over the week ending Wednesday. That was up from $86.3 billion in average daily borrowing logged over the week that ended Dec. 24.

Investment firms drew $38.5 billion over the past week. That compared with an average of $45.7 billion the previous week. This category includes any loans that were made to the U.S.-and London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Merrill Lynch.

The Fed report also showed that its net holdings of "commercial paper" averaged $332.4 billion over the week ending Wednesday, an increase of $6.6 billion from the previous week. Under the first-of-its-kind program started Oct. 27, the Fed is buying commercial paper - the crucial short-term debt that companies use to pay everyday expenses. The Fed has said about $1.3 trillion worth of commercial paper would qualify.

Squeezed banks and investment firms are borrowing from the Fed because they can't get money elsewhere. Investors have cut them off, having shifted their money into safer Treasury securities. Financial institutions are hoarding whatever cash they have, rather than lending it to each other or customers. The lockup in lending has contributed to the recession that began in December 2007.

Investment houses in March were given similar emergency-loan privileges as commercial banks after a run on Bear Stearns pushed what was the nation's fifth-largest investment bank to the brink of bankruptcy and into a takeover by JPMorgan Chase.

The identities of commercial banks and investment houses that borrow are not released. Commercial banks and investment companies now pay just 0.50 per cent in interest for the emergency loans.

Critics worry the Fed's actions have put billions of taxpayers' dollars at risk.

The Fed's balance sheet has ballooned to $2.25 trillion, from just under $900 billion in September, reflecting the central bank's many unconventional efforts - various programs to lend or buy debt - to mend the financial system and jolt the economy out of recession.

The report also showed that insurance giant American International Group's loan from the Fed averaged $38.9 billion for the week ending Dec. 31. That was down by $1.09 billion from the prior week's average.