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WASHINGTON - Wall Street investment companies have reduced borrowing from the Federal Reserve's emergency lending program, a sign that credit problems may be easing a bit.

A Federal Reserve report Thursday said those firms averaged US$16.5 billion in daily borrowing over the past week. That compared with $18.6 billion the previous week. It marked the fifth week in a row where investment firms borrowed less from the central bank.

The program, which began March 17, is one of several unconventional actions the Fed has taken to help financial companies and the national economy overcome fallout from housing, credit and financial debacles.

After a run on Bear Stearns pushed the fifth-largest U.S. investment bank to the brink of bankruptcy in March, fears grew that others might be in jeopardy, given major stresses in credit and financial markets at that time.

Scrambling to avert a market meltdown, Fed Chairman Ben Bernanke and his colleagues - in the broadest use of the central bank's lending authority since the 1930s - agreed in March to temporarily let investment firms obtain emergency financing from the Fed, a privilege previously granted only to commercial banks.

The program, similar to one the Fed has long had for commercial banks, will continue for at least six months. It gives investment firms a place to go for overnight loans. Commercial banks and investment companies now pay 2.25 per cent in interest for the loans.

Banks - which had been stepping up their borrowing - showed demand for the Fed loans holding nearly steady. Banks averaged $11.7 in daily borrowing for the week ending May 7. That compared with $11.6 billion for the previous week. The identities of commercial banks and investment houses are not released.

Treasury Secretary Henry Paulson, in an interview Wednesday, said he believed the worst of the country's credit crisis may have passed. "There's progress," he said. "I think we're closer to the end of this" than to the beginning. Still, he added, financial markets are not yet back to normal.

As part of the effort to relieve credit strains, the Fed auctioned $28.77 billion in safe Treasury securities to investment firms on Thursday.

The auction - the seventh of its kind - drew bids less than $50 billion being made available. The reduction could be viewed as a sign of some improvement in credit conditions.

In exchange for the 28-day loan of Treasury securities, bidding firms can put up more risky investments, including certain shunned mortgage-backed securities and bonds backed by federally guaranteed student loans, as collateral.