Investment firms drew just $482 million over the past week from the Fed program, down from an average of $643 million the previous week.
The identities of financial institutions are not released. They pay just 0.50 percent in interest for the emergency loans.
The report also showed that the Fed's net holdings of "commercial paper" averaged $166.9 billion over the week ending Wednesday, an increase of $2.2 billion from the previous week.
Commercial paper is the crucial short-term debt that companies use to pay everyday expenses, which the Fed began buying under the first-of-its-kind program on Oct. 27, a time of intensified credit problems. The central bank has said about $1.3 trillion worth of commercial paper would qualify.
The Fed also said its purchases of mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae averaged $384.1 billion over the past week, up $18.3 billion from the previous week. The goal of the program, which started on Jan. 5, is to help the crippled mortgage-finance and housing markets. Mortgage rates have dropped since the Fed announced the creation of the program late last year.
Rates on 30-year mortgages nudged up this week but are still well below last year's level. Average rates on 30-year, fixed-rate mortgages, the most popular loan among home buyers, rose to 4.86 percent, from 4.84 percent. A year ago, 30-year rates averaged 6.01 percent.
Squeezed banks and investment firms are borrowing from the Fed because they can't get money elsewhere. Investors have cut them off and shifted their money into safer Treasury securities. Financial institutions are hoarding much of their cash, rather than lending it to each other or customers. The lockup in lending has contributed to the recession, which is now the longest since World War II.
Investment houses in March 2008 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 & Co.
Critics worry the Fed's actions have put billions of taxpayers' dollars at risk. Bolstering those concerns, the assets the Fed took on last year when it bailed out Bear Stearns and insurer American International Group Inc. have dipped in value.
The report also said that credit provided to AIG averaged $45.7 billion for the week ending Wednesday, up slightly from the previous week.
The central bank's balance sheet now stands at $2.116 trillion, up from $2.041 trillion last week. However, the balance sheet has more than doubled since September, reflecting the Fed's many unconventional efforts - various programs to lend or buy debt - to mend the financial system and jolt the economy out of recession.
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