Fed's emergency lending finds scant interest

NEW YORK (Reuters) - The Fed offered another $50 billion in emergency bank funds on Thursday but received just over half that amount in bids, a sign that short-term funding pressures may be easing even as other credit strains linger.

Primary dealers submitted just $28.77 billion in bids for the Treasury securities auctioned, the Federal Reserve said. The auction is part of a program aimed at helping Wall Street, and is called the Term Securities Lending Facility (TSLF).

It is part of an effort to revive interbank lending, which has been crippled by a costly housing crisis and its knock-on effects on asset-backed bonds.

"It was a failed auction," said David Ader, Treasury market strategist at RBS Greenwich Capital Markets in Greenwich, Connecticut.

TSLF loans must be repaid within 28 days. Dealers can lend out the Treasuries in exchange for short-term cash loans in the $4.5 trillion U.S. repurchase market to help shore up damaged balance sheets.

"The results don't tell you that all is well with the world. I would not say the crisis is over," said Ader.

Indeed, a separate report from the Fed on Thursday showed the U.S. commercial paper market shrinking again, and at its weakest level in two years. Asset-backed commercial paper issuance declining sharply, by nearly $16 billion.

(Reporting by Chris Reese and Pedro da Costa; Editing by Jonathan Oatis)