Sept. 24 (Bloomberg) -- The Federal Reserve said it will shrink its emergency programs that auction loans to commercial banks and Treasury securities to bond dealers, citing “continued improvements” in financial markets.

The Term Auction Facility will sell $50 billion in 70-day funds next month, down from $75 billion in 84-day funds in September, with the auctions’ size and maturity decreasing more in November and December, the Fed said today in a statement in Washington. The Term Securities Lending Facility will shrink to $50 billion, and then $25 billion, from $75 billion.

The moves are a further curtailment of the emergency- funding programs created by the central bank to buttress financial companies and the economy. The Fed began reducing the TAF and TSLF auctions in July.

The Fed said it will evaluate whether to “maintain a TAF on a permanent basis” and put out for public comment a “range of possible structures for a permanent TAF.”

Under the TAF, a separate monthly sale of $75 billion in 28-day funds will be unchanged through January, the Fed said. The longer-term auctions will be reduced to $25 billion in November and December, eventually converting the auction schedule to a single cycle of 28-day funds from biweekly sales for different maturities, the Fed said.

“The schedules also take account of the possibility that market pressures could be heightened over year-end,” the Fed said today. “The Federal Reserve remains prepared to expand its liquidity operations more generally should financial market conditions deteriorate materially.”

Yesterday, after a two-day meeting in Washington, Fed policy makers committed to complete their $1.25 trillion in purchases of mortgage securities and extended the end-date of the program to March from December.

To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net.

Last Updated: September 24, 2009 10:04 EDT