Several hedge funds with assets of more than $4 billion (£2 billion) were on the brink of collapse last night or had halted withdrawals, despite moves by the US Federal Reserve this week to ease America’s deteriorating credit crisis with a $200 billion collateral lending facility.

The potential closure of six funds came as a leading private equity executive, who declined to be named, said that such funds were “snapping like twigs”, with one failing every day.

Yesterday Patti Cook, Freddie Mac’s chief business officer, predicted that the Federal Reserve’s $200 billion bond lending facility this week would fail to solve the long-term problem of Wall Street’s deepening credit crisis.

The funds’ predicament – seven funds have been frozen this month – was seen as evidence that the initiative by America’s central bank to allow lenders to swap their risky mortgage-backed bonds for safer Treasury debt, will be of help only in the short term. Those fears hit the dollar and New York equity markets, with the greenback falling to a new low against the euro and sterling, as the European currency hit $1.55 for the first time.

The Dow Jones industrial average, after a rally of more than 400 points on Tuesday, ran out of steam as dealers worried that the Fed’s lending package would not reverse Wall Street’s liquidity crisis. At the close, the Dow was off 46.61 at 12,110.02.

Drake Management, a New York money manager, wrote yesterday to investors in its $3 billion Global Opportunities Fund, warning them that it was considering closing the fund. The fund, which lost 25 per cent last year, has already blocked investors from withdrawing their cash.

In its letter Drake, which manages $13 billion of assets, said that it may have to wind down the fund “in an attempt to maintain and maximise value for investors during this period of severe market downturn and contraction of liquidity”.

Drake is also understood to be considering whether to close two other hedge funds, the Drake Low Volatility fund and the Drake Absolute Return, both of which lost almost a sixth of their value last year.

The Drake money manager was founded by the former BlackRock executives Anthony Faillace and Steve Luttrell in 2001.

Separately, GO Capital Asset Management, an Amsterdam investment group, said that it had frozen its $881 million Global Opportunities hedge fund, preventing investors from withdrawing their capital. About half the fund’s investors have already asked to withdraw their investment.

Mr Faillace and Mr Luttrell told investors that the closure of their fund was one option but that they were also considering an arrangement whereby investors could choose whether to be repaid over the next 18 months or have their capital rolled over into a new fund.

ING, the Dutch bank, said that it had frozen two investment trusts in New Zealand that were highly exposed to mortgage-backed bonds, blaming the global credit crunch. ING said that the two funds held assets worth €275 million between them.

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