WASHINGTON — Bankers are making more mortgages but still drastically decreasing other types of consumer lending, according to a Treasury Department survey of the largest financial firms receiving government rescue funds.

In its second lending survey of Troubled Asset Relief Program recipients, the Treasury said mortgage origination, including refinancings, rose significantly in February from January. The increase was driven largely by falling interest rates. Of the 21 firms surveyed, 16 said originations rose, and two said they declined. Home equity line lending increased by 18% on average.

Commercial and industrial lending weakened across all categories. The average survey participant decreased its C&I loan total by 14% and its origination of such loans by 13%.

For auto, student and other consumer loans, the average bank decreased originations by 47%, the Treasury said. Credit card lending also declined, with the average loan balance decreasing 1% and new accounts decreasing 3%.

In its analysis, the Treasury said the decrease in lending was driven by a lack of consumer confidence and low demand.

Though the report was started in an attempt to show bankers were using Tarp funds for further lending, some observes said the report will give critics more ammunition.

"On a political front, it's going to be perceived bad that banks are not using funds properly," said Paul Miller, managing director of Friedman, Billings, Ramsey & Co. Inc.

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