WASHINGTON -- Banks trimmed their borrowing from the Federal Reserve's emergency lending facility over the past week, and cut back their use of other programs designed to ease the financial crisis.

The reductions indicate that banks are having an easier time obtaining credit and don't have to rely mostly on the Fed for short-term loans.

Federal Reserve Chairman Ben Bernanke and his colleagues on Wednesday said "financial markets have improved further in recent weeks" and the economy "is leveling out," a more upbeat assessment than they gave after their previous meeting in June.

In a report issued Thursday, the Fed said commercial banks averaged $33.9 billion in daily borrowing over the week that ended Wednesday. That was down from $35.1 billion in the week ended Aug. 5.

The identities of the financial institutions are not released. They pay just 0.50 percent in interest for the emergency loans.

The weekly lending report also showed the Fed's net holdings of "commercial paper" averaged $60 billion, a decrease of $4.7 billion from the previous week. That's an encouraging sign that investors' appetite for such help from the Fed has eased.

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.

At its peak in late January, the Fed held almost $350 billion of commercial paper. It has said that about $1.3 trillion would qualify.

The report also showed the Fed made little change to its purchases of mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. They averaged $542.8 billion over the past week, nearly unchanged from the previous week. The goal of the program, which started on Jan. 5, is to drive down mortgage rates and help the housing market.

The Fed has pledged to purchase up to $1.25 trillion of the securities, along with $200 billion of debt issued by Fannie and Freddie.

Mortgage rates rose this week. Rates on 30-year home loans averaged 5.29 percent, up from 5.22 percent last week, Freddie Mac reported Thursday. Still, the 30-year fixed-rate mortgage averaged 6.52 percent a year ago.

Investment houses in March 2008 were given similar emergency-loan privileges as commercial banks after a run on Bear Stearns pushed what was America's fifth-largest investment bank to the brink of bankruptcy and into a takeover by JPMorgan Chase & Co.

But investment firms didn't draw any loans from the Fed for the 13th straight week. The last time they drew any money — just $482 million — was in the week that ended May 13.

Critics worry the Fed's actions have put billions of taxpayers' dollars at risk. Some of 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 $41.2 billion for the week ending Wednesday, down from $41.6 billion last week.

The central bank's balance sheet stands at about $1.99 trillion, up from nearly $1.98 trillion last week. 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 lift the country out of recession.