Federal Reserve Chairman Ben Bernanke urged community banks to operate prudently, but not to let fear drive lending decisions. Community banks are generally banks with less than $1 billion in capital. Bernanke said he understood that Washington was sending small banks mixed signals. On the one hand it was important to continue lending, while on the other it was important to have a strong capital position. Bernanke said the Fed had no option other than to rescue large financial firms. He said the Fed would pay close attention to bank pay and bonus practices going forward. He said the Fed was pleased, so far, with its new credit easing policies. He only made a brief mention of the Fed's plan to purchase $300 billion of longer-term Treasury securities.

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