The Federal Reserve is considering revealing more supervisory information, as public disclosure was an important part of the success of last year's bank stress tests, Fed Chairman Ben Bernanke said on Thursday.

The Fed and other bank regulators last year conducted stress tests on the 19 largest U.S. financial firms and disclosed the results, a controversial decision even inside the central bank. The concern was that weaker banks might be harmed by public disclosure of the results.

Traditionally, the view has been that banks are more willing to cooperate with supervisors if they know the findings will be confidential.

Some observers warned last year that public disclosure of the results might backfire, Bernanke told the Federal Reserve Bank of Chicago's annual bank structure and competition conference.

In fact, the stress test exercise helped reduce uncertainty about losses banks were facing, encouraging private capital back into the banks, he said.

The public disclosure was an important reason for its success, he said.

In proper context, more information about the status of both the individual banks and of the banking system as a whole should be confidence-enhancing, Bernanke said. We will continue to examine options for increasing the information that supervisors make public.

While Bernanke wants to lead the Fed in more transparent direction, the central bank has tried to draw a line on letting in too much light on its emergency lending activities and monetary policy. The Senate is expected to vote on a regulatory overhaul bill amendment on Thursday that would subject the Fed to broader Congressional audits.

The 2009 stress tests were a unique exercise in that they took a horizontal approach and tested how the banks would fare under uniform assumptions of economic conditions and loss rates.

Last year's stress assessment was a one-time event in the sense that circumstances may not again call for a simultaneous evaluation of institutions holding two-thirds of the banking systems assets, Bernanke said.

But, he added, the Fed is increasing its use of cross-firm horizontal examinations.

Fed Governor Daniel Tarullo and Kansas City Federal Reserve Bank President Thomas Hoenig have said bank regulators should consider conducting routine, publicly disclosed stress tests.

The Fed is still monitoring credit losses and earnings at the 19 stress-tested institutions to compare the outcomes with the supervisory estimates made a year ago under the more adverse scenario, he said.

It is not possible to say precisely at this point whether the assessed banks are performing better or worse than estimated, he said.

One objective of the stress tests -- speeding up the return to a better lending environment -- has not yet occurred, Bernanke said.

While economic activity has continued to strengthen, he said, bank lending continues to contract and terms and conditions remain tight, Bernanke said. He said loan losses at regional and community institutions are likely to remain elevated this year.

But he said there are reasons for optimism, as bank attitudes toward lending may be shifting.

The Fed has been taking steps to ensure that its supervisory actions do not inadvertently impede sound lending, he said.

Federal reserve Ben Bernanke