Short Summary of FED Chairman Bernanke’s testimonial

• Data suggest economic contraction may be slowing, but the economy is hardly out of the woods. 

"A number of factors are likely to continue to weigh on consumer spending, among them the weak labor market, the declines in equity and housing wealth that households have experienced over the past two years, and still-tight credit conditions," Bernanke said.

• Bernanke still anticipates the economy to recover by the end of this year or around Q3.

"recovery will only gradually gain momentum and that economic slack will diminish slowly. In particular, businesses are likely to be cautious about hiring and the unemployment rate is likely to rise for a time, even after economic growth resumes.” – Cautions Bernanke.

• On the issue of tarp, the FED is planning to release a list of banks in good shape and able to repay TARP.
• On inflation, Bernanke does not see any upside risk in the near term.  He does not see wage pressures currently.
• On unwinding quantitative easing, the chief stated that he believes the Fed will not have difficulty cutting back on balance sheet expansion. 
• He sees the FED’s new ability to pay interest rate on reserves as a key tool when unwinding and also simply closing the new lending programs when appropriate. 

Source: CNN Money & Barron's