Federal Reserve officials played good cop/bad cop Thursday, offering up very different versions of the central bank's relationship with investment banks and other denizens of Wall Street. What are financial titans to take away from it all?

Speaking to Congress, vice chairman Donald Kohn urged tough talk and more comprehensive regulations on Thursday to forestall the next financial crisis. But in an interview, Jeffrey Lacker, the president of the Federal Reserve Bank of Richmond, said the Fed itself encouraged banks' risky behavior.

Kohn said banks failed to identify, measure and understand the risks to their balance sheets from instruments like mortgage-backed securities, despite early warnings by the Fed before the credit market turmoil unfolded last summer.

The remedies outlined in his prepared remarks dealt largely with new rules and regulations meant to strengthen how firms control their overall exposure to risk.

To Kohn, the current financial crisis was caused by "a sense of overconfidence among many bankers" who did not "fully consider the potential for those good times to end."

To ensure level heads the next time around, Kohn outlined plans to stiffen regulatory controls and enhance the rules that govern the Fed's banking examiners. He concluded by calling for the Fed to "send strong supervisory messages" with "more force and frequency."

At the same time, however, Lacker said that he thinks bankers knew exactly how deep in the ocean they had gotten. They just figured—correctly as it turned out—that the Fed would be there with a life preserver, he said.

"In times of financial crisis, the understandable central bank imperative is to alleviate the stress," Lacker said in prepared remarks to a conference in London. But the Fed's own studies show that when banks know it will intervene, they "do not self-protect, and thus leave themselves more susceptible to runs."

Banks, after all, need risk to generate profit, and usually the bigger the risks—a high-interest loan to a subprime borrower, for instance—the greater the reward. When the Fed intervenes in a bank failure, he added, lenders just go deeper and deeper the next time around—regardless of tough talk from Washington.

Lacker said the Fed's interference in some types of banking crisis "interferes with market discipline and distorts market prices," making these incidents more frequent.

Interference can be justified during an irrational run on the bank caused by panic, Lacker said, but becomes risky when the Fed intervenes during a crisis caused by a fundamental problem, like rising mortgage defaults that raised questions about the soundness of mortgage-backed securities.

Fed critics saw a moral hazard in the Fed's $29 billion rescue loan to Bear Stearns, and its active role in supporting a takeover of the troubled bank by J.P. Morgan Chase.

The actions may have ensured the soundness of the banking system at the nadir of the financial crisis this spring. But the Fed's role as lifesaver may have shifted the calculations that banks make when taking on risks.

In a sign of how the Bear incident has turned the Fed into a protective parent, banks are approaching the central bank looking for help "like you helped with Bear," Lacker told the Wall Street Journal's Greg Ip on Thursday.