Federal Reserve Chairman Ben S. Bernanke told lawmakers today that his agency's actions had helped avoid making the recession worse, though conceded that they could have done more.
The Fed's moves "contributed substantially to the improvement in financial conditions and to what now appear to be the beginnings of a turnaround in both the U.S. and foreign economies," he said during testimony before the Senate Banking Committee at his confirmation hearing for a second term.
Senate Banking Committee Chairman Christopher Dodd (D-Conn.) endorsed giving Bernanke a second term but said he remains "concerned about the weaknesses of the Federal Reserve system." And noted he is pushing for legislation to take away some of its regulatory powers and would make changes to the structure of the Fed's regional banks.
In response to questions from committee members of both parties, Bernanke conceded that the Fed failed in some of its oversight of the actions of some of the large bank holding companies.
He told Sen. Richard Shelby (R-Ala.), the panel's top Republican, that "there have been failures all through the system."
But Shelby pushed him harder and Bernanke said: "Did we do everything we could? Absolutely not."
But Bernanke said the Fed's failures shouldn't mean that Congress should take away any of the Fed's powers.
"If you fight a battle and lose a battle, does that mean you never use the army again?" Bernanke said.
He also said that if lawmakers approved amendments allowing Congress to audit the Fed's decisions on monetary policy it would negatively impact the market's confidence in the Fed's ability to make decisions without respect to short-term political pressures.
Though Bernanke is expected to be confirmed, Sen. Bernard Sanders (I-Vt.) has said he will place a hold on the nomination because Sanders said recent economic policies haven't done enough to help the middle class.
