Bernanke defends Fed, warts and all

WASHINGTON, Dec. 3 (UPI) -- U.S. Federal Reserve Chairman Ben Bernanke told Senate Banking Committee members in a partly contentious confirmation hearing the central bank made mistakes.

Bernanke told committee members the scope of the financial crisis surprised him.

"I did not anticipate a crisis of this magnitude," he said.

He also said: "In the area where we had responsibility, the bank holding companies, we should have done more. That is a mistake we won't make again."

Bernanke said the Fed was "slow" in policing the high risk mortgages that contributed to the housing bubble.

He also faced scathing criticism, The New York Times reported Thursday.

"In the face of rising home prices and risky mortgage underwriting, the Fed failed to act," Sen. Richard Shelby, R-Ala., said.

Sen. Jim Bunning, R-Ky., said he would "do everything I can to stop your nomination" for a second four-year term as Fed chairman.

Sen. Christopher Dodd, D-Conn., chairman of the committee, has criticized the Fed in the past, but said he would vote for Bernanke's re-appointment.

"Under your leadership, Mr. Chairman, the Federal Reserve has taken extraordinary actions to right the economy," he said.