Bernanke back on Capitol Hill -- and hot seat

Federal Reserve Chairman Ben S. Bernanke on Wednesday suggested that protecting users of financial products be formally made part of the central bank’s mission, as he sought to head off a congressional assault on the Fed’s consumer protection powers.

In his second day of testimony on monetary policy, Bernanke told the Senate Banking Committee that the Fed should not be stripped of its role protecting consumers from unsafe credit cards, mortgages and other financial products. The Obama administration and congressional Democrats want to do just that, creating a new agency to oversee the safety of consumer financial products.

Bernanke acknowledged that the Fed was “not quick enough, and we were not aggressive enough to address consumer issues earlier in this decade,” but argued that “we have the capacity, we have the ability, we have the expertise, the range of abilities and the complementarity with our other activities to be effective when we are working in that direction.”

To ingrain that mission, Bernanke suggested that the Fed’s congressional mandate -- to maintain stable prices and full employment -- be formally expanded to include protecting consumers. That would be a rare role by the standards of central banks around the world.

Bernanke also suggested the Fed chairman could be required to report to Congress on the Fed’s consumer role just as he currently does on monetary policy.