Bernanke also told the Senate Banking Committee that the one-two punch of housing and credit crises has greatly strained the economy. And he forecast sluggish growth in the near term. Bernanke also noted that hiring has slowed and that people are likely to tighten their belts further because of high energy prices and plummeting home values.

"The outlook for the economy has worsened in recent months, and the downside risks to growth have increased," Bernanke said. "To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so."

Bernanke also told senators that the "virtual shutdown" of the market for subprime mortgages given to people with blemished credit histories or low incomes — and a reluctance by skittish lenders to make "jumbo" home loans exceeding $417,000 — have aggravated problems in the housing market.

Gee. Maybe there should have been some regulation of the housing industry BEFORE all those subprime mortgages were dished out like candy!