Bernanke spoke before the Senate Banking Committee, one day after waging a defence of the Fed's actions before lawmakers in the House.

Last year's taxpayer-financed rescues of insurance giant American International Group and others outraged many ordinary Americans and some lawmakers.

"Why does the Fed deserve more authority" when it failed to spot the current financial crisis before it struck? wondered Senator Chris-topher Dodd (D-Conn), chairman of the committee.

High unemployment

Senator Richard Shelby (R-Ala) raised the same concerns about expanding the Fed's duties to police big financial companies, as envisioned by the Obama administration.

On the economy, high unemployment is "the most pressing issue" as the nation struggles to emerge from recession, Bernanke told the Senate panel. He also said the Fed is monitoring the troubled commercial real estate market, where defaults are rising.

Bernanke's innovative policies have been credited with helping avert a financial catastrophe last year. But critics worry about putting more taxpayer money at risk - and about leaving companies more inclined to take big gambles, confident the government will support them.

The Fed chief also argued against congressional proposals to let the Government Accountability Office, Congress' investigative arm, audit the central bank.

He says audits that delve into the Fed's interest-rate decisions could compromise its independence in setting interest-rate policies.

"You've argued for transparency and haven't delivered," huffed Senator Jim Bunning (R-Ky).

"You still resist fully opening your books. You are the one throwing away independence by acting as an arm of the Treasury."

Bernanke said he would work with Congress to release information about how taxpayer money is being used in the financial bailout. But he resisted the idea of providing more information about interest-rate policy.

"Where I'm resisting is monetary policy," Bernanke said.