However, Bernanke in his remarks did not detail any specific tightening of regulations, saying only that the Fed would hold hearings in coming weeks on the matter.

Bernanke said while it was likely that there would be further increases in mortgage delinquencies and foreclosures this year and in 2008, he did not believe this problem would be enough to derail the overall economy.

"We believe the effect of the troubles in the subprime sector on the broader housing market will be limited and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system," Bernanke said in his remarks, copies of which were distributed in Washington.

Bernanke's comments to a banking conference sponsored by the Federal Reserve Bank of Chicago marked his most extensive review of the troubles in the subprime market since the Fed and other banking regulators came under criticism from members of Congress.

Meanwhile, when the Fed governor was asked whether he saw banks taking on too much risk by financing private equity deals, he said: "There are some significant risks associated with the financing of private equity including bridge loans. ... We are looking at that."

Banks Loosened Standards

Senate Banking Committee Chairman Christopher Dodd said a "chronology of regulatory neglect" allowed the problems in the subprime market to go unchecked.

Banks and other lenders loosened their standards for making riskier mortgages during the five-year housing boom.

The problems in subprime mortgages - higher-priced home loans for people with weaker credit histories - have roiled financial markets in recent months and raised concerns about possible spillover effects to the larger economy.

But in his speech, Bernanke said that the "vast majority of mortgages, including even subprime mortgages, continue to perform well."

He said that past gains in home prices have left most homeowners with significant amounts of equity in their houses and the growth in jobs and incomes should allow most households to keep their financial obligations in a manageable range.