Chairman Ben Bernanke said Friday that the Federal Reserve was left with few good options when it stepped in to shore up the largest U.S. financial institutions during the 2008 crisis.

Bernanke defended the central bank's actions to support insurance giant American International Group and help with the sale of investment bank Bear Stearns, during a speech to a New York conference examining the crisis.

While there were risks associated with that support, Bernanke said that the billions of dollars in loans the Fed provided were backed by adequate collateral and taxpayers did not lose money. And he noted that the Fed and other U.S. regulators are better positioned to deal with a crisis because Congress passed an overhaul of financial regulations in 2010.

"The Federal Reserve's responses to the failure or near failure of a number of systemically critical firms reflected the best of bad options, given the absence of a legal framework for winding down such firms in an orderly way in the midst of a crisis _ a framework we now have," Bernanke said.

Some have criticized the Fed for helping rescuing those institutions rather than letting them fail. They said the Fed sent a message: banks could expect the government to bail them out after taking extraordinary risks that threatened the larger financial system.

In his speech, Bernanke disputed this view. And he said the regulatory overhaul gave the Fed new powers to wind down those institutions without threatening the larger financial system.

Bernanke's speech didn't address the current state of the economy or the Fed's recent policy action to boost growth. But he did emphasize that the Fed's regulatory duties are just as important as that mission.

"Going forward, for the Federal Reserve as well as other central banks, the promotion of financial stability must be on equal footing with the management of monetary policy as the most critical policy priorities," Bernanke said.

After the speech, Bernanke was asked whether the Fed's low benchmark interest rate helped fuel the housing bubble. The question was directed at policies under former Chairman Alan Greenspan., who preceded Bernanke at the Fed.

Bernanke disagreed but said regulators must pay close attention to the financial system when interest rates are low. The comment was Bernanke's only reference to interest rate policies.

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AP Business Writer Christina Rexrode in New York contributed to this report.