Ben Bernanke and other regulators are updating Congress about their efforts to carry out the biggest overhaul of the nation's financial rules since the Great Depression.
In prepared testimony to the Senate Banking Committee on Thursday, Bernanke said the Fed will unveil new regulations this summer that would protect the U.S. economy from another meltdown of the nation's largest banks and financial companies.
Congress directed the Fed to write the rules when it passed last year's financial regulatory overhaul. The law aims to prevent another financial crisis like the one in 2008 that plunged the economy deeper into recession.
The rules will require big banks and others, such as Wall Street firms, hedge funds and insurance companies, whose failure could endanger the economy, to be subject to more strict requirements for the amount of capital and cash they must have on hand to cushion against potential losses if another financial crisis were to strike.
"Our goal is to produce a well-integrated set of rules that meaningfully reduces the probability of failure of our largest, most complex financial firms, and that minimizes the losses to the financial system and the economy if such a firm should fail," Bernanke said in the testimony.
The Fed will allow the public, banks and other interested parties to comment on the proposed regulations before implementing then in January 2012.
On the international front, Bernanke said regulators in the United States and in other countries are trying to make sure that big banks and other major financial companies are regulated in a consistent manner. That's important to maintaining "a level international playing field," Bernanke said.
Regulators are scrambling to implement hundreds of new rules, many required to be completed before the law's one-year anniversary on July 21.
Besides Bernanke, other regulators testifying include Neal Wolin, deputy secretary of the Treasury Department, and the chiefs of the Securities and Exchange Commission and the Federal Deposit Insurance Corp.
The law also created the Financial Stability Oversight Council, which is headed by Treasury Secretary Timothy Geithner, and is responsible for keeping watch over the entire financial system. The council includes regulators from the Fed, the SEC and the FDIC, and is preparing a report on its efforts to monitor risky practices.