UNDER-FIRE FED DEFENDS ITS ROLE AS KEY PROTECTOR

       Federal Reserve chairman Ben Bernanke on Thursday told lawmakers that protecting consumers of fincancial services is "vitally important", while omitting prior criticism of an Obama administration proposal to shift such powers from the Fed to a new agency.
       "It is vitally important that consumers be protected from unfair and deceptive practices in their financial dealings," Bernanke said in testimony to the House Financial Services Committee.
       "Strong consumer protection" helps preserve savings and promote confidence in financial firms and markets, he said.
       Bernanke did not discuss the proposal for a separate agency in the testimony, after saying in July that there would be disadvantages to creating one.
       That may soften a clash with Representative Barney Frank, the panel's chairman, who said at a hearing that the Consumer Financial Protection Agency must be created because the Fed and other bank regency, Frank said.
       Frank, a Massachusetts Democrat, released a "report card" on September 23 that he said demonstrated the Fed's "poor record" in "using the tools provided by Congress to protect consumers from abusive financial-industry practices".
       The 55-year-old Fed chief previously testified on potential changes to financial regulation in July, when he said there would be disadvantages to creating a consumer financial-protection agency.
       Rules created by the Fed in recent years "benefited form the supervisory and research capabilities" of the central bank, Bernanke said in July.
       Representative Mel Watt, a North Carolina Democrat, noted the length of comments on consumer issues in the Fed chief's prepared statement, telling Bernanke that "five sentences" was not enough. "It's just not a good message to send," said Watt, who chairs a subcommittee on US monetary policy.
       Bernanke did not respond to Watt's criticism. In a July-22 Senate hearing, the Fed chairman said consumer protection should be added to the Federal Rreserve Act as a formal policy goal along with low inflation and full employment.
       Answering questions from lawmakers, Bernanke said he does not see an "immediate risk" to the US dollar's status as the world's main reserve currency.
       Al the same time, US leaders must "take the appropriate steps to manage our fiscal position and keep in flation low", he said.