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Chairman of the Federal Reserve Ben Bernanke spoke today before the Senate Committee on Banking, Housing and Urban Affairs to discuss the Reserve's Semiannual Monetary Policy Report.

Chairman of the committee Christopher Dodd (D-CT) said that the country's economic situation is “very serious, if not perilous.” He said that growth is slowing, inflation is rising, and consumer confidence is “plummeting.” He also expressed great concern with regard to the housing crisis saying that this year will be the first time since the Great Depression that national home prices have dropped in consecutive years. He said that foreclosures were up 57% since since one year ago causing over 2 million Americans to lose their homes. Dodd said that his committee drafted the FHA modernization bill which was passed in Congress and appropriated almost $200 million to facilitate foreclosure prevention. Dodd also praised Congress and the administration for reaching a compromise on the recently approved stimulus package but said that their still needs to be more done.

Ranking member of the committee Richard Shelby (R-AL) spoke briefly expressing concern over the high price of oil and gold. He also cited a recent Labor Department report revealing that wholesale price inflation hit a 26-year high in January.

Chairman of the Federal Reserve Ben Bernanke addressed the committee to present the Reserve's Monetary Policy Report. He told the committee that the economy has taken a downturn in many areas including job growth, GDP growth, and the housing markets. The crisis in housing markets and mortgage rates were emphasized during the hearing. He said that the housing market “reversed course” in 2007 after having done well in previous years. But he said that on the positive side, the non-financial business sector remained strong showing high profit and liquidity. He said that the high price of oil is largely responsible for consumer price inflation and that inflation can be curbed if food and oil prices are stabilized. Bernanke admitted that the current economic situation is worse than it was 7 years ago after being asked by Chairman Dodd. When asked about the baning situation, Bernanke told the committee that he expect some smaller banks to “fail”—especially those heavily invested in real estate where the prices have fallen. He said that larger banks are maintaining strong capital ratios but said that would like to see them obtain more capital in order to keep offering loans which he called the “lifeblood” of the economy. Bernanke also predicted a rise in unemployment to about 5.3% from the current figure of 4.9%. But he said that he is “quite confident” in the future of the economy calling it “productive” and “resilient.”