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Bernanke concerned about weak job market

By Jennifer Liberto, senior writer


WASHINGTON (CNNMoney.com) -- Federal Reserve chairman Ben Bernanke told Congress on Wednesday that government action has helped start an economic recovery, but that he's worried about the state of the job market.

Bernanke also changed his stance and said he'd be willing to consider supporting some legislation that's pending before Congress that would make the Fed more accountable.

In testimony about monetary policy before the House Financial Services Committee, Bernanke noted that the recession continues to abate, but not when it comes to the job market, which "has been hit especially hard," he said.

"The job market remains quite weak, with the unemployment rate near 10 percent and job openings scarce," Bernanke said.

The Fed chairman said he's particularly worried about the long-term impact on workers skills and wages and the increasing incidence of long-term unemployment.

"Indeed, more than 40 percent of the unemployed have been out of work six months or more, nearly double the share of a year ago," he said.

Bernanke also said that he expects inflation to remain in check for some time, as oil prices have flattened out and housing costs have risen very slowly, thanks to high vacancy rates.

"According to most measures, longer-term inflation expectations have remained relatively stable," he said.

Over the past year, Bernanke has faced a mixed reception whenever he's appeared on Capitol Hill. Lawmakers credit him for pulling the economy out of the greatest recession since the Great Depression. But they also blame him for missing signals of the recession and for overlooking consumer protections.

However, the Senate voted overwhelmingly in January to confirm him for a second term.

Before Bernanke spoke, several Republican lawmakers said they particularly wanted to ask the Fed chairman about why the job market remains weak, even though Congress passed a massive $700 billion stimulus package last year.

House Financial Services Chairman Barney Frank, D-Mass., noted that after the stimulus package passed, fewer jobs were lost.

"It is possible to debate what is the best way to do the stimulus, but no sensible human being can deny that the stimulus had a positive effect," Frank said.

Frank asked Bernanke, specifically, whether stimulus helped stem job losses and Bernanke answered "Yes.""I think most economists would agree that the stimulus created jobs, relative to the baseline," Bernanke said.

Surprising endorsement

Bernanke also said he is prepared to support pendinglegislation authorizing Congress' Government Accountability Office to audit "the operational integrity, collateral policies, use of third-party contractors, accounting, financial reporting, and internal controls of these special credit and liquidity facilities."

Previously, Bernanke has fought any move by Congress to audit the Fed. But his new support is for a limited audit that would not venture into monetary policy.

He also said he now supports revealing the names of firms who got emergency cheap Fed loans during the financial crisis, "after an appropriate delay." The Fed has, in the past, fought such revelations.

But he drew the line at making immediately available the names of banks coming to the discount window on a short-term basis, saying it could undermine confidence.

-- CNN senior producer Scott Spoerry contributed to this report To top of page

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