The two mortgage giants, which hold or guarantee more than 5 trillion dollars in mortgages, are adequately capitalized, Bernanke said to the House Financial Services Committee.
"However, the weakness in market confidence, this is having real effects as their stock prices fall, (and) it's difficult for them to raise capital," said the central bank chief.
He noted that the best solution is to keep Fannie and Freddie "in their current form" as opposed to having the government take them over, adding it is also vital for Congress to boost regulatory oversight on the two companies.
Bernanke also said the loss of confidence could prompt higher rates on bonds of the government-sponsored, shareholder-owned firms, and accordingly increase their borrowing costs.
"As I said yesterday, I think the housing market is really the central element of this crisis," Bernanke said. "And anything we can do to strengthen the housing market, to strengthen mortgage finance would be beneficial."
