Bernanke says Fed could not save Lehman

Federal Reserve Chairman Ben Bernanke has testified the central bank had no option but to let Lehman Brothers fail despite knowing it would have "catastrophic" aftershocks.

Bernanke, speaking at the Financial Crisis Inquiry Commission hearing in Washington, says the Fed did not have other options, as it determined Lehman did not have enough collateral to support a loan from the central bank.

His view contrasts with former Lehman CEO Dick Fuld, who earlier testified the authorities could have saved the investment banking giant.

"I never at any time wavered in my view that we should do absolutely everything possible to prevent the failure of Lehman," Bernanke says.

However, he conceded his previous statements may have innocently "supported this myth" the central bank could have done more.

"This is my own fault, in a sense," he added. "I regret not being more straightforward there because clearly it has supported the mistaken impression that in fact we could have done something. We could not have done anything."

Bernanke He says if he had of publicly discussed his view Lehman had likely been insolvent, it may have reduced confidence further and led to increased pressure in markets.