Speaking to the House Financial Services Committee, Mr Bernanke said that plans to limit the central bank's regulatory powers to apply to only larger banks are misguided.
He stated that being responsible for regulating smaller banks as well allows the Fed to judge its monetary policy more accurately.
But he admitted that changes still need to take place within the Fed.
"We need to change our culture, our structure and our instructions to examiners and so on, to make sure that we do a better job next time," he said.
Earlier this week, Senate Banking Committee chairman Christopher Dodd outlined his proposals to change the structure of the Fed in his Financial Rules Bill.
Proposals included granting the regulator powers to break up large banks if they are judged to pose a "grave threat" to the health of the US economy.
By Claire Archer