While widely crediting with helping keep the Great Recession from becoming a second Great Depression, Bernanke faces enormous anger from both Congress and the public for bailing out Wall Street, while ordinary Americans are struggling under the crush of high unemployment, stagnant incomes and rising foreclosures.
If confirmed to a second, four-year term, Bernanke vowed to work with Congress to overhaul the nation's financial regulatory structure and to bring about stronger and more effective supervision, he told the Senate Banking Committee.
"It would be a tragedy if, after all the hardships that Americans have endured during the past two years, our nation failed to take the steps necessary to prevent a recurrence of a crisis of the magnitude we have recently confronted," Bernanke said in prepared testimony to the panel.
Despite all the criticism heaped on him about the bailouts and a move by one senator to block Bernanke's confirmation, it doesn't appear in doubt at this point.
Sen. Christopher Dodd, D-Conn., chairman of the panel, predicted Bernanke would win confirmation. "Under your leadership, the Fed has taken extraordinary actions to right the economy," said Dodd, who wants to limit the Fed's powers. "These efforts played, in my view, a very significant role in arresting the financial crisis."
Dodd and others drew a distinction between Bernanke's leadership and the operations of the Fed as an institution itself.
Efforts already have begun at the Fed to tighten oversight of banks and other financial firms. And the central bank is actively engaged in identifying and implementing improvements, Bernanke said.
"A financial crisis of the severity we have experienced must prompt financial institutions and regulators alike to undertake unsparing self-assessment of their past performance," the Fed chief said.
Bernanke, 55, has taken heat for failing to detect early signs of the housing collapse. Lax regulatory oversight by the Fed and others was blamed for contributing to the crisis.
At the same time, Bernanke argued that the Fed must remain "effective and independent" to make decisions that may be good for the economy but unpopular with politicians or the public. That was directed at a provision - passed by a House committee on Wednesday - that would subject the notoriously secretive Fed to congressional audits. Bernanke fears that could interfere with crucial decisions about interest rates.
Bernanke said the Fed stands ready - when the time is right - to reverse course and start boosting interest rates to prevent inflation from flaring up. As part of that process, the Fed would need to soak up an unprecedented amount of money - trillions of dollars - it poured into the economy during the crisis.
"We are confident that we have the necessary tools to do so," Bernanke said. He didn't say when the Fed would start raising rates, although private economists think that will happen late next year.
The central bank's forceful and aggressive actions prevented the devastating crisis from getting even worse, Bernanke said.
Drawing on lessons learned as a scholar of the Great Depression, Bernanke rolled out a slew of bold and unprecedented programs to help ease credit clogs and spur lending. He coordinated emergency relief actions with central banks overseas. He slashed a key lending rate to a record low near zero.
Those steps - along with a $787 billion stimulus package - eventually helped pull the country out of recession. The economy has now entered a fragile recovery.
Even so, it probably won't be strong enough to stop the unemployment rate - now at a 26-year high of 10.2 percent - from rising into 2010, Fed officials and private economists say. And that poses a threat to lawmakers in next year's congressional elections.
The biggest sore point with the public - and their representatives - was the government's bailout of Wall Street, even as ordinary Americans suffered. The multibillion-dollar bailouts of American International Group Inc. and other financial firms that continued to hand out huge bonuses sparked fury. They also fueled worries that the Fed's moves would encourage further reckless bets by companies.
In response to the bailouts, some lawmakers not only want to rein in the Fed, as Dodd would do, but also subject it to deeper scrutiny.
Sen. Bernie Sanders, an independent from Vermont, said he's so upset about the bailouts he plans to try to block Bernanke's nomination by putting a "hold" on it when it reaches the Senate floor. Essentially that means the Senate would need 60 votes to approve the nomination, rather than a simple majority. That could slow the approval process but is unlikely to derail it.
Treasury Secretary Timothy Geithner, in an interview on CNBC Thursday, said: "We're confident he'll be confirmed."
Geithner, who was chief of the Federal Reserve Bank of New York before taking the Treasury job, credited Bernanke with "enormous creativity and bravery" in confronting the financial crisis. "We're lucky to have him in the job," Geithner said.