Federal Reserve Chairman Ben Bernanke said it should be possible to create a housing finance system without institutions like the government-sponsored mortgage finance agencies Fannie Mae and Freddie Mac that could destabilize the broad financial system.

There are a variety of organizational forms that might replace Fannie Mae and Freddie Mac that could likely provide mortgage credit without the systemic risks associated with these institutions in the past, he said in a letter to Rep. Marcy Kaptur that was released on Friday.

(Reporting by Mark Felsenthal; Editing by James Dalgleish)