Federal Reserve Chairman Ben Bernanke said on Thursday that subprime mortgage losses could hit $100 billion and threaten consumer spending, but he sought to reassure lawmakers that the central bank was working quickly to strengthen lending regulations.

The credit losses associated with subprime have come to light and they are fairly significant, Bernanke told the Senate Banking Committee in a second day of testimony on the Fed's twice-yearly economic report.

Some estimates are in the order of between $50 billion and $100 billion of losses associated with subprime credit problems, he said, referring to a segment of the mortgage market that caters to borrowers with shaky credit.

Bernanke said that the most reliable indicators show U.S. home prices have not declined nationally and that the housing slump had so far not led U.S. consumers to cut back on spending.

He said, however, that if prices did drop, consumers might trim spending by as much as 9 cents for each dollar of wealth lost.

As a result of the weaker-than-expected housing sector, the Fed has lowered its growth forecasts for this year and next, but the U.S. central bank believes the drag should ease over time.

Bernanke outlined steps the Fed has taken or plans to take to ensure that the subprime problems do not recur, but sharp questions from members of the committee showed some lawmakers think the Fed was not acting swiftly enough as foreclosure rates soar.

He testified that the central bank was progressing as fast as it responsibly could.

In testimony before lawmakers in the House of Representatives on Wednesday, Bernanke had said that licensing mortgage brokers could be a good idea and he promised to institute new rules on mortgage loans within six months.

The Fed chief also faced pointed questioning over China's currency policy as U.S. lawmakers argue that China keeps the value of its yuan currency artificially low to gain an edge for its producers in international markets.

The committee's chairman, Democratic Sen. Christopher Dodd of Connecticut, said the panel planned to vote on a bill that could push the U.S. Treasury to declare China a currency manipulator before lawmakers leave Washington for an August recess.

Bernanke said he shared the frustration over China's slow progress in allowing the yuan to appreciate, but added that exchange rates alone would not solve an imbalance that has seen the U.S. trade gap with China balloon to new record highs.

The weak currency distorts China's economy in favor of exports, Bernanke said, but he added that the yuan regime was not a subsidy in the legal sense of the word.

Last December, Bernanke caused a stir when he wrote in a speech that the undervalued yuan provided an effective subsidy to Chinese exporters. He stood by that statement under questioning from Congress in February.