Benanke said that, in general, the government should directly intervene in the markets only in "exceptional circumstances." Now, he said, is one of those times.
"The failure of a major financial institution at a time when financial markets are already quite fragile poses too great a threat to financial and economic stability to be ignored. In such cases, intervention is necessary to protect the public interest."
Later in the day, his economic partner, Treasury Secretary Henry Paulson, also spoke.
"There is no single action the federal government can take to end the financial market turmoil and the economic downturn," he said. "In these extraordinary times, we must instead focus on developing the most effective combination of our tools to further stabilize our financial system and speed the process of recovery."
Do you have more information about this topic? If so, please click here to contact the editors of ABC News.
Quotes delayed 15 minutes for NASDAQ. 20 minutes for NYSE and AMEX. Market Data provided by Interactive Data. Terms & Conditions.
Powered and implemented by Interactive Data Managed Solutions
