Lawmakers, economists, housing bubble blogs and casual observers have been consistently frustrated with Fed Chairman Ben Bernanke's views on housing. Even as evidence of a severe housing downturn surfaced, Bernanke maintained his stance that the problems in were unlikely to spill over into the economy.

But it seems that Bernanke has been forced to change his tune.

In a report to Congress on Wednesday, he blamed the current economic slowdown on 'ongoing adjustment in the housing sector'. And while he says he is predicting moderate economic growth next year, he warned 'the ongoing housing correction might prove larger than anticipated', and cause 'spillovers onto consumer spending'.

Bernanke noted in his testimony that consumer spending has already softened over the last few months, and that evidence of housing problems spilling into the finance sector is evident.

'Conditions in the subprime mortgage sector have deteriorated significantly, reflecting mounting delinquency rates on adjustable-rate loans,' Bernanke said. 'In recent weeks, we have also seen increased concerns among investors about credit risk on some other types of financial instruments.'

The seriousness of the subprime mortgage mess is no longer debatable. Mass foreclosures are occurring across the nation as a result of defaulting subprime loans and adjusting ARMs.

Bernanke says he expects the devastation caused by foreclosures to 'get worse before it gets better', but stubbornly maintains that the problems are not causing a system-wide credit crunch.

Talk of subprime woes is expected to dominate Bernanke's testimony to Congress today. Lawmakers want to know why the Fed did not step in sooner to quell the obvious problems in lending.

In 2005, Bernanke stated, 'Our best defenses against potential problems in housing markets are vigilant lenders and banking regulators, together with perspective and good sense on the part of borrowers.'

Great words, but none of the three parties mentioned lived up to their end of the bargain. Lenders went crazy between 2004 and 2006, doling out more than $2.8 trillion in mortgage loans. Banking regulators did nothing to protect borrowers, who according to a recent survey, were apparently signing up for mortgages they did not understand.

Congress, however, does not seem willing to let the Fed pass the buck. Christopher Dodd, the Connecticut Democrat who chairs the Senate Banking Committee has been pushing for aggressive action on the part of the Fed.

'The law requires the Federal Reserve to write rules to protect home borrowers,' Dodd said in May.

So far though, very little action has been taken. Bernanke told Congress yesterday that the Fed is currently working with borrowers and lenders alike to make sure people can stay in their homes, and that several plans are being outlined to stop abusive lending practices in the future.

Some of the rules the Fed are considering adopting involve better disclosures to borrowers, more upfront mortgage advertising, stricter loan qualifications and federal licensing of mortgage brokers.