WASHINGTON — Federal Reserve Chairman Ben Bernanke says the central bank is considering tougher rules to crack down on abusive practices by mortgage lenders. But he says the economy should escape without significant harm from the problems in the subprime market.

Facing criticism from members of Congress about lax regulation, Bernanke said yesterday that the Fed was reviewing all of its options from bolstering disclosure requirements on what lenders must tell prospective borrowers to writing tougher rules to guard against fraud.

"We at the Federal Reserve will do all that we can to prevent fraud and abusive lending and to ensure that lenders employ sound underwriting practices and make effective disclosures to consumers," Bernanke told a banking conference in Chicago.

Bernanke said regulators needed to be sure that any rules they imposed did not stifle the market for legitimate loans.

"In deciding what actions to take, regulators must walk a fine line," he said. "We must do what we can to prevent abuses or bad practices, but at the same time we do not want to curtail responsible subprime lending or close off refinancing options that would be beneficial to borrowers."

He said that while it was likely there would be further increases in mortgage delinquencies and foreclosures this year and in 2008, he did not believe these problems would derail the overall economy.

Bernanke's comments represented his most extensive review of the troubles in the subprime market since the Fed and other banking regulators came under criticism from members of Congress earlier this year. The lawmakers said the regulators were not doing enough to halt abusive practices in the subprime market, which provides loans to people with weak credit histories.

Problems with subprime loans have roiled financial markets and raised concerns about possible spillover effects to the entire economy. One major worry was a potentially more severe downturn in housing if significant numbers of homes get dumped back on the market because borrowers cannot meet payments adjustable mortgage payments that are resetting at higher levels.

Senate Banking Committee Chairman Christopher Dodd, D-Conn., who earlier called the whole episode a "chronology of regulatory neglect," welcomed Bernanke's announcement of Fed hearings.

"It's past time for action," Dodd said in a statement, which urged the central bank to quickly promulgate tougher rules.

Sen. Charles Schumer, D-N.Y., who has introduced legislation to help homeowners avoid foreclosures, said Congress needed to act to deal with thousands of homeowners facing the threat of foreclosure.

"I hope Chairman Bernanke is right when he says that a slumping housing market will not affect the broader economy, but I would not bet the house on it," Schumer said.