Federal Reserve Chairman Ben Bernanke assured Friday the Fed is watching the economy and is ready to act as necessary to keep financial markets stable. Speaking at an economic symposium in Jackson Hole, Wyoming, Bernanke reassured investors after first acknowledging the problems in the U.S. economy.

Ben Bernanke pointed out the housing downturn has been "sharp" and has taken its toll on the U.S. economic growth. The fate of subprime borrowers who struggle with increased rates has indeed caused widespread effects in the credit markets. The speech is apparently a response to the sharp criticism and concern of investors regarding the August 7th Fed policy meeting, which appeared to sidestep and not fully acknowledge or take seriously the market turmoil.

Now, most investors feel reassured to some extent, as the Fed acknowledged clearly that there are serious problems with the economy and it's keeping a watch to minimize their impact. Bernanke was ambiguous with respect to the possible cutting of the Fed funds rate and has also stated the government will not to bail out investors and lenders "from the consequences of their financial decisions" (to loan out to subprime borrowers).

Also, president Bush spoke in Washington about the troubles in the U.S. economy. He announced steps Friday to help homeowners struggling to make their mortgage payments, but reinforced the policy of not subsidizing bad financial decisions by the lenders.

"The government's got a role to play, but it is limited," Bush said at the White House. "A federal bailout of lenders would only encourage a recurrence of the problem."

Similarly, "It is not the responsibility of the Federal Reserve — nor would it be appropriate — to protect lenders and investors from the consequences of their financial decisions," Bernanke said in Wyoming. "But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy."

CNN has published Federal Reserve Chairman Ben Bernanke's speech.