Federal Reserve Chairman Ben Bernanke stood before the Senate Banking Committee today and detailed our economic woes, sending the markets and exchange traded funds (ETFs) moving sharply back and forth.

Among the “highlights” of his testimony, reports The Associated Press:

• Rising prices for food and energy are raising the risk of inflation, and the situation delivers a big challenge as the Fed tries to find the best course for keeping the economy on track.
• The economy’s problems, such as falling home values and rising unemployment, are making people feel less like spending. This will hinder economic growth.
• The economy will grow “appreciably below its trend rate” for the rest of this year, because of housing weakness, energy prices and tight credit conditions.

Treasury Secretary Henry Paulson outlined his rescue plan for Fannie Mae and Freddie Mac, and said that if the government does give them financial backing, it will be under conditions that protect the U.S. taxpayer. The two companies combined hold or guarantee more than $5 trillion in mortgages.

Bernanke will continue his testimony tomorrow.

Tags: Energy, Federal Reserve, Financial, Real Estate, Retail