Bernanke, the Federal Reserve chairman, made the comment in testimony Thursday before the Financial Crisis Inquiry Commission, the congressionally appointed panel that is writing the definitive, federally sanctioned history of the financial crisis.

Bernanke appeared at a panel probing the 2008 collapse of the giant securities firm Lehman Brothers and the problems tied to so-called too-big-to-fail banks. But asked by FCIC Chairman Phil Angelides to size up the Fed’s biggest failing during the crisis, Bernanke pointed to the Fed’s failure as a regulator to restrict mortgage loans made at punitive terms to borrowers with limited ability to repay.

Bernanke also said the Fed had no capacity to prevent Lehman Brothers from collapsing two years ago. He said he “regrets” having failed to communicate that lack of options in the immediate aftermath of the biggest-ever U.S. bankruptcy filing.

He said his testimony before Congress on Sept. 23-24, 2008, which indicated Lehman was permitted to fail because market players had had time to make other arrangements, inadvertently fed “the myth we had a way of saving Lehman.”

Bernanke said he equivocated because he judged at the time that explaining that the Fed couldn’t save Lehman “could have reduced confidence in the system even further,” possibly leading to runs on other financial institutions.

Bernanke appeared before Congress at the height of the financial crisis. He testified a week after Lehman’s failure the morning of Sept. 15 and the government’s rescue of AIG  the next day, and just days before Washington Mutual collapsed in the biggest-ever U.S. bank failure. Within a week, another giant bank, Wachovia, was rescued in a deal that would give way to a private sale to Wells Fargo .

As bad as September 2008 was, Bernanke feared he could have made it worse by frankly admitting the Fed had no way of preventing a giant securities firm from unraveling. But he said in retrospect that caution has handed unwarranted ammunition to a large group that contends policymakers let Lehman fail to save face politically.

“I regret not being more straightforward there,” Bernanke said. He said the apparent change in his explanation of Lehman’s failure over the past two years “has supported the mistaken impression we could have done more.”

Former Lehman chief Dick Fuld made just this case in his testimony Wednesday, claiming the Fed could have pulled any number of levers to keep Lehman going but chose not to because of poor information and political pressure.

Bernanke became the third Fed official to reject that claim, saying an analysis by the Federal Reserve Bank of New York showed the firm didn’t have enough collateral to meet all its claims and open for business Monday morning. Accordingly, policymakers pushed the firm to pull the plug Sunday night.

“I never wavered in view we should do everything possible to save Lehman,” Bernanke said. “If we lent to Lehman, we would have saddled taxpayer with tens of billions of dollars in losses.”