WASHINGTON (Bloomberg) — Federal Reserve chairman Ben Bernanke said regulators urged Lehman Brothers Holdings Inc. to fix "significant deficiencies" in its available liquidity before the securities firm's failure in 2008.

The results of stress tests "showed significant deficiencies in available liquidity, which the management was strongly urged to correct," Bernanke said in testimony prepared for a House Financial Services Committee hearing today. The Fed posted the remarks on its website. Lehman's response, including raising $6 billion in capital in June 2008 and improvements in liquidity the next month, "proved inadequate," Bernanke said.

He reiterated comments from last month that the central bank was unaware Lehman used off-balance-sheet transactions to downplay its leverage. The central bank started to monitor Lehman and other bond dealers after allowing them to borrow from the central bank starting in March 2008. The two Fed employees placed on site at Lehman to gather information "had no authority to regulate Lehman's disclosures, capital, risk management or other business activities," said Bernanke.