LOS ANGELES, CA (Catholic Online) - The Federal Reserve has posted Bernanke's prepared speech on its Web site ahead of time. Fox Business News apparently obtained a copy and published excerpts on its Web site.

Bernanke, who is scheduled to testify on Europe to the House Committee on Government Oversight and Reform, says that weakness in the eurozone is beginning to have an impact on the U.S. economy.

"Financial strains in Europe have also shown through to our financial markets. During times when financial conditions in Europe were at their most turbulent, investors around the world retreated from riskier assets. In the United States, these pullbacks decreased stock prices increased the costs of issuing corporate debt, and reduced consumer and business confidence. In addition, U.S. financial institutions that were thought to have substantial exposures to Europe saw their stock prices fall and their credit spreads widen," Bernanke added.

 "The difficulties in the euro area have affected the U.S. economy," Bernanke says, according to prepared text of his remarks. "The European Union accounts for roughly one-fifth of U.S. exports of goods and services. Not surprisingly, U.S. exports to Europe over the past two years have underperformed our exports to the rest of the world. In addition, weaker demand from Europe has slowed growth in other economies, which has also lowered foreign demand for our products."

"U.S. financial firms and money market funds have had time to adjust their exposures and hedge their risks to some degree as the European situation has evolved, but the risks of contagion remain a concern for both these institutions and their supervisors and regulators," Bernanke says.

In particular, Bernanke warns of potential danger to the financial sector.

"The recent reduction in financial stresses in Europe is a welcome development for the United States, given the important trade and financial linkages connecting our economies. However, Europe's financial and economic situation remains difficult, and it is critical that the European leaders follow through on their policy commitments to ensure a lasting stabilization.

"Although progress has been made, more needs to be done," Bernanke says. He recommends strengthening the European banking and taking steps to boost the continents economy.

The newest speech is in contrast from a speech in February when he told a congressional panel that "Our basic conclusion is that direct exposure of U.S. banks to European sovereign debt is quite limited, particularly on the periphery."

The text of the speech can be read in its entirety on the Federal Reserve Web site.

© 2012, Catholic Online. Distributed by NEWS CONSORTIUM.