Federal Reserve Chairman Ben Bernanke learned from news reports four years ago that banks were manipulating a key British interest rate. But Bernanke said Tuesday that the Fed was powerless to do anything beyond contacting British authorities.

The London interbank offered rate, or LIBOR, rate, affects the interest on many loans. The process for setting LIBOR has come under scrutiny since Britain's Barclays bank admitted two weeks ago that it had submitted false information to keep the rate low.

Sen. Pat Toomey, R-Pa., pressed Bernanke on why regulators didn't address "systematic" problems that damaged the integrity of the rate.

"Why have we allowed it to go on the old way when we knew it was flawed?" Toomey asked.

"Because the Federal Reserve had no authority to change it," Bernanke replied.