Bernanke has tried to separate the function of ensuring the smooth running of markets and setting monetary policy as a whole but finds himself increasingly hamstrung.
Recently he spelled out the dilemma. "It is not the responsibility of the Federal Reserve to protect lenders and investors from the consequences of their decisions. But developments in financial markets can have broad economic effects felt by many outside the market and the Federal Reserve must take them into account."
In other words, he doesn't want to bail out the banks, but he has made no secret of his willingness to cut rates decisively if the man on the street starts to suffer.
As for this week's likely move, according to Howard Wheeldon of BCG Partners: "It's a hard one to call. With no official Fed meeting scheduled for February and the next not due until March 18, even if the Fed decides to err on the side of caution and leave rates alone, the appearance of another emergency cut does appear likely some time over the next three weeks.
"A half-point cut would take the US benchmark Fed funds rate down to 3pc. However, combined with last week's large cut, the $150bn Bush fiscal plan and continued central bank liquidity support, the opposing theory would be to suggest that as the Fed may have no consensus for another cut it will prefer to wait."
There is much at stake. Yesterday's dismal housing numbers laid bare the weakness in the US economy, but inflation still poses a threat, and if the Fed cuts too far, that could create far worse problems in the long run.
"They are getting themselves deeper into a hole," said Robert Eisenbeis, former research boss at the Federal Reserve Bank of Atlanta, who argues that the 175 basis points of cuts from the Fed since August poses clear "moral hazard".
"It makes people believe that there will never be a downside," he said.
Greenspan is still held responsible by some for the current economic woes faced by the US for doing exactly the same thing at the time of the dotcom collapse, cutting interest rates aggressively and creating conditions where cheap money fuelled the sub-prime crisis.
"The Fed really doesn't want to bail out investors," said James Hamilton, professor of economics at the University of California. "There will be lots more blood on the floor before this is done."
Telegraph UK