The head of the US Federal Reserve has partially opposed president Barack Obama's new rules to regulate financial firms.

Legislation unveiled earlier this week by the Obama administration suggested that the central bank would supervise only the biggest banks in the event of a possible failure.

The Federal Reserve would be limited to supervising banks with more than $US50 billion in assets.

Because the role of the US Federal Reserve is at the heart of the proposed legislation, the Federal Reserve chairman Ben Bernanke has come out to say he wants more control over smaller banks as well.

Mr Bernanke, who during the financial crisis was accused of not seeing it coming, warned that there needs to be a change in culture and structure in all financial institutions to make sure everyone does a better job.

Speaking to the House Financial Services Committee in Washington, he responded to questions about the Fed's poor record in forecasting the global financial crisis by saying: "So there were mistakes and problems throughout the system. Other regulators and the Federal Reserve, private sector and even Congress made mistakes in this crisis. We have been doing a lot of soul searching and a lot of changes."

He warned the Fed should not be stripped back on its responsibilities and said he was concerned by the proposals to make the Fed a regulator only of the biggest banks.

He said: It makes us essentially the too-big-to-fail regulator. We don't want that responsibility. We want to have a connection to Main Street as well as to Wall Street."