In the wake of last weekend’s G7 finance ministers meeting that broached the subject of hedge fund oversight and regulation, Federal Reserve Chairman Ben Bernanke is throwing his weight squarely behind the reguskeptics.

Bernanke yesterday told the Senate Banking Committee the he “would be very reluctant to get involved in heavy-handed, direct regulation of hedge funds,” fearing that such a move would stifle innovation.

“One of their key characteristics is that they are very nimble,” Bernanke said. “That is good for the economy, because they help create liquidity in markets, they help to spread risks around more broadly, and a regulatory regime that inhibited that flexibility and nimbleness would eliminate a lot of the economic benefits.”

Bernanke’s concerns echo those of U.S Treasury Secretary Henry Paulson, who said after the close of the G7 meeting, “Market discipline, focusing on risk management of regulated counterparties, is the most effective way to address potential systemic risk concerns.”