"What it's going to do is burn down some of the institutions which are critical to us as a nation and as an economy to recover and create jobs," he warned.
The New Hampshire Republican's comments come as Democrats, including President Barack Obama, ramp up their populist economic rhetoric and policies.
The president, for instance, is set to meet with his "middle-class task force" Monday afternoon, and last week announced new restrictions on large financial institutions meant to separate their investment and commercial banking operations.
Sen. Jeff Merkley (Ore.), one of the prime Democratic opponents of Bernanke, characterized his opposition to the Fed's renomination as part of the president's populist shift, though Obama supports and nominated Bernanke for a second term.
"As we move from this year of rescuing Wall Street, we are now moving toward rebuilding the American economy that is not about profits on Wall Street but about success for families," Merkley said during an interview on CNBC. "This is about supporting the president's pivot from the year spent on Wall Street to his focus on American families."
Gregg warned of a slippery slope the populist focus could unleash.
"Where does that stop? Do we start disassembling Wal-Mart because they don't have unions?" Gregg asked, adding of Obama's new bank rules: "If it's a healthy bank, I don't want five or six people sitting in Washington deciding whether healthy institutions can continue to exist."