SEC chief urges Congress to regulate credit swaps

WASHINGTON (Reuters) - The chairman of the Securities and Exchange Commission on Wednesday urged the U.S. Congress to act now to provide oversight of the fast growing $55 trillion credit default swap market.

The lack of regulation is a growing concern, SEC Chairman Christopher Cox said in opening remarks at an SEC conference to discuss securities disclosure issues.

Credit default swaps (CDS) are used to protect or insure against the risk that a borrower will default on debt, or to speculate on a borrower's credit quality.

However the swaps, used by banks, brokerages, insurance companies and others, have been widely blamed for contributing to the financial meltdown.

American International Group's (AIG.N) exposure to the CDS market was one of the reasons U.S. authorities rescued the insurer with a $85 billion loan.

"It's important for Congress to act now to provide oversight of the (credit default swap) market," Cox said.

Cox, along with policymakers and other regulators, have been calling for regulation of the opaque market. AIG's two recent chief executives, Martin Sullivan and Robert Willumstad, said on Tuesday that they would support regulation for the CDS market.

Bart Chilton, commissioner with the commodity futures regulator, also called for oversight. However Chilton said the Commodity Futures Trading Commission is the logical regulator as it oversees risk management transactions.

Cox has previously urged Congress to pass laws to regulate the over-the-counter market, but has never said the need was as urgent as he did on Wednesday.

(Reporting by Rachelle Younglai, editing by Gerald E. McCormick, Brad Dorfman)