Firing the opening shot in a likely battle with Wall Street, the federal regulator who's overseeing the trading of oil contracts asked Congress on Thursday for broad powers to regulate the exotic private contracts that are thought to contribute to rising oil prices and the global financial crisis.

Testifying before the Senate Agriculture Committee, Commodity Futures Trading Commission Chairman Gary Gensler told lawmakers that he needs broad authority to bring all derivatives contracts under regulatory supervision. Derivatives involve bets that derive their value based on future prices of some underlying asset, such as oil contracts, interest rates, currency or even bonds and other forms of credit.

The new commission chief also called for an additional set of rules for swaps dealers, big global financial institutions that dominate activity in these markets. These rules would force players on both sides of a transaction in these markets to set aside cash to cover potential losses.

The global financial system nearly collapsed during the last four months of 2008 after the Federal Reserve and the Treasury Department rescued insurance giant American International Group. AIG was rescued because it had issued trillions of dollars in insurance-like private derivatives contracts and had insufficient reserves to cover its losses.

"The current financial crisis has taught us that the derivatives trading activities of a single firm can threaten the entire financial system and that all such firms should be subject to robust federal regulation," Gensler said.

However, private-sector players such as farming giant Cargill Inc. warned of unintended consequences from forcing companies to post more cash on trades. The proposed changes will cause "a significant drain on working capital at a time when capital is highly constrained and credit is in short supply," said David Dines, the president of risk management for Cargill.

Gensler's proposals seek to curb excessive speculation in these complex markets. They'd standardize many contracts and have them clear on an exchange, much like regulated products on the New York Mercantile Exchange.

If Congress grants the commission's wishes, big Wall Street players such as Goldman Sachs, Morgan Stanley, JP Morgan Chase and others would be subject to capital requirements, new business-conduct rules and more extensive reporting and recordkeeping requirements.

On the job officially for eight days, Gensler saw his confirmation held up in the Senate for months until the Obama administration publicly came out with a proposal to regulate derivatives. Some Democratic senators, concerned that massive amounts of bets in unregulated markets are partly behind rising oil prices, wanted proof that the administration was serious about taking on Wall Street.

"We can't continue to do what we've been doing," said Sen. Tom Harkin, D-Iowa, the chairman of the Senate Agriculture Committee, adding that he hoped to pass a derivatives-regulation bill by fall.

A former Goldman Sachs partner, Gensler was a controversial pick by President Barack Obama because while Gensler was a top Treasury official in the Clinton administration, he pushed for deregulation in these markets that led to the excesses that brought the globe to the brink of financial catastrophe last year.

Gensler has acknowledged that Clinton-era deregulation went too far. He told Senate appropriators earlier this week that he thought that these unregulated markets had helped push oil prices to record highs last summer and might be doing so again.

"I do think that, looking back, looking back in that period . . . when oil prices peaked in last summer, that a contributing factor — not the only factor, because there were many, many factors, but a contributing factor — to the commodity asset bubble was index investors and other financial investors," he said Tuesday.

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