"I urge you to provide in statute the authority to regulate these products to enhance investor protection and ensure the operation of fair and orderly markets," Cox told the Senate Banking Committee in prepared testimony. The debt insurance is known as credit default swaps.

Cox said such regulation should be part of a regulatory overhaul of nation's financial system, something Congress is not likely to tackle until next year.

Prices for this insurance soared in the aftermath of the Lehman Brothers' bankruptcy and pushed American International Group, a major insurer of this kind of corporate debt, into peril. The Federal Reserve last week provided a $85 billion emergency loan to AIG, which was on the brink of bankruptcy, saying the company's failure would have wreaked havoc on the economy.

The soaring prices of the debt insurance indicated that investors were getting even more afraid of taking risk.