Tightening regulation of the credit default swaps market probably will be one of the first tasks on the congressional agenda in 2009.

Sam Leaman of Washington Analysis, Washington, makes that prediction in a new investment note covering the hearings the House and Senate agriculture committees are holding this week on the recent swaps market turmoil.

“The congressional agriculture committees are already at work on preparations for such regulation,” Leaman writes.

The 1999 rewrite of the Commodities Exchange Act explicitly exempted credit default swaps from government regulation, “but that won’t happen this time,” Leaman writes.

Since 1999, the credit default swaps market has “grown exponentially, and [its] $60 trillion value is of great concern to many in Congress,” Leaman writes.

In addition, he writes, “the failure of AIG largely due to credit default swaps increases the odds for insurance regulation as well, either as part of the massive regulatory overhaul of the financial sector or as a standalone measure.”

The International Swaps and Derivatives Association Inc., New York, has proposed setting up a clearinghouse for credit default swaps.

Setting up a clearinghouse might be a good first step, but it probably will not provide enough regulation to satisfy the congressional agriculture committees, Leaman writes.