WASHINGTON — Securities and Exchange Commission Chairman Christopher Cox said Thursday the government must start to build an "exit strategy" that includes taxpayer protections for its massive financial rescue plan.

With the bailout program barely two months old, some federal regulators and legislators are beginning to press the Bush administration to work on a strategy for eventually unwinding the unprecedented government intervention. Sheila Bair, chairman of the Federal Deposit Insurance Corp., made the same point as Cox earlier this week, and lawmakers are asking the administration to explain its end game.

"Having got the government so deeply involved in so many private financial institutions, I believe we must now begin to build a framework for our exit strategy from this myriad of new programs and commitments," Cox said in a speech to a gathering of Women in Housing and Finance and the Exchequer Club, two Washington groups.

The SEC isn't directly involved in the government's multitrillion-dollar bailout efforts but oversees brokerage and securities operations of the big banks that have received billions in taxpayer funds.

The government's exit strategy "should be consistent with the fundamental policy objectives of the interventions themselves, and also with the protection of taxpayers," Cox said.

"Even though we are on the front end of what are multiyear government investments, guarantees, and conservatorships, it is vital to understand where we are headed, or else we will never arrive at the intended destination of returning these institutions to fully private ownership and financing," he said.

Cox, a conservative Republican known for his free-market views, was named SEC chief by President Bush in 2005 after serving 17 years in Congress as a congressman from California. In September, as the administration rolled out its bailout plan, the SEC took an unprecedented stride into the market by imposing a temporary emergency ban on all short-selling _ the method on Wall Street for profiting when a stock drops _ in the shares of hundreds of financial companies.

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The financial rescue program _ including taking major stakes worth tens of billions in big U.S. banks _ could hurt the SEC's enforcement and regulatory efforts by breaking down the customary arm's length relationship between the government and the business that it regulates, Cox said Thursday.

"When the government becomes both referee and player, the game changes rather dramatically for every other participant," he said.

In several cases this year, the Treasury and the Federal Reserve acted as negotiators in merger and takeover transactions _ such as JPMorgan Chase & Co.'s acquisition of investment bank Bear Stearns in March. Even in those episodes, the SEC's role remained to regulate the transactions, Cox said.

"We took pains to stay at arm's length," he said, but the agency's close cooperation with the other federal regulators made for a potentially awkward situation.

Cox has urged Congress to act to rein in the massive global market for credit default swaps, complex investments partly blamed for the global financial crisis. He told reporters after his speech that the SEC planned action soon regarding new central clearinghouses that are expected to be set up by private groups for transactions involving the swaps.

Credit default swaps are commonly used contracts to insure against the default of financial instruments such as bonds and corporate debt. But they also are bought and sold as bets against bond defaults. The clearinghouses should help provide crucial information on the parties involved in the complex and unregulated products, bringing needed transparency to a $60 trillion worldwide market and possibly reducing financial risks.

The government guarantees and investments extended under the rescue program now include $250 billion set aside for the Treasury to buy stock in U.S. banks, hundreds of billions in aid to giant financial institutions, and hundreds more billions in special lending facilities to banks.

The potential cost for the government's efforts to contain the financial crisis now approaches $7 trillion and is climbing. That figure includes large commitments of funds by the government to guarantee certain debts, although those funds may never actually be spent. But still, the overall figure reflects the huge liabilities the government is taking on in response to the meltdown.

The amount of taxpayer money that has been committed in the past few months "is far more, even in inflation-adjusted dollars, than we spent fighting all of World War II," Cox said in his speech.