The Obama administration's plan to crack down on the $450 trillion over-the-counter derivatives market would require financial regulators to supervise the dealers of the private contracts.

Banking regulators would oversee derivatives dealers that are banks while securities and futures regulators would supervise other dealers, according to legislative language sent to Congress on Tuesday.

Key congressional members have already sketched out plans to supervise the loosely regulated industry. One of its products, the credit default swap, has been blamed for exacerbating the financial crisis by spreading the risk from shoddy home loans.

The administration's plan is similar in most points to what Congress is crafting and includes giving the Securities and Exchange Commission and Commodity Futures Trading Commission power to limit holdings of the swaps. But a House outline would deny a role to banking agencies in the regulation of derivatives.

For months policy-makers have pushed for more so-called standardized contracts to be cleared by a central clearinghouse. According to the White House language, all standardized contracts would be required to be cleared and to be traded on exchanges or via a swap execution facility.

The administration shied away from the thorny issue of defining standardized contract, and instead said regulators would write a broad definition within six months of the law being enacted.

(Reporting by Charles Abbott and Rachelle Younglai; Editing by Dan Grebler)