This is a rush transcript from "Your World With Neil Cavuto," April 19, 2010. This copy may not be in its final form and may be updated.

NEIL CAVUTO, ANCHOR: Well, the government is looking for the next Goldman Sachs, investigating whether it is going to slap fraud charges on any other banks. On the heels of that, the president heading to New York City Thursday to push his plan to clamp down on the street.

My next guests calling for the Securities and Exchange Commission to expand the Goldman investigation. Democratic Congressman Elijah Cummings and Peter DeFazio join me right now.

Gentlemen, very good to have you both.

REP. ELIJAH CUMMINGS D-MD.: Good to be with you.

CAVUTO: Congressman Cummings, to you first, do you suspect this is significantly broader than Goldman?

CUMMINGS: Yes, I do believe that. And the most important thing that we have to do is make sure that we have a very clean, accountable and transparent market system. And so we need to look beyond this one deal. But I have a suspicion, as does, clearly, the SEC, that it’s much broader than what we’ve seen so far.

CAVUTO: Congressman DeFazio, do you have a sense that, maybe, for the better part of valor, just forbid these guys from any type of exotic investments, be they collateralized debt obligations or mortgage derivatives which are, in this case, might have bet on the very housing downturn we saw — just stop them from doing it?

REP. PETER DEFAZIO D-ORE.: Well, I tell you...

(CROSSTALK)

CAVUTO: Congressman DeFazio first, who I...

(CROSSTALK)

CUMMINGS: Oh, I didn’t — OK, sure.

DEFAZIO: OK.

CUMMINGS: No, go ahead.

DEFAZIO: Senator Lambert Lincoln has proposed some pretty stiff regulation of derivatives, which would eliminate some of the problem. And the other thing is to — I would separate, you know, investment banking and financial services, you know, the way we historically did in this country, from insured deposits. But then you still have the problem of debts too big and institutions too big to cause systemic failure. And that’s difficult to deal with without dismantling some of these organizations.

So what we’re trying to get at here is accountability for what happened in the past; make taxpayers as whole as we can, here, if there was fraud involved in any of the other transactions that went through AIG. Since that’s now being bailed out by the government, by the taxpayers, we’d like to be made whole for the taxpayers.

CAVUTO: Congressman Cummings, though, I’m just wondering, though, all of this happened under either Washington’s watchful eye or unwatchful eye. So is it a matter of needing more cops to prevent this sort of thing in the future or just smarter ones?

CUMMINGS: Well, clearly, in the past, there have been complaints that the SEC had not used all the power that it had. I think nobody would dispute that.

As a matter of fact, when the — when the SEC came before the oversight committee, we were surprised at some of the lax efforts on that — with regard to that organization.

Now, with Ms. Schapiro heading it up, we think they have been much more aggressive. But certainly, they need to move within the rules that they already have. And we probably need to add some.

But these derivatives are very interesting because what you find is that it seems as if the market is ahead of the law. And in many instances, we find, in such a fast-paced society that we’re in, sometimes the — that we are behind, actually, the pace of developments in the market.

And so, you know, I think we need to do — we need to do both. We need to enforce what we have and we probably need to add some additional things. And as my colleague, Mr. DeFazio, just said, those are the kinds of things that we need to do, in moving in that direction.

CAVUTO: Are you worried, though, that with the best of intentions, Congressman DeFazio, what will happen is people will look at the move toward more regulation here, even the moves that are warranted, and say the U.S. is overtaxed, over-regulated; we’ll go elsewhere; we’ll invest elsewhere?

DEFAZIO: Well, we are still the largest economy in the world. You know, I — in — for instance, if you’re talking about taxing or regulating, you know, in Britain, they have a financial transaction tax. It hasn’t driven people out of London.

People don’t want to have to live in Third World countries in order to escape reasonable regulation. And we also need to do these things in concert with our allies. The E. U. was very interested in cracking down on these products and getting to the heart of what caused this meltdown, as are some other responsible First World nations.

CAVUTO: But as you know, gentlemen...

DEFAZIO: I think it would be hard to escape...

(CROSSTALK)

CAVUTO: I’m sorry — and Elijah raises the view — but there isn’t nearly the amount of regulation or oversight or babysitting, for lack of a better term, in some of the hot Asian markets, for example, as is being proposed in our own country.

Now, that could just be, you know, a preview of collapsing issues there. But for now, that’s not the case. So wouldn’t money naturally be drawn to those markets and not ours?

CUMMINGS: We can certainly easily worry about those...

DEFAZIO: Sure, money...

(CROSSTALK)

CAVUTO: Go ahead, Elijah, first to you.

CUMMINGS: Yes, we could easily worry about those things, but I think it’s more important that we look at the long-range situation here. And that is that you have an accountable system, that you have a transparent system, and that you have a very clean system, so that people will have the confidence to invest.

One thing that we don’t want is for people to get to a point where they say, "You know what, I’m not bothering because this whole thing is rigged." That’s the worst thing that could happen. So we’ve got to...

CAVUTO: All right. That’s a good point.

(CROSSTALK)

CUMMINGS: We always have to have a balance.

CAVUTO: Congressman DeFazio, to you then, you — this idea that, maybe, just go back to the good old days when investment banking activity and traditional banking activity were in two separate houses — is that really the simplest way to handle this?

DEFAZIO: Well, it’s not simple to — you know, to break up what was created with the repeal of Glass-Steagall, but we — we may well want to work in that direction.

But we’ve also got to look at even the size of just the investment- oriented firms. Because, if they get too big — remember, long-term capital management and others, you know, they can cause problems, even if they’re totally in the unregulated sector. So...

CAVUTO: Got you. Gentlemen, thank you both.

DEFAZIO: So regulations across the board, dividing things up a bit might help.

CAVUTO: Got you. Gentlemen, thank you.

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