Congressman Tim Walz (D - MN) went to back to Washington Wednesday to attend a Congressional hearing, which sought to investigate what caused the financial meltdown.

A member of the House Agriculture Committee, the Democrat from Minnesota's 1st Congressional District  said the hearing examined the role of so-called "credit derivatives."

So what is a "credit derivative?" The U.S. Commodity Futures and Trading Commission's (CTFC) website defines it as "An over-the-counter (OTC) derivative designed to assume or shift credit risk, that is, the risk of a credit event such as a default or bankruptcy of a borrower."

In an interview with KSFY's Drew Sandholm, Walz talks about what he learned from the investigative hearing and what steps suggests should be taken to fix the nation's economic anxiety. Here's how it went:

KSFY: Going into your Congressional hearing, you said the use of credit derivatives had the American economy operating on a "...Vegas casino mentality..." Did you find that to be true?

Walz: Well, that's pretty much what the experts said. This was held in the Agricultural Committee hearing and it's the Commodities Futures Trading Commission. It was dealing specifically with the credit default swaps. These are kind of shadowy backroom deals that equal 55-trillion dollars. They were at the heart of bringing down AIG and the problem with them is: there is no oversight to them. There is no one that knows who's trading these things, how leveraged they are, and the risk was obviously one of the contributing factors in the problems we're experiencing in the economy.

So, we were there to hear from the Securities and Exchange Commission, the CFTC, experts from the University of Texas, amongst others -- Chicago Mercantile Exchange and then representatives from this industry who was pretty much the only one in the room that thought everything was okay. Everybody else said, 'No, there's a problem here.'

KSFY: So what's the solution here? Because from those I speak with in towns across this area, they don't think everything is okay. They're angry.

Walz: No, you're absolutely right and I think the biggest thing (is) this is what should have been happening and I applaud chairman Collin Peterson (who) has had the foresight on this. In the Farm Bill, he put in mechanisms for instant results of trading in cattle market and that was a big step forward. He's the one who brought the oil speculation and oil trading forward and brought some transparency and I think probably the solution is some type of clearinghouse is what it sounded like most of these experts agreed on where these things are brought out of the shadows... people understand who's trading what and what the values are and what the risks are... making sure once again that the government should not be a player in markets, but we've got to know someone's refereeing. One of the strengths of the American economy has always been trust. We have to reestablish trust amongst the American consumers, amongst investors and amongst the rest of the world that someone's watching the store and that's what this will do.

KSFY: But how do you referee our financial system without having government get involved?

Walz: Well, we need to implement it and it was one of the concerns I had. I was not supportive of the bailout bill, not because the underlying principals of the economics weren't strong, it's that I felt like these regulations why we had leverage need to be put in to make sure it doesn't happen again. Chairman Peterson has guaranteed that we're going to come back to this and make sure that it happens. I think it will be... the industry knows and almost everyone in it understands something is going to be done. They're talking about voluntarily regulating themselves a little bit. I think the public is a little skeptical of oversight that's coming from the industry, but I think we'll get a transparent process that allows people to, you know, take risk, but not to take excessive risk with other people's money. For example, the AIG, the manager who brought that down was saying just less than a year ago that we would never lose a dollar in this. He was compensated $280 million and walked away from the disaster that he created. That's got to change.

KSFY: You talked about how the public might be skeptical of the industry, these banks or other financial institutions, the speculators, regulating themselves. But do you really think they'd say, "Oh, we learned our lesson. Now we'll do right? We'll shape up."

Walz: Well, I taught school for too many years to know that it takes more than just that to get to it. I think they do realize what's happened here, but I think that's a very good point, Drew -- that we may fix this on these credit default swaps... that that's just one mechanism. We need to be very careful that if we repair that, these markets will move to another shadowy alley that they will operate in. We need to make sure we're not, you know, fighting the last war on this. That there is regulators there, that there is open and there's transparency and honesty. We want our economy to grow. We want entrepreneurs to take risks and create jobs. These people did none of that. They speculated on the side in the dark alleys and pulled money out of people's pockets. That's got to end.

KSFY: I want to get back to the solution. When you talk about refereeing, what do you mean by that? Or is asking for such specifics too premature of a question?

Walz: It maybe too premature. I would give you my opinion. I think it needs to set in the CFTC and I think it needs to set there because I think Agriculture Commodities has done a very good job with those and I think there is enough distance from Wall Street that it gives us an independent eye. Right now, I'm not real confident in the Securities and Exchange Commission, but there maybe some kind of compromise. But the mechanism is out there and that's what we're hearing from the experts today and I think many of us came to the conclusion that it should stay within the CFTC.

KSFY: Representative, thank you for speaking with me. I enjoyed our conversation very much.

Walz: Thanks, Drew.

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