This is a partial transcript from "Your World with Neil Cavuto," October 6, 2004, that was edited for clarity.

NEIL CAVUTO, HOST: My next guest says that homebuyers have been cheated and he's going to put a stop to it.

Joining us now from Capitol Hill is Republican Congressman Chris Shays of Connecticut.

Congressman, good to have you.

REP. CHRIS SHAYS, R-CONN.: I hope I didn't say it quite like that.

CAVUTO: I don't know. Well, let me ask you, what is your position on the Fannie Mae (search) mess right now: is it accounting irregularities or is it something bigger?

SHAYS: They manipulated earnings, and they haven't played by the rules for a very, very long time. They're not under, by law, the 34 Act, the Securities Act. They are voluntarily, only because they were forced to, and they are not under the law at all, the 33 Act.

They weren't under Sarbanes-Oxley until we pointed out that they need to be, and then they voluntarily said they would comply.

The bottom line is, they have a regulator that's been very gentle with them, and now it's finally speaking out, and Fannie Mae is having a difficult time with that.

CAVUTO: Are you worried, though, Congressman, with the best of intentions, you could throw out the baby with the bathwater? In other words, by aggressively going after Fannie Mae, you might make it more difficult for a lot of people to get mortgages?

SHAYS: No. I'm not worried about that. What I'm worried about is that we don't end up with a savings and loan problem or a problem like Arthur Andersen had, where we were aware of things that needed to be changed by not having consulting work done with accounting work.

CAVUTO: So as far as you're concerned, Fannie Mae, in the context of other corporate scandals, let's say a Tyco or an Enron, where do you rate it?

SHAYS: It's not there, but it could be. If we don't reign them in a bit and have them play by the same rules that everyone else has to play by.  That's really the problem.

They are so powerful. They're so large that they've really been a bully in the marketplace, and we just need to reign them in a little bit so that they don't implode.

CAVUTO: Congressman Chris Shays, thanks for joining us. I know you had a busy hearing day today.

SHAYS: I appreciate it.

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