This is a rush transcript from "Your World With Neil Cavuto," July 16, 2010. This copy may not be in its final form and may be updated.

NEIL CAVUTO, ANCHOR: Meanwhile, Democrats today crowing about the financial overhaul legislation the president is going to sign, but do they all know what’s in it?

(BEGIN VIDEO CLIP)

SEN. CHRISTOPHER DODD, D-CONN.: We don’t know ultimately how well the ideas we have incorporated will achieve the results we all desire. It will take the next economic crisis, as certainly will come, to determine whether or not the provisions of this bill will actually provide this generation or the next generation of regulators with the tools necessary to minimize the effects of that crisis when it happens.

(END VIDEO CLIP)

CAVUTO: All right, now, I heard that. I thought, we have to wait until the next crisis to come.

You know, Jim Himes, a fine Democratic congressman from the great state of Connecticut, that scares me. I thought this whole hullabaloo was about not even entertaining that possibility.

REP. JIM HIMES, D-CONN.: Well, Neil, look, what we have done in the Congress is take some very big steps towards addressing the incredible irresponsibility that ran the range of institutions, Wall Street, credit rating agencies, regulatory agencies. We have addressed each and every one of those things. But you know what? We bring a little bit of humility to this.

CAVUTO: But, actually, Congressmen, you didn’t. With all due respect, you didn’t. With all due respect, you left Fannie — Freddie Mac and Fannie Mae out of this. And they were at least the two huge culprits behind what got us into deep doo-doo, right?

HIMES: Yes, Neil, I know that’s the favorite talking point of the right wing. I have looked very hard.

(CROSSTALK)

CAVUTO: No, it’s not a talking point. It’s a fact. They’re out of this. They’re not included.

Now, you’re quite right it addresses a lot of things, but the two big culprits are not among those things.

HIMES: No, Neil, those are not the two big culprits. Those are part of the culprits. But you know what? Fannie Mae and Freddie Mac are doing radically different business than they were doing three years ago.

They’re not doing sub-prime. They’re not doing Alt-A stuff. We’re watching the portfolio very, very carefully. There are fewer members of Congress today who understand what the GSEs do than there are members of Congress who understand the derivatives market.

CAVUTO: Then why not, for the heck of it, Congressman, include them?

HIMES: Well, we should. We should do that, and we will do that when we get back next year. But the reality is that we took...

(CROSSTALK)

CAVUTO: Wait, wait, wait, wait. So, Freddie Mac and Fannie will be included in follow-up legislation?

HIMES: Absolutely.

CAVUTO: All right.

HIMES: Look, there needs to be a major reform of the GSEs, but the reality is that that bomb exploded. We’re now guaranteeing their liabilities. They’re not taking on any more toxic stuff. We have taken the hit there.

(CROSSTALK)

CAVUTO: You don’t think there will be another 2008, Congressman? Mr. Dodd seems to be saying, we want to prevent the next crisis. But this started by saying we would never see another crisis, this is going to prevent that.

HIMES: Yes, but, Neil, look, an industry that is as global, as innovative, and as rapidly changing as any industry out there, it would be the ultimate in hubris to say we have solved this problem for the ages.

(CROSSTALK)

CAVUTO: Well, some of the your colleagues have, though. I want you to listen to what Harry Reid said.

(BEGIN VIDEO CLIP)

SEN. HARRY REID, D-NEV., MAJORITY LEADER: What took place that brought down this country economically, we can’t stand by and let it happen again. And that’s the difference between this legislation.

(END VIDEO CLIP)

CAVUTO: All right. But you all but said, well, we can’t prevent it, right?

HIMES: Yes. Hey, look, you know, the legislation that was introduced in the 1930s did pretty well. Look at bank failures from 1930 until the early ‘80s. There really were not that many of them.

Then we started the process of eliminating regulation, of doing away with Glass-Steagall, of deregulating and deregulating. And guess what? It blew up on us. So, there’s no saying that, 75 years from now, this is not going to happen again. We have taken our best shot at the abuse of the consumer, at the really irresponsible behavior on Wall Street, and done what we can.

But, you know, 40, 50 years from now, who knows.

CAVUTO: Well, I would think the next crisis isn’t that long away, right?

HIMES: Well, Neil, I don’t know. I was listening to Art Laffer talk about his projections. Who the heck knows, you know?

CAVUTO: Well, what about this "too big to fail" argument, then, Congressman? The whole idea behind this was to avoid an institution from expecting it’s going to be saved by Uncle Sam.

But can you honestly tell me, sir, that if a Bank of America or a Citigroup were on the ropes and it was going to go bye-bye, that you guys would let that happen, just let it happen?

HIMES: Well, first of all, an important part of this legislation is to make sure that they don’t ever get themselves into that position again. There’s going to be a lot more scrutiny.

CAVUTO: I understand that, but let’s say it did. Let’s say it did.

HIMES: If they did, you know what? Everybody out there who has watched the financial industry knows that, for generations now, the FDIC has been doing orderly unwinding of financial institutions.

And now we’re just saying that what the FDIC has been doing very successfully for decades now with banks is going to happen to "too big to fail" institutions, as capitalism says it should. Shareholders...

(CROSSTALK)

CAVUTO: That’s not what happened in the past. And you’re right to try to address it.

HIMES: That’s exactly right.

CAVUTO: So, let me ask you this, again. Bank of America is on the ropes, about to go bust. You would let it go bust?

HIMES: We unwind it in a orderly fashion. This was the problem with Lehman Brothers and Bear Stearns. Nobody knew...

(CROSSTALK)

CAVUTO: So, nobody is too big to fail? If you’re screwing up, you’re done, you’re toast, bye-bye?

HIMES: That’s exactly right.

CAVUTO: OK.

HIMES: And, frankly, if the regulators let somebody get so risky that they fail, they have not done their job.

But the point is, look, there will be failures in the future. And the question in that moment is, do we unwind them orderly or do we have chaos?

(CROSSTALK)

CAVUTO: Congressman, thank you very much. Good seeing you again.

HIMES: All right. Take care.

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