mr. dinallo. if you're going to explain it, there are actually people watching who have no idea what those letters you just rattled off meant. >> thank you. what we're talking about are financial guarantee companies, companies that take their capital, their rating, and they guarantee the obligations of others, whether it's an issuer of bonds or eventually structured cdos. and when we started to see this happen in the department of law, i mean in the department of insurance, it was early on that aig back in the early '80s and citigroup and others started to do this, they started to quote, monetize their rating, and the department demanded that these be set alone and called monolines and they could only do this one business, they had to be standing alone, they had no access to the guarantee funds to government bailout, and they were highly regulated with very high capital requirements and a low return to equity. they weren't going to be, you know, leveraged businesses. and the belief was that if the

mr. dinallo. you said in your testimony that the deregulatory effect of the commodity futures modernization act played a role in the financial crisis. and i wondered if you could elaborate a little bit on how that worked. >> i believe that there are core financial products that the regulatory regimes of different regulators, whether it was the banking regulators, the insurance regulators, futures and even legal gambling regulators over bonds and investments understood through good learning what the right capital requirements were for doing that business. and sometimes it's called net capital. sometimes it's called reserving. and what the cfma did, in my mind, was it told all of wall street you no long ver to told capital to do that kind of a business. you can replicate it through a distribute in an unregulated entity and like magic, you don't have to use billions of dollars of holdback capital. you can do it with very little capital. and it's unregulated. and no one can go over there and argue wit