mr. donaldson and mr.ox was to the sec had the power to tighten the rules for the large sophisticated investors who ended up with these poorly understood complex problems during the crisis. >> i think there was a hole in the regulation of the dirt of its as the result of the law that was passed which to act authority away -- >> what about securitized mortgage assets and things like that, not just a derivatives? >> it was a commodity -- which was in effect opened up the gate in the derivatives market and took the effort ready away from the cftc and the sec. and it is through that hole that the credit-default swaps and all these things went and nobody had jurisdiction over them. >> how about the cbo squared, mortgage-backed securities and staunches repackaged? booze aren't all through that. aren't some of those through your particular rules which allow sophisticated investors to have products which were not gone through the usual sec registration process? >> i'm talking about derivatives now. >> i'm not. >>

mr. donaldson and mr. cox. we were all aware of the contest that went on as the traditional banking system saw a significant shift from them to the so-called shadow banking because of the ability to create more modern instruments or more creative instruments. it reached a point with the act+ passing in 1999 which changed the traditional structure so that it could blend. these terms may not be technical, but it could blend into the activities of the investment banks. what was the mental set, and i start with the mr. donaldson. it had no legislative structure. frankly, given the mantle said that led to gramley to bliley -- gramm leech bliley. i guess we're still working on tomorrow after what happened yesterday afternoon to all of us. if you have this attempt to take the sec's given jurisdiction and regulatory power and see what you could do with it to solve or at least address a blank in the regulatory structure because of what happened with the repeal of glass-steagall work because you felt it was necessary to