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The article reports on a group of small investors in Canada, many of them retired people, who organized to force some financial services companies to repay the investments they lost in asset-backed commercial paper (ABCP). Organizing via the social networking web site Facebook, they have also been able to influence government plans to restructure the ABCP market.

his article argues that developing-country governments still have work to do if they want to attract the right sort of foreign capital. Better bank regulation is as much a task for rich-country as for poor-country governments. But in addition, the developing countries also need to implement many other financial reforms and improvements of their own. Reducing corruption would be high on the list even if economic efficiency were the only concern. Measures include explicit restrictions on connected lending, better accounting standards and greater disclosure of financial information (and not just for the banks). A study by Gaston Gelos and Shang-Jin Wei, quoted in the International Monetary Fund paper, looked at the investments of international equity funds to see if there was a connection with "transparency", measured in a number of different ways. There is evidence that ownership of the banks and other financial institutions in developing countries matters a lot. In many ways, therefore, the benefits to the host country of foreign-owned banks are simply the financial-sector equivalent of the broader benefits of foreign direction investment (FDI). Possibly most important of all, banking-sector FDI promotes diversification, which is a good way of reducing risk. For every advantage that banking FDI offers the emerging-market economy, state ownership brings with it a corresponding disadvantage. The evidence confirms that countries with the highest proportion of state-owned banks have the highest bank operating costs and the largest proportion of non-performing loans. In addition to promoting access to information and curbing corruption-where greater foreign ownership can be of great help-developing-country governments need to weigh the case for explicit restrictions on certain kinds of financial activity. It is he quality of national financial policy, in rich countries and poor countries alike, that decides the safety of the global capital market.

The article discusses U.S. President Barack Obama's plan for financial regulatory reform. According to the article, multiple federal agencies oversee the financial system. These duties are shared with approximately 50 state banking regulators and other state and federal consumer-protection agencies. The aims of Obama's financial white paper, which includes not rolling back deregulation of the past 30 years and offering better regulations rather than new regulators, are discussed.

Collateralized debt obligations (CDOs) are a clever way of exploiting anomalies in credit ratings. A number of loans or debt securities payable by various companies are put into a pool, and new securities are issued which pay out according to the pool's collective performance. The new securities are divided into three (or more) levels of risk. The lowest, equity tranche takes the first loss if any companies in the pool default. If enough losses eat that up, the next, mezzanine level suffers. The most-protected level, the senior tranche, should still be safe, unless the collective pool has severe losses. Given the poor performance of companies in America and Europe over the past three years, and some spectacular defaults and frauds at once highly-rated companies, it is hardly surprising that many CDO debt pools have suffered. It takes only a couple of defaults in a pool of 100 companies to destroy the equity tranche. Many insurance companies that invested in CDOs, or sold guarantees to enhance the rating of the senior tranches, have had a rude shock. In America, insurers have for the first time had to mark-to-market paper losses on their CDO portfolios. The investment banks that constructed these CDOs, and the rating agencies that gave them their initial high ratings, are feeling defensive. This is now a huge business. There may be $1 trillion of CDOs outstanding. Securitization of credit is one of the few bits of investment banking that continues to generate big fees--for arranging deals and for managing the pools of assets.

States that with $1.2 trillion-worth of paper outstanding, the municipal-bond market can claim to be America's second biggest securities market behind Treasuries. Questions about why it is so lightly touched by regulation; Allegations of graft that have plagued this investment field; Additional information.

The article offers business news briefs. The U.S. President Barack Obama's administration announced changes to the country's financial regulatory system in a white paper. Mervyn King, governor of the Bank of England, stated Great Britain's central bank needed more power to settle its regulatory responsibilities. The European Central Bank reported that losses at banks in the euro area could increase by $283 billion by the end of the year 2010.