" The report went on to say that "Given this dynamic, the Commission is troubled that neither the U.S. government nor the U.S. investment community is adequately evaluating security-related risks related to China's fund-raising in the U.S. capital markets.

CENTERFORSECURITYPOLICY: Wall Street's 'Poisoned Apples'

Indeed, the Casey Institute has yet to find a single U.S. investment bank, public pension fund, mutual fund or insurance company which includes a national security-related review in its "due diligence" assessments of emerging market entities.

CENTERFORSECURITYPOLICY: Center For Security Policy

And, in addition to the high interest rates that reflect the extra risk they are assuming, investors also get a security that generally isn't correlated to other market moves--the ideal investment for hedge fund managers.

FORBES: Catastrophe Bonds

Arguably, the least disruptive approach -- which would not impede the free flow of capital into and out of the United States and minimize the need for government intervention -- would be the voluntary adoption of new security- and human rights-minded "due diligence" by U.S. investment banks and fund managers, including those in California.

CENTERFORSECURITYPOLICY: Roger Robinson testimony on California Pension Funds