corporate numbers made no sense

What's inexcusable is that the SEC missed the problems or failed to act. Let's look at two examples. More than a year before the demise of Washington Mutual, Gradient pegged it as a bank that was overstating earnings because it was not setting aside enough money to protect against loan losses. Gradient noticed that problem loans were piling up at a much faster rate than write-offs for losses. But the SEC didn't act. Perhaps even more egregious, AIG auditor PricewaterhouseCoopers stated in February that it thought the company had significant shortcomings in how it was valuing insurance derivatives known as credit default swaps, a kind of insurance on debt payments. At the same time, Gradient described AIG as "downright frightening," in part because it had increased the estimated worth of credit default swaps virtually overnight by switching to a new valuation model. "It was as if Santa Claus himself had visited AIG the night before, leaving gift certificates with value derived by higher mathematics," Gradient wrote in a report.
The SEC didn't launch an investigation until many months later. More and better oversight is needed now so this doesnt happen again.