Good analysis, unfortunately these models are tested as a post-mortem exercise. The sad aspect of this entire saga is that some analysts sitting far away in NY with no local knowledge were able to catch the financial manipulation and expressed lack of trust.  None of the analysts with charters and degrees from prestigious institutions with expert local market knowledge employed by world class banks, insurance companies, IPO managers , lawyers and auditors could pick this up. We wonder why ? Is there a need for more regulation on lines of SOX or is it just the greed phenomenon across all industries ? I am afraid there are many more in the closet a!!