Years ago I worked for a Japanese financial institution (they no longer exist), these were my formative year and it gave me a taste of easy it is for financial institutions to hid information from regulators (that's the important bit). Since this firm was "highly" regulated by the bank of Japan every year a number (4-6) Japanese auditors would arrive at the bank -- and then instead of working they got drunk with the staff -- every night till 3/4 AM. But more interesting is that the staff of my bank (the Japanese guys) would prior to the arrival of these auditors remove records from the filing system [highly coordinated, they had a list]. Now these auditors were clearly going through the motion (SEC anyone, anyone at all) since they could have sequestered themselves from the bank staff (like it is done here in Canada).
Since I was a "good friend" of some of the Japanese staff (I was probably the only Gaijin who actually liked Japanese food and culture) they told me how the system worked. First, the head of the bank was told by his Japanese boss how many infraction they were to have (the fix was in), and that certain files must not be reviewed (hence the list), the boss of the bank in London would then instruct his staff (via the Managing Directors -- until they got to the newest "Japanese" guy in the bank), who would be faced with the problem that he knew that certain files were "no-go" in that they were delinquent or loans had not been approved correctly or amounts were too large, faced with this dilemma he took the files out of the system and took them home.
The objective here is to illustrate how easy it was in the mid-80s to hid your junk from the regulators, imagine how much easier it is in the electronic age (where structures are 10x more complicated)! Remember the Section 105 swap that Lehman and Bear Stern employed to hide the size of their assets (and leverage)?
This morning it emerged that Fukushima Nuclear plant (here) came much much closer to full meltdown then was every acknowledged -- apparently Tepco finally admitted that there was only a few meters of cement that stopped the nuclear fuel from exiting the facility (nuclear fuel had melted through the containment vessel and most of the concrete floor below that..."China Syndrome" or in plain English for those who never saw Fonda's movie -- full nuclear meltdown)
Going back to my Japanese bank what eventually did them in was a whistle blower who went to the Bank of England (he was made redundant and didn't like his termination package...), I was long gone by then (I lasted all of 24 months there) but apparently the Bank of England sent 50 inspectors (with police escort) told the staff to immediately leave the premise, and checked everything themselves -- I understand that within day every single Japanese employee was on a plane back to Tokyo and a new bunch was sent to London. They also paid massive fines (part of which was paid to the whistle blower).
Still, the Japanese have a culture of the "magical" that always impressed me; senior management says I want ABC result, and the leave it to their staff to execute, since bosses are never questioned (ever) eventually corners are cut to meet senior management's objectives. Nissan is a perfect example of that, objective #1 become #1 car manufacturer in the world -- "Yes, Sir, right away sir" with the disastrous consequence on the quality of their product.
Anyway, end of rant