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In the taxi, on the way to the bank, I had jotted a few figures down on the back of an envelope to show how much more business I was going to do with my aggressive and imaginative promoting. Since the Indians had almost broken even the previous year with an attendance of less than 400,000, I had projected the profits from this marvelous attendance to show how quickly I would be able to repay the loan. It was all pretty general and pretty vague. In addition to the figures on my envelope, plus my non-negotiable hopes and dreams, I had only my experience as a successful minor-league operator and the solid financial backgrounds of my backers to recommend me. I was also able to pass on the information, for what it was worth, that there was a good chance Chick Fisher up in Detroit would be willing to take half the loan. My backers proved to be a mixed blessing. Congden wanted to know if I could give him, as a reference, the name of any banker I had ever actually done business with, preferably one who wasn’t going to be a partner. There was only Mr. Weinhold up in Milwaukee. Congden asked me if I wanted to step out of the room while he talked to him. “Look,” I said, “there’s no reason for me to leave. I know what you’re going to ask him. Mr. Weinhold is a nice, honorable man; he’ll tell you the truth as he sees it. If he doesn’t give me a good count, I’ll get up and leave quietly.” Congden got him on the phone, and all at once I’m wondering what Weinhold did think of me and my Milwaukee operation. Most especially, I am wondering whether he knew anything at all about my broken-field running among the Chicago loan companies. When Congden hung up he looked a little bewildered. What Mr. Weinhold had told him, as passed on to me, was roughly this: “Five years ago, this fellow came to me with a harebrained scheme. If he’s in there with another of his harebrained schemes, I’d like to get in on it again. We’re just a little bank up here but I’ll go as far as the bank can go with him and if there’s anything left over I’d like to take a piece of his play myself.” Speaking for himself, Congden went on, “I suppose I should have told you that I know Weinhold. Weinhold is a very conservative banker. Even for Milwaukee he’s a conservative banker. I can’t imagine Weinhold lending any money on a thing like this, let alone taking . . . ‘a piece of your play.’” Checking with Chick Fisher, he became slightly more bewildered. Chick had asked him to pass the word to me that his loan committee had approved the full million. He had then told Congden that he knew I wanted to borrow the money in Cleveland but that if Congden didn’t want it all he’d like to have half of it up in Detroit. Congden studied the figures on the back of my envelope for awhile, drumming his fingers on the desk. “Mr. Veeck,” he said, finally. “If these figures are right, we’ll go along with you. I think we can manage the whole loan ourselves.” And then, bubbling over, he chuckled, “You know, I think it…
Veeck--as in Wreck
Bill Veeck, Ed Linn
Your life has two big arcs. The first is about acquisition; acquiring knowledge about yourself and the world—figuring out how to meet your own needs. What am I going to do to make a living? Will I get married? Buy a house? Have kids? The second arc is about contribution. You start thinking about how you can serve others and make a lasting impression on the world. We take, and then we give. The avalanche sparked a major transition for me. It expanded my circle of awareness from simply meeting my own needs to extending my contribution to the world. I started thinking about ways I could pass on the gift I’d been given, the gift of creative expression. How
Creative Calling
Chase Jarvis
GOODWILL: PRATT’S PATENT MEDICINE FOR A SICK INDUSTRY The other huge GAAP abuse was “goodwill accounting.” A word of encouragement: you will be able to understand it, you will be amazed at the scam, and you will know why policy makers must understand such scams. You will also be joining an elite group, for few understood it. In other books you can read that goodwill accounting was abusive, but not about how the scam worked. I describe in detail only the two accounting frauds central to the debacle; goodwill is the first. It all starts with a simple, logical assumption drawn from economics: the best proof of market value is what an arm’s-length buyer pays for an asset. An arm’s-length buyer is an independent buyer acting in his own interests. (When economists assume “rationality,” they err if they fail to take into account what’s rational for a fraud.) Goodwill accounting among 1980s S&Ls was overwhelmingly fraudulent. Pratt’s priorities, because the FSLIC had only trivial amounts of money relative to the scale of the industry’s insolvency, were to avoid spending FSLIC funds to resolve failed S&Ls and to cover up the insolvency of the industry and the FSLIC. That meant that the FSLIC rarely used the normal means of resolving failures, i.e., paying a healthy firm to acquire the failed S&L. Instead, Pratt induced roughly 300 buyers to acquire failed S&Ls without any FSLIC assistance. Pratt called these “resolutions” and took credit for developing innovative techniques that reduced the average cost of resolving such failures by about 75 percent. White-collar criminologists’ mantra is “if it sounds too good to be true, it probably is.” The obvious question is why entities knowingly took on net liabilities without FSLIC assistance. (A firm whose debts exceed its assets is insolvent; it is a net liability.) Accountants’ answer was “goodwill.” A firm can have greater value than the sum of its tangible assets less its debts. McDonalds is an example. It is worth far more than what it could sell its physical assets for, less its debts. It has a reputation for safety and cleanliness and is famous worldwide. This favorable reputation has great value, and we call that value “goodwill.”
The Best Way to Rob a Bank Is to Own One
William K. Black
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