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The second implication is that an S&L running an ADC Ponzi was certain to report extraordinarily high “income” as long as the auditor allowed it to classify the deals as loans instead of as investments. Every control fraud was able to get its auditor to misclassify its ADC deals as loans, so that caveat had no effect. It was simply a matter of math (and some additional abusive accounting). ADC Ponzis booked most of the points and fees that they self-funded, i.e., paid themselves as immediate income. Roughly 3 percent of the total loan amount instantly became income.5 ADC Ponzis recognized the self-funded interest as income every month or quarter when interest came due, crediting the borrower for paying interest to the S&L from the interest reserve. Because of the high fees and interest rates, all of it self-funded, a control fraud was certain to report high profits. The extremely rapid growth rate of the ADC Ponzis guaranteed that these profits would be extraordinary. Any S&L that grew rapidly and made primarily ADC loans was mathematically guaranteed to report extraordinary profits. This is why the worst control frauds invariably reported that they were among the most profitable S&Ls. Indeed, one of the best ways to spot control frauds was to concentrate examination efforts on the S&Ls reporting the highest profits.
The Best Way to Rob a Bank Is to Own One
William K. Black
Veteran actors know that after an intense session of memorizing lines, it’s best to take a nap immediately. If you’re memorizing music, or anything else, the best thing you can do after a cram session is to go to sleep for at least 90 minutes before you do anything that interferes with the information you just stuffed into your noggin. If you take a nap immediately after your most intense practice session of the day, you’ll learn the most quickly. It’s no coincidence that researchers who study experts find that this is exactly what they do. Nap time isn’t just for kids.
The Practice of Practice
Jonathan Harnum
When he reached Mao’s house in mid-morning, the chairman, very much a night person, was asleep. Mao’s bodyguard tried to block Peng. “You can’t go in there—he’s still sleeping.” “You cannot stop me,” Peng answered. “My men are dying on the battlefield. I can’t wait for him to wake up.” So Peng barged in and woke Mao and told him that they had an entirely new war on their hands. There would be no rush to Pusan, no great American retreat south. They now had to prepare for a long war, and they were going to rotate some of their troops because the kind of combat they were engaged in was exhausting to the men. That morning they agreed upon some rotation of troops, even though part of Mao, clearly dreaming different dreams from Peng and other commanders on the battlefield, still believed that the entire Korean peninsula might yet be his.
The Coldest Winter
David Halberstam
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