William Black: How to rob a bank (from the inside, that is)


William Kurt Black is an American lawyer, academic, author, and a former bank regulator. Black’s expertise is in white-collar crime, public finance, regulation, and other topics in law and economics.


The average bank robbery nets $7,500, but the really scary thing is when CEOs use dishonest accounting to claim record profits and defraud the economy as a whole. The last time this happened it cost $11 trillion and 10,000,000 jobs were lost. The common ‘recipe’ for this style of fraud is easy to see, and follows the same trends:

  1. Grow like crazy
  2. Buy or make crappy loans at a premium yield
  3. Employ extreme yield
  4. Keep only trivial loss reserves.

This will give amazing returns to the bank, and easily enough to trigger massive executive bonuses. However a few years down the line, the bank is doomed to take a large hit.

Appraisal fraud is when a bank will over-inflate the value of collateral against a loan. There were warnings of this before Enron collapsed, including a warning to the US government from some appraisers. These honest appraisers had been blacklisted by the banks for refusing to inflate the values of assets. The appraisal is a great defense against losses, so no honest bank should need to do it, but is a clear sign of accounting fraud.

Liars loans are the second issue – where a bank will not check income of a borrower before lending them money. If a borrower overstates their income, it allows the bank to sell them a higher mortgage. Again, no honest bank should do this – it is a recipe for disaster to loan too much to someone who can’t pay.

Between 2003 and 2006, liars loans increased by 500% – by 2006 40% of all loans were ‘liars loans’. This is despite the industry’s anti-fraud experts warning banks that they 90% of the stated incomes are fraudulent. Appraisal fraud was also increasing over the same time period – by 2007 90% of appraisers said they had experienced coersion from the banks to overstate values of assets. Banks were also giving up their federal deposit insurance, so were no longer under the gaze of the federal regulator. There was also the issue of the secondary market for these fraudulent loans- when banks will fraudulently sell the loans onto someone else. To do this it was necessary to hide the true value of the loan, or repackage the loans alongside better loans.

The response after the savings and loans debacle of 1990s included 30,000 criminal referrals from regulators – one of the largest responses to white collar criminals. In response to the current crisis (GFC of 2009?), there were no criminal prosecutions. The FBI alone doesn’t have the expertise to investigate complex accounting fraud on its own – it needs guidance from regulators. In 2007 an alliance was formed between the Mortgage Bankers Association (an industry body) and the FBI to investigate mortgage fraud, but their definition of fraud was one where the banks were always the victim, and industry incapable of committing fraud. This led to criminal prosecutions against small business owners to protect the banks from them.

William’s solution to banking regulation

  1. abandon the ‘too big to fail’ mantra. They need to be shrunk to the point where their failure will not trigger wider losses.
  2. we need to rework modern executive professional salaries. It is too big an incentive to defraud the system, and can create a situation where good ethics can be driven out of the system by bad ethics (unscrupulous appraisers).
  3. deal with deregulation, de-supervision, and defacto decriminalisation. Over time, it has become trendy not to regulate banks, even when the regulators can see what is happening.

By making these changes, we can decrease the frequency and impact of future banking crises. We need to learn what the bankers learned – the recipe to rob a bank.

My Thoughts

Could be good if you have an interest in accounting fraud. Personally I found the talk difficult to follow at times – it felt like it was working in circles. The ‘recipe’ itself was interesting, though I wasn’t clear how each of those steps were beneficial to the bank.

Mike Rowe: Learning from dirty jobs


Mike Rowe was the host of Dirty Jobs, a program on the Discovery Channelin, where he is shown performing difficult, strange, disgusting, or messy occupational duties alongside the typical employees.


For one episode of Dirty Jobs, Mike went to work on a sheep ranch in the western US. He found out the day before filming that castration was going to be part of the work. So he thought some research might be in order and called the Humane Society and ASPCA to find out the “proper” way to castrate sheep. He learned that a  rubberband was put on the sheep’s tail and testicles to stop blood circulation and after about a week, they fell off. So with image in his mind, he went to the farm expecting Albert, the rancher, to do the same. But instead of pulling a rubberband from his pocket, Albert pulled a knife. And in a matter of seconds he snipped off the tail, tossed in to a bucket and then split open the scrotum. Then he reached forward with his mouth, and to Mike’s shock, bit off the testicles before throwing them in the bucket as well. Mike adds, that before this incident, he had never stopped filming or done a second take for Dirty Jobs. But he stepped in and had to say, “stop, this is crazy”. Mike said to Albert, “that’s not you’re supposed to do it”, and Albert replied, “well that’s how we do it”. Mike wanted to do it like the humane society, so Albert consented and got his bag of rubberbands. After putting the rubber bands on the second lamb, Albert put it back down, and let it walk away. It took about two steps before falling over, until it eventually huddled up in a corner, clearly in a lot of pain. The first lamb had now stopped bleeding and was frolicking as thought nothing happened. Mike realized how wrong was then, and the experience gave him a bigger realization about how wrong he was all the time.

After that episode, Mike started thinking and speaking about the show in different ways and about topics that were sacrosanct. He questioned whether “follow your passion” is actually good career advice. He says he’s met dozens of people who are happy but definitely did not end up where they were by following their passions. He gives one example of a dairy in farmer in Connecticut who started making millions when he realized the poop from his cows was worth more than the milk if he used it to make biodegradable flower pots. Instead of prioritizing safety first, what if we should be prioritizing it third? What if people who have “dirty jobs” live more balanced lives than white collar workers?

Mike developed a theory from his experience: we’ve declared a war on work. Policy in Washington, telelvison from Hollywood, and advertisements from NY are devaluing manual labor. Mike wants a P.R. campaign to teach people about the forgotten benefits of skilled work. To him, clean and dirty are not opposites, they are the two sides of the same coin.

My Thoughts

Mike Rowe has collected some amazing experiences from his work and his storytelling ability allows him to fulfill his responsibility of sharing them. At the end of the talk I had a hard time following his points, however, and wish his message was a little more clear. But this talk is certainly worth the watch and I recommend you check it out when you want to hear about sheep castration, manual labor, or the job market.

Pamela Meyer: How to spot a liar


Pamela Meyer is author of “Liespotting”, which pulls together research on deception from a number of sources.


Everyone is a liar, but the goal to spotting liars isn’t to trick them or play ‘gotcha’, but to understand the truth.

Truth #1 Lying is a cooperative act – it needs the hearer to believe.

Truth #2 We are against lying… and covertly for it

Lying can manifest as corporate fraud, which costs nearly a trillion dollars a year in the US, or it can betray national secrets. In many cases lying defines our social interations – to protect ourselves, to protect others, to portray ourselves differently to what we are, to lie to a partner, we lie to a stranger 3 times within 10 minutes of meeting them. The thought of this makes people recoil in horror. However, the more intelligent the species, the more they rely on deception. Children grow up with lies and by the time they are in the workforce they are living in a ‘post-truth society’.

Trained Lie spotters get to the truth 90% of the time, while untrained people get there 54% of the time. Pamela studies Bill Clinton’s denial of his affair with Monica Lewinsky “I did not have sexual relations with that woman” – later proven to be a lie. She looks at how his speech patterns and language betrays him.

  • He uses overly formal language
  • he distances himself from “that woman”
  • he uses qualifying language.

Clinton didn’t do this, but Pamela also stays on the lookout for too much or too little detail in the statements, and repeating the question to stall for time.

She also looks separately at body language symbols of liars:

  • They don’t always fidget, some completely freeze their upper bodies.
  • We think liars won’t look you in the eye, some look too much to compensate
  • They often smile to show sincerity, but it is a fake smile, and they are not smiling in the eyes
  • Body language cues can be giving the opposite of the words – eg shaking head while saying yes or shrugging shoulders while telling a confident, good story.

Giveaways in attitude, when conversing with a deceptive person:

  • An honest person will be enthusiastic and help brainstorm to discover the real suspect.
  • an honest person will be infuriated throughout the whole process if they suspect they are being accused – it won’t just be in flashes
  • an honest person will want a strict punishment for the person who committed the crimes.
  • In contrast a deceptive person will talk only in chronological order and get confused when asked to tell it differently (change the order)
  • A deceptive person will be withdrawn from the conversation
  • A deceptive person will add way too much irrelevant detail

A lot of small tells can also show deceptive behaviour – changing blink rate, or putting physical barriers between the asker and themselves, or changing their tone of voice. But these can happen naturally as well, it is only when they happen in clusters that you should be suspicious. When dealing with a suspected liar, be curious and friendly, treat them with dignity, and don’t be too aggressive.

The world is getting more interconnected, people are sharing a lot. By learning to spot lies, you are telling the world that you will not be part of the lie – that your world is a truthful one.

Naomi Oreskes: Why we should trust scientists


Naomi Oreskes is an American historian of science.


We as a people have to answer questions that rely on the scientific method – about global warming, evolution, and the effectiveness of vaccines. But increasingly, public opinion polls show that Americans don’t believe the science on these issues. For most people, science is not fully understood, so it is reduced to a matter of ‘belief’, and this is true even for scientists operating outside of their own field (eg a chemist talking about evolutionary biology). So how do we trust scientists?

The inductive model is the textbook scientific method. This forces scientists to

  1. Develop a hypothesis
  2. Deduce it’s consequences
  3. Observe these consequences

In the ideal case, the idea is a law of nature. A law is true in the general case – in all times and places, and cannot be broken.

For example, the theory of general relativity said that space-time wasn’t an empty void and actually had a fabric that was bent in the presence of large objects. An observable conclusion was that light would bend around the sun. This took a few years to test, but was observable and therefore verified the theory of general relativity.

Naomi says this deductive model of science is wrong for 3 reasons

  1. False theories can make true predictions – just because a test shows something, doesn’t prove this hypothesis.
  2. Auxiliary Hypothesis – assumptions that scientists are making without realising they are making them. For example to test that the Earth rotated around the sun, scientists suggested that when they focussed on a particular star in June, the backdrop of other stars would be different in December (since it was being observed from a different ‘angle’). They did not see this, so disproved the (correct) model because the effect of ‘stellar parallax’ was small (Earth’s orbit relative to star distances was tiny), and their telescopes were not sensitive enough. The scientists made incorrect implicit assumptions about the size of the orbit and the sensitivity of their equipment, which undermined their conclusions.
  3. Inductive science – a lot of science is based on finding evidence and data first, then developing a model later. Darwin’s evolutionary work itself evolved after Darwin collected samples and data over a number of years.

Scientists often build models, to explain the root causes of something. A geologist who hypothesised continental drift to form mountains did so first by compressing clay with a clamp – this did show results similar to the folds in mountains and this added to the evidence of continental drift. Climate change is an area where modelling is used to explain the 1 degree celsius temperature increase over the past 50 years. Temperature measurements over 150yr period show that the increase is clear, but the models explain this by taking into account all effects (for example sulfates, volcanic eruptions, greenhouse gases, ozone, solar radiation). By modelling each of these effects, we can see which combination of them affects temperature. The modelling shows that each of these effects yield a temperature change, but the largest rise was driven by the impact of greenhouse gases. This lets us show that not only is climate change happening (from observations of temperature), but also that greenhouse gases are a major driver (from the models).

If scientists do not use a common methodology, how do we know if they are right or wrong? By organised skepticism – they convince each other from a position of mistrust, with the burden of proof on someone who wants to make a novel claim. It is difficult to shift scientific thought to a new radical idea – the model is conservative by design. Scientific knowledge is therefore a model of consensus by the experts.

Is this consensus any different from the ‘appeal to authority’ argument? It is similar to an appeal to authority, but it is not an appeal to an individual, but the authority of the entire collective scientific community. For example – modern automobiles are the product of not 1 person, but on the collective work of every person who has worked on the car for the past 100 years. The same is true for science – but it has been collected over thousands of years. We should trust science, but not blindly – it should be based on evidence. This means scientists need to be better at sharing their reasons for knowing something, but also that we as a community need to be better at listening.

Dan Pink: The puzzle of motivation


Dan Pink is the author of five books about business, work, and management that have sold two million copies worldwide


Dan Pink introduces ‘The Candle Problem’ – attaching a candle to a wall with a box of thumbtacks and matches to that it doesn’t drip. 2 groups try to solve the problem – one is told they are timing to discover norms, while the other is given money if they are in the top 25%. This test consistently shows that the group being given money is 3minutes slower than the other. Other research over 40 years backs up the idea that for most tasks you can’t incentivize people to perform better with money. This is one of the most robust findings from social science, but also the most ignored. There is a mismatch between what science knows and what business does.

Extrinsic motivators do however work well for ’20th century tasks’ – with manual work and simple solutions. The reward narrows their focus towards the answer, and pushes them to solve it quicker. But most modern professionals don’t do this kind of work, they do much more complicated tasks with no easy answer. An MIT study found a similar result – for simple mechanistic tasks a reward improved their performance, but if they required ANY kind of cognitive function the higher reward decreased performance.

Modern psychology is leaning more towards intrinsic motivators – the desire to do more for personal reasons. In the business setting it revolves around

  • autonomy – the desire to direct our own lives
  • mastery – the urge to get better, or develop skills
  • and purpose – the need to do what we do for reasons bigger than ourselves.

Dan’s talk focuses on autonomy. Management is an example that improves compliance, but decreases autonomy for most workers. Modern approaches can increase autonomy – giving people a personal project. Atlassian for example is a software company that makes engineers take a day off their normal work to develop whatever they want – as long as it is unrelated to their normal work and they deliver something by the end of the day. This approach was so successful that they adopted Google’s famous approach, which lets people allocate 20% of their time to personal projects. Around half of Google’s new products come from engineer’s personal projects.

A more extreme approach is ROWE – Results Only Work Environment. People can work whatever hours they want as long as they do the work. This increases autonomy and productivity, and decreases staff turnover.

Dan’s ultimate example was Microsoft Encarta vs Wikipedia. Encarta was build by well paid professionals and managers, incentivized with standard extrinsic motivators. Wikipedia was built by unpaid (autonomous) volunteers for fun, and because they believed in the project. In 1999 no economist would have tipped that Encarta’s model would be overtaken by Wikipedia’s, but it has.

If we get past the simplistic ‘carrots vs sticks’ ideology, and allow people to be more motivated by autonomy, mastery and purpose, we can make our businesses stronger and maybe change the world.

Chris Hadfield: What I learned from going blind in space


Chris Hadfield  is a retired Canadian astronaut who was the first Canadian to walk in space. An Engineer and former Royal Canadian Air Force fighter pilot, Hadfield has flown two space shuttle missions and served as commander of the International Space Station.


Colonel Chris Hadfield starts his talk with a question for the audience. What is the scariest, most dangerous thing you’ve ever done and why did you do it?

For Chris, it was going into space. The odds of crashing during the first shuttle launches were 1/9. When you wake up on launch day, you know that at the end of the day you’ll either be floating or you’ll be dead. After takeoff there’s 8min and 40sec of intense, intense pressure, equivalent to someone pouring cement on you. And then you’re weightless. For Chris it was worth the risk. At age 9, watching other people walk on the moon, he made the decision to become an astronaut.

While in space, Chris went out on his first spacewalk, watching the earth “roar silently with colors and textures”. Suddenly his left eye slammed shut, but he ignored it and kept working. But because tears don’t fall in space, the ball of residue and tears slowly moved across the bridge of his nose and into his right eye. His right eye slammed shut. He was completely blind, standing outside, floating through space.

Once again, Chris humorously asks, what is the scariest thing you’ve ever done?

A lot of people are afraid of spiders, he says. Take the brown recluse, for example. Definitely scary, but is it dangerous? In Canada, only 1 of the 729 species of spiders are venomous. And that species has bright colored markings and builds its webs on the ground for your convenience. So when we flail around after walking into a spider web, what is the justification? The spider is likely no more of a threat to you than a ladybug. The danger is entirely different than the fear. So next time you see a spiderweb, walk through it. Walk through 100 more spiderwebs and Chris guarantees you’ll fundamentally change your behavioral pattern.

Now apply that logic to everything else you’re afraid of. In training for spacewalks, Chris went through every possible scenario that could happen, effectively eliminating the instinctive response to panic. Instead Chris just went through the possibilities and was easily able to communicate to his partner to pull him back.  By understanding the difference between perceived danger and actual danger, you can go to places and see things that otherwise would be denied to you. In preparing to accomplish his goal of space travel, Chris learned how to reprogram his primal fears..

Chris ends his talk by playing and singing a part from the David Bowie song “Space Oddity”.

Simon Sinek: How great leaders inspire action

Speaker: Simon Sinek – Simon is author of “Start With Why: How Great Leaders Inspire Everyone to Take Action” http://www.ted.com/speakers/simon_sinek

Length: 18:34


What gives the great leaders their edge? Why were Martin Luther King, Wright Brothers, & Steve Jobs successful when others have access to similar resources and conditions? The thing these leaders have in common is summarised in the ‘Golden Circle’.

  1. What – every organisation should know this
  2. How – some know this – their differentiating values, or intellectual property
  3. Why – only the best know this – why their organisation exists beyond a profit

The best organisations can explain and sell the ‘why’ first, and use this to inspire others. People don’t buy what you do, but why you do it. Using Apple as an example, their sales statements starts with their “why” – they design differently to push the boundary. Once you accept their why, you trust them to build anything for you – a computer, an MP3 player, phone. Other quality electronics companies known for 1 product (eg Dell computers) struggle to sell anything else, because they are only known for what they make not why.

The most central parts of the brain control behaviour – this is what people speak to when they answer ‘why’. Answering ‘what’ deals with fact, figures, but still might not feel right on gut feeling.

Simon gives the example of the Wright brothers against Samuel Pierpont Langley. Samuel had all the usually be the recipes to success on his side – money, market conditions, and a well educated and connected team. But while Samuel was driven by wealth and power, the Wright brother’s team were motivated by the idea of changing the course of history with powered flight. The Wright brothers achieved flight first, and Samuel immediately quit once the goal of being first was out of reach.

Different people are comfortable to adopt new technology at different times. The early adopters take up the first 15-18%, with the mainstream being the next 68%. The mainstream need the early adopters to try it first, on gut instinct. This makes hitting 20% market share vital – hitting the tipping point where the mainstream will start to take up quickly. Early adopters are sold everything on the ‘why’ – they will adopt a poor quality product if they like the idea behind it.

People don’t buy what you do, they buy why you do it.

Jill Bolte Taylor’s stroke of insight

Speaker: Jill Bolte Taylor – a neuroanatomist interested in how the human brain relates to schizophrenia and severe mental illness. She is also an author, having published books on her stroke “My Stroke of Insight” and ranked by Time magazine as one of the 100 most influential people in the world. Full Bio at http://en.wikipedia.org/wiki/Jill_Bolte_Taylor

Length: 20:11


Note this talk is an animated story of Jill’s experiences during a stroke – where one hemisphere of her brain was ‘switched off’. This summary cannot do the full talk justice – if it interests you, watch the full video.

Jill Bolte Taylor starts by trying to work out what makes her brain different from her brother’s – who is schizophrenic. She elaborates by bringing a real human brain to the stage – showing it is divided into 2 distinct halves, with minimal connection between the two. Each half functions differently:

  • Right Hemisphere is a parallel processor. It focusses on the current moment, using pictures and learns through kinaesthetic movement. It is well connected to senses to build an understanding of what is happening at the moment. It connects us with the world around it.
  • Left Hemisphere acts as a serial processor. It thinks linearly and methodically, looking at the past and future. It picks through the details of the current time – arranging and sorting these, and connecting them to the events of the past and future. It thinks in language and words. It looks as us as an individual, isolating us from the world.

Jill had a stroke which disabled the left side of her brain – waking up to a throbbing pain behind her eyes similar to ice cream headache. She used an exercise machine while on a stroke, and focussed on how strange her body looked – as if she was out of her body. She noticed that every movement was slower, laboriously focussing to execute every movement. She couldn’t work out where her body ended and the rest of the world began, thinking about the energy of the world around her. Soon her left hemisphere recovered and started to realise that she was in danger, before dropping out again. During the stroke, she was disconnected from her normal brain chatter – the stress and emotional baggage.

When she realised she was having a stroke, she decided to study her brain from the inside. She tried to read her business card, but her vision as broken to ‘pixels’ – and she couldn’t differentiate it from the background. She was having difficulty picking out objects in vision – couldn’t read the numbers, couldn’t keep track of the numbers she had dialled. When she eventually got the phone working, she couldn’t understand the other end, nor speak clearly herself. Eventually an ambulance was called, and she blacked out.

When she woke, she was alive and the stroke was over. She thought back on the stroke as a moment of Nirvana – where she felt connected to the world, and that her spirit was larger than her body. She started to wish everyone could have that moment where their left brain switched off.

Russell Foster: Why do we sleep?

Speaker: Russell Foster

Length: 21:46


Sleep is the single most important behavioral experience we have. But the perception and role of sleep in our society has shifted from importance to a waste of precious time. Shakespeare referred to sleep as “nature’s soft nurse”, but Edison thought it was a “heritage from our cave days.” People often feel similarly to the latter, but it’s usually because they don’t understand the purpose of sleep.

The reality is that our brain doesn’t shut down during sleep. The most popular theory for why we sleep is that sleep controls our brain function. Sleep deprivation is shown to cause poor memory, increased impulsiveness, and poor creativity. But that’s not even the worst part. Sleep is strongly connected to serious health problems like cardiovascular disease and mental illnesses. Sleep deprivation can cause a 50% higher rate of obesity, brought about by excess release of the hormone, ghrelin, which triggers your hunger.  Sustained stress, another result of sleep deprivation, suppresses your immune system.

Foster spends the second half of his talk on the genetic ties between sleep disruption and schizophrenia. A discovery was made that stabilizing sleep also helped reduce symptoms of paranoia. From all the different examples and study’s he cites you can draw 3 conclusions.

  1. Sleep and mental illness are tied together
  2. Sleep disruption can be used as an early warning signal for illnesses
  3. Sleep centers are a new therapeutic target for solving other problems

The question you might be wondering now is, how do I know if I’m getting enough sleep?

If you need an alarm clock to wake up, are grumpy and irritable, or need a cup of coffee to do anything: you are probably sleep deprived. The key is to listen to your body. You might need 6 hours of sleep or you might need 10 hours. There is actually no correlation between waking up early and having better health (or more wealth). To get a good nights sleep, make sure that you’re room is as dark as possible and slightly cool. Reducing light exposure/electronics use during the 30 minutes prior will also help.

tl:dr Take sleep seriously.

Sir Ken Robinson: Do schools kill creativity?

Speaker: Ken Robinson

Length: 20:03


Ken thinks that creativity is as important in education as Literacy. However, children are being taught how not to be wrong. Ken argues that being creative means that you have to be willing to be wrong, and the education system treats being wrong as the worst thing possible. In doing this, education teaches away children’s natural urge to ‘give it a go’.

All education systems globally have a ‘hierarchy’, with math and language at the top, social sciences in the middle and arts at the bottom. This is because the childhood education system was developed to satisfy the industrial revolution of the 19th century, where math and science was essential for jobs, but times have changed. While once people just needed school for a good job, then a bachelor degree, and now that alone is no guarantee for a job. Degrees have had a form of inflation over time, and this shows it is shifting too quickly. Having children go to school just to attend university is not really equipping them to work any more.

We know 3 things about intelligence

  • It is diverse – we think in many ways – visually, in sound, movement, abstract
  • it is dynamic – original ideas come about from the interaction of many different ways of seeing things.
  • it is distinct – people have their way of doing things – Ken’s example is a ‘problem student’ who couldn’t sit still at school, but when moved to a dance school fit in fine – she needed to move to think. Her dance skills went on to give her immense fame and fortune, bringing value to millions of people. In modern times, she would probably have been given ADHD medication and been put told to calm down.

We need to redefine our education system – our current way is one of ‘strip mining’ our children for the most desired properties, in the same way we mined the Earth for ore. We now need to use our imaginations and creativity wisely, to face an uncertain and problematic future. We may not see this future, but need to equip our children to conquer it.