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 Post subject: Banks: Doin' it Right
PostPosted: Wed Aug 10, 2011 1:40 pm 
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Let's start with some facts.
1) As long as the game has free accounts, gives away starting cash, and makes starting levels easy, we can never allow unbalanced cash transfers.
2) No matter what you think you know about the future or how much you trust them, we don't know that. Therefore any trade that doesn't stand on its own merits counts as an unbalanced cash transfer. And is therefore illegal.
3) We don't really want new players jumping from level 1 to level 12 instantly. They get up there where it's more complex and don't know what they're doing. Nor have they developed the patience for high level business (which grows much slower than low levels anyway). It's not something we would punish, but I don't think you're doing someone a favor when you catapult them like that.

Now our attempt at creating a banking industry was bonds. It's complex and there have been rough spots, but when used as intended it does the job. Those with extra cash invest (with guaranteed payout), those with needs borrow (with generous terms), and the interest rate adjusts. But apparently people aren't happy unless they know who's getting the money. (Personally I think you should get over it, but Amarsir says we shouldn't fight human instinct).

So what if we work with you to create a banking system? Literally anything is possible, and you wouldn't have to be manipulating trades and keeping private records if we put the system in place. However, the 3 things I said above are not debatable and whatever you want to do has to avoid violating them.

So use this space to tell us what you would want a banking system to do and how we can build in guarantees that nobody can just take the money and run.

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PostPosted: Wed Aug 10, 2011 1:51 pm 
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User avatarAindala Holdings
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This is quite a turn!
There was a suggestion thread about that a while back, I'm going to check it now.

EDIT: Here it is: viewtopic.php?f=11&t=4743

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PostPosted: Wed Aug 10, 2011 1:56 pm 
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Well one good thing came out of Financial Co. :P Thanks Committed this helps soften things a lot for me.

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PostPosted: Wed Aug 10, 2011 2:17 pm 
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Thank you for reminding me about that one, Aindala.

I want this thread to be focused on very specific answers to the specific problem. Think through the process. Let's say you're the bank and I'm a potential borrower.

1) How do I initiate the process?
2) Do you approve me manually or is it automated?
3) What criteria are necessary? (If manual, this means what do you need to know. If automated, this means what does the system have to check?)
4) When I get the cash, what's recorded?
5) What locks are put in place while I have the loan out?
6) Can I pay back at any time or is there a fixed due date?
7) How is interest calculated?
8) When I pay back, what's recorded? What locks are released or adjustments are made?
9) If the due date comes and I don't pay back, what happens to me?
10) If the due date comes and I don't pay back, what happens to you?

All of those, and any loopholes I didn't think of, must have solid answers. Again let's keep the thread focused on answering these questions as completely as possible and considering all other interactions.

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PostPosted: Wed Aug 10, 2011 3:17 pm 

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1) How do I initiate the process?

I think that if players are allowed to have banks, that there should be a screen, similar to the train page, that shows who all has one, and some very basic information about that bank, current rates, name, and popularity(this is decided by the borrowers, scale 1-10).

2) Do you approve me manually or is it automated?

I would imagine that this needs to be a mandatory automatic. If not, people can claim there is some bias going on, which isn't fair.

3) What criteria are necessary? (If manual, this means what do you need to know. If automated, this means what does the system have to check?)

Company level, current debt to asset ratio must be under a certain level, max borrowing capacity can't exceed 100% company worth.

4) When I get the cash, what's recorded?

It could be as basic as just value of loan taken, interest accrued, time since loan was taken out, and payoff amount, or minimum payment required.

5) What locks are put in place while I have the loan out?

In order to have collateral, place buildings up. Instead of taking them, LOCK them to that user, with the bankers company name in top-left corner, with a picture of a lock. While this buildings is "locked", it can still be productive for the borrower, but can't be expanded, sold, or changed in any way. Basically it's a lien against that building.

6) Can I pay back at any time or is there a fixed due date?

Up to the banker(read bottom after #10)

7) How is interest calculated?

The same way as the bonds, continuously.

8) When I pay back, what's recorded? What locks are released or adjustments are made?

The date of the loan, original loan balance, interest accrued, total payoff amount, length of loan, and an adjustment on the borrowers rating, and the lenders rating(dependant on borrowers voted rating of that lender; IE terms of loan, satisfaction of loan, etc.)

9) If the due date comes and I don't pay back, what happens to me?
The building that has been locked(or tickets if used as collateral) become unusable, and frozen in state for 10days, while the lender and borrower try to come to an agreement. If there isn't one, the borrower can take control of said building, and keep it, or sell it. Borrower rating lowered, and borrower unable to vote against lender's rating.

10) If the due date comes and I don't pay back, what happens to you?

I didn't see any difference between these two, so answered both in Q9.



I think this should be a very interactive addition to the game. When creating a bank, a page loads that gives multiple choices. Some input boxes, like max loan amount, etc.. I scroll option for interest rates(two, 1 for percentage, 1 for partial percentage), check boxes to either enable or disable certain functions, like whether to accept tickets as collateral, whether to make loan eligibility based off rating or debt/asset ratio. Make this very user decision decided, but chosen off the variables allowed.

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PostPosted: Wed Aug 10, 2011 3:33 pm 
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winnerman16 wrote:
1) How do I initiate the process?

I think that if players are allowed to have banks, that there should be a screen, similar to the train page, that shows who all has one, and some very basic information about that bank, current rates, name, and popularity(this is decided by the borrowers, scale 1-10).

Yes, in the financial screen.

Quote:
Company level, current debt to asset ratio must be under a certain level, max borrowing capacity can't exceed 100% company worth.

And a certain requirement for the value of the collateral.
Also, shouldn't we insert borrower rating somewhere?

Quote:
6) Can I pay back at any time or is there a fixed due date?

I think there could be a margin in this. The company chooses an amount of money to borrow, a duration for loan, etc.
A nice option would be allowing people to pay in full in the end, or choosing to pay interest during the loan's duration (in this alternative, people would be allowed to fulfill early).

Quote:
9) If the due date comes and I don't pay back, what happens to me?
The building that has been locked(or tickets if used as collateral) become unusable, and frozen in state for 10days, while the lender and borrower try to come to an agreement. If there isn't one, the borrower can take control of said building, and keep it, or sell it. Borrower rating lowered, and borrower unable to vote against lender's rating.

5-10 days is more than enough, but I can't see how an agreement would be managed.

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PostPosted: Wed Aug 10, 2011 4:04 pm 

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The lender would have a screen. He sets the terms of the extension, and then it's sent to the borrower. If he agrees as-is, the new terms take effect.

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PostPosted: Wed Aug 10, 2011 4:08 pm 

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much like the stock exchange (YET TO COME) THE devs will take years...

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PostPosted: Wed Aug 10, 2011 4:20 pm 
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winnerman16 wrote:
The lender would have a screen. He sets the terms of the extension, and then it's sent to the borrower. If he agrees as-is, the new terms take effect.

Like a loan extension, right? And what if the lender doesn't want to extend it?

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PostPosted: Wed Aug 10, 2011 4:49 pm 

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Quote:
the borrower can take control of said building, and keep it, or sell it. Borrower rating lowered, and borrower unable to vote against lender's rating.

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PostPosted: Thu Aug 11, 2011 2:58 am 
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Committed wrote:
Thank you for reminding me about that one, Aindala.

I want this thread to be focused on very specific answers to the specific problem. Think through the process. Let's say you're the bank and I'm a potential borrower.

1) How do I initiate the process?
2) Do you approve me manually or is it automated?
3) What criteria are necessary? (If manual, this means what do you need to know. If automated, this means what does the system have to check?)
4) When I get the cash, what's recorded?
5) What locks are put in place while I have the loan out?
6) Can I pay back at any time or is there a fixed due date?
7) How is interest calculated?
8) When I pay back, what's recorded? What locks are released or adjustments are made?
9) If the due date comes and I don't pay back, what happens to me?
10) If the due date comes and I don't pay back, what happens to you?

All of those, and any loopholes I didn't think of, must have solid answers. Again let's keep the thread focused on answering these questions as completely as possible and considering all other interactions.



A few insights from Financial Co.

1. Is there a way to implement a board of directors, voting, can be done simply by asking through messages, and cash could be transferred automatically every week or so, like the dividend system to be implemented in stocks, since I’m assuming this will happen after.
2. Banks should be allowed to buy stocks, and have investments etc. that could be done with a profits account or something similar.
3. I’m under the impression banks will be under the same account as the regular business, that’s all fine, but there could be problems, when someone defaults on a loan and the buildings transferred (collateral) take up too many slots. Should they just not be able to be used?
4. There should be separate accounting sheets for banking.
5. More of advice then a rule, but players are going to be hard pressed trying to operate both their business and a bank under the same account.

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PostPosted: Thu Aug 11, 2011 3:07 am 

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It is somewhat ironic, that you decide now to do Financial Markets, just when at the same time in the real world, the problem of overboarded Financial Markets is at an all time high.

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PostPosted: Thu Aug 11, 2011 5:06 am 
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The problem of black market banks here is at an all time high too. :smile:

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PostPosted: Thu Aug 11, 2011 5:25 am 

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what was so wrong with the official Simunomics Bank that has led to everyone wanting to create a player bank?

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PostPosted: Thu Aug 11, 2011 6:31 am 

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If player banks are allowed, then everyone would want to be a banker. People have been talking about restrictions on the borrower, but restrictions need to be put on the bankers as well.
So my idea is: make it compulsory that if a player wants to run a bank, then his company need to go public (with stocks arriving soon)

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