Financing and repossession

[Carlobrand]

What "goalposts" are you talking about? The language you quoted is from an obviously INFORMAL discussion of a NONEXISTENT system. There are no goalposts to move. Nor am I interested in a debate about the deep technical details of a fictional system postulated for an RPG. The FT seems to me to be a reasonable extrapolation from the technology that enables the standard starship transponder. YMMV.

So...if you find the FT idea implausible, THEN DON'T USE IT.

Uh huh.

Since these purported "holes" are based on assumed facts that are not in evidence, you might consider being being a little less strident... Just a thought. ...

The facts were in evidence; I already established that.

You're sounding irritated. It isn't my intention to irritate you, and I don't think HG's sitting there planning how best to get under your skin. If you're feeling offended by anything I say, you have my apologies, but I gotta call 'em as I see 'em. The point here is not to attack you nor to make hash of your idea. We put ideas out there to get feedback from others, and we give feedback in order to help refine those ideas. The end product is usually better for it.

HG's not saying anything a player in your gaming group wouldn't say. If you as gamemaster present your "nonexistent" system as part of their game universe, and they - as gamers are likely to do - start looking for holes to exploit for their own advantage, they are likely to be less than thrilled to have you respond to them as you have to us. If we as gamemasters adopt your system without looking for possible holes that our players can exploit, then it ends up being us sitting there trying to figure out how to deal with it. We all benefit from a "debate" because such a discussion will help reveal and resolve those issues that are likely to crop up in the gaming session itself.

However, if you seriously do not want feedback, then may I respectfully suggest that you indicate that when you post an idea, 'cause most of us take a post as an invitation to provide feedback.

I agree with Aramis that I would like to see the idea incorporated in the existing ship's transponder, and I agree with Spacebadger that a completely foolproof system comes off as gamemaster fiat. It needs to be strong enough to be really challenging, or the criminal syndicates will have a field day and the banks will stop giving loans. However, to make it impossible denies the players an opportunity for an interesting and risky little adventure. I'm also wondering how we'd prevent someone from flying a ship into the Vargr extents and selling it there. The Vargr aren't exactly renowned for honoring Imperial law, and I can't see much that would stop them from pulling out the Imperial transponder and putting one in that identifies the ship as Vargr-owned.

 

[tbeard1999]

The facts were in evidence; I already established that.

Nope. Nowhere did I state that there were "wires" leading to an "antenna", for instance. For that matter, I never stated that there was an accessible connection between the FT and the transmitting device that could be severed at all, much less be severed without trigging an alarm. My home burglar alarm will go off if a wire is clipped; I think that a TL10-15 system protecting a Cr30 million asset would be a tad more robust.

You're sounding irritated. It isn't my intention to irritate you, and I don't think HG's sitting there planning how best to get under your skin. If you're feeling offended by anything I say, you have my apologies, but I gotta call 'em as I see 'em.

As do I. The proposed hacks would not defeat a TL5 home burglar alarm, so forgive me if I'm unimpressed.

And I'm breathlessly awaiting a more plausible explanation for how Traveller banks would protect their investments.

I agree with Spacebadger that a completely foolproof system comes off as gamemaster fiat. It needs to be strong enough to be really challenging, or the criminal syndicates will have a field day and the banks will stop giving loans...

<blink> I never said that the system was foolproof, so you're demolishing a strawman. If you're interested, the FT IMTU are about as hard to crack as high grade starship transponder. Maybe a little tougher since literally millions of credits are at stake.

As a first approximation-- i.e., I can't recall what we did in my old campaigns -- in CT roll 12+ to disable the FT without triggering the alarm. DM + electronics skill. If you fail, make a second roll. If you succeed, nothing happens. If you fail, the alarm sounds just as though the FT was removed.

(Most standard bank loan agreements provide that the bank can call the note if the FT is removed or disabled more than 3 times in any 24 month period, regardless of the reason. Banks can often be persuaded to forego this the first time -- roll 8+, DM + Admin or Carousing; DM -2 for every time that the bank has waived calling the note in the last 2 years; DM -2 if you have a crminal record involving fraud that the bank is aware of.) All of these target numbers should be increased by 2 if your campaign has Book 4+ characters, since Skill levels of 4+ are far more common.

 

[tbeard1999]

Exactly.

Exactly a strawman, since I never stated that the system was foolproof. I only stated that your method -- which wouldn't even defeat a TL5-7 home burglar alarm-- would not be effective to defeat the system (even assuming arguendo that your assumptions are reasonable).

 

[tbeard1999]

As a separate box, it's a problem. If it's a normal component part of the core transponder, it's workable.

I don't agree that it would be unworkable as a separate box. Just thinking out loud here, but the separate module could wirelessly communicate to the ship transponder. If the ship transponder fails to receive a regular signal, then it would assume that the FT had been disabled and sound the alert.

But if it makes you feel better, feel free to make it an integrated unit.

You'll note that I made it a separate unit as a bit of color --

Some may wonder why the FT isn't just integrated with the standard Imperial transponder. The answer lies in ancient and obtuse Villani banking laws that are still part of the Lex Mercatoria (the Imperial Commerce Code).

And since no one here is a qualified TL10-15 electrical engineer, I find it absurd (and rather presumptuous) to debate the inner workings of this device. I took the most reasonable course -- I explained what it did in the context of the game. And as an aside, I did put a lot of thought into what kind of system would be necessary to enable starship financing to work as postulated in Traveller. (In my day job as a business lawyer, I negotiate and structure banking transactions frequently, which informed my postulations; at the very least, I have some professional insight into what banks would require to loan money on the terms established by Traveller canon). This was, by far, the best way I could envision. And so far, I've not read anything better.

 

[tbeard1999]

While we are at it, I kinda have my doubts about the ability of a low-tech bank that lacks the ability to update the transponder, then having the ability to create a forgery-proof receipt instead. If there is so much of a tech gap that they can't update the transponder, I think that any document they could create would probably able to be forged or altered by higher-tech methods.

The receipt is not forgery proof, just challenging.

...Produce valid receipts proving that the DA is being erroneously broadcast. Forged receipts are *very* hard to produce (11+ roll, DM + Forgery skill). The documents will be shipped to the nearest bank for authentication. If they are discovered to be forgeries, you have committed a 2nd degree felony, punishable by 5-10 years and a fine not to exceed cr50,000. The local authorities *may* require you to bond the ship until the documents are verified (15+ to require bond, DM + Law Level, DM -1 per cr2000 spent on a lawyer, max -5). See below for bonding.

Also, it may not be a technology gap that causes banks to issue receipts. Since codes have to be distributed by mail, banks simply might not have the current codes. Paper receipts are an imperfect backup system for that. They allow the bank to get their money (a Very Good Thing in their eyes) at any branch, and allow the shipmaster to carry on, with only modest hassle.

 

[tbeard1999]

Not saying this is any better, but this is what I have in MTU document in regards to limiting lending risks due to piracy and some apply to skipping.

Security
Just a few of the things, IMTU, that help limit piracy of ships.

1) Transponders. I don't know what cannon has to say about this, but IMTU, they are not very easy to disable or imitate. NOTE: You can not 'hack' the transponder like hacking software; it is mostly hard wired and would require gaining physical access. These devices are purposely built into hard to get to locations of a ship that generally require some key ships systems to be shut down and disassembled to access.
2) Mortgage companies. A ship is quite an investment. The computer, transponder, and other key systems are designed such that they need codes entered at certain intervals or else there are consequences. These codes are provided at the time payments are made.
3) More codes. Just like the mortgage company codes, most ships are configured such that captains and crew can set there own codes for key systems. This is for limiting access to only authorized persons and also it can cause something to happen when a code is not entered within a certain interval. This helps reduce hyjacking, sabotage, and pirating.
4) Secret modifications can be added to ships. Some more technical folk even add their own unique features in both hardware and software. Hidden shut off valves. Remote activated self destruct to burn out a circuit board, and anything anyone might imagine.

The reason that I rejected thing like having to enter codes is that such systems could leave ships stranded and cause a lot of deaths. What if the captain dies? What if the codes are incorrectly written down? Etc.

The FTs do not disable the ship (well, not after the Pecunious Magnus disaster). They only broadcast the fact that the shipowner is in default. This gives salvage agents, skip tracers and portmasters the legal authority to sieze the ship. (And legally entitles them to collect a fee for doing so). The system protects the lenders because it appeals to the self-interest of others who will effectively act as repo agents for the bank.

The one flaw is that the system envisions the starship frequenting civilized systems. If a ship could somehow avoid civilized systems, it is possible that the bank might have to wait a very long time before recovering its collateral. Banks are typically willing to run that risk, since a very tiny percent of ships might do this.

The canon loan terms strongly imply that foreign governments would enfore Imperial banking laws. Otherwise, bank loans would be on far more onerous terms than in Traveller canon, since folks could steal ships by taking them into foreign space. (That is the case regardless of whether you use the FT).

Note too that ships are required to make payments at a particular location, or pay a penalty:

The loan agreement specifies where payments must be made, usually the main office of the bank on the world where the ship is delivered. Banks usually allow you to make payments at any branch bank, affiliate bank or Imperial Reserve Bank.

Most loan agreements contain extra fees for payments made far away. Pretty typical is a fee of 1% of the payment for every parsec of distance from the main bank. Banks will "transfer" your loan to a branch bank in another system, thereby relieving you of the fee. However, this costs a flat cr10,000 and takes 6 weeks. So if you have a "home port", you'll want to transfer your loan there.

Standard late payment fees are 5% of the payment per week it's late. So if you're 3 weeks late with a payment, you must pay the payment plus 15% more.

Note too that banks are NEVER required to make a loan. Bank loan officers will take any specific knowledge they have (or that they think they have) into account when determining whether to make a loan.

 

[SpaceBadger]

Standard late payment fees are 5% of the payment per week it's late. So if you're 3 weeks late with a payment, you must pay the payment plus 15% more.

Not on my mortgage, nor the few times I have financed a vehicle, nothing that onerous. I think a late fee that high might violate usury laws in many states. Do you have any particular experience with loans made on big ocean-going ships? That might be more persuasive.

Note too that banks are NEVER required to make a loan. Bank loan officers will take any specific knowledge they have (or that they think they have) into account when determining whether to make a loan.

Banks are never required to make any particular loan, but if they don't make any loans at all they go out of business. The trick for a loan officer if trying to avoid the loans that won't pay off, while still making enough loans to show a profit on his/her own loan portfpolio to advance his/her career w the bank.

 

[tbeard1999]

Not on my mortgage, nor the few times I have financed a vehicle, nothing that onerous. I think a late fee that high might violate usury laws in many states. Do you have any particular experience with loans made on big ocean-going ships? That might be more persuasive.

Actually, yes. Airplanes too. They're not markedly different than other types of equipment loans (though they have certain unique features, mainly things like inspection requirements, what ship equipment can be counted as part of the value of the ship/plane, etc.) They also usually have financial covenants that are similar to what you find in business loans.

However, the BIG difference between loans in 2013 AD and Traveller is that there is no instantaneous communication. So financial transactions in Traveller look more like 18th century financial arrangements than anything else. It would be a major hassle for a Traveller bank if someone paid at multiple branches, given the communications lag. The penalty is designed to cover that. (It also encourages a shipmaster to keep close to the bank, which makes the bank more likely to be able to find its collateral.)

This is a CRITICAL point -- the lack of instantaneous communications makes Traveller business transactions very different from 21st century transactions.

And every promissory note I've read state the place where payment must be made. In a world where most things can be paid instantaneously, or mailed to a destination in a day or two, these provisions are not a big deal. But if it would take (say) a month for payments to reach their destination, then it matters a lot.

Banks are never required to make any particular loan, but if they don't make any loans at all they go out of business. The trick for a loan officer if trying to avoid the loans that won't pay off.

Exactly. And given the low interest rates on Traveller ship loans, banks will be forced to decline risky borrowers (or charge a MUCH higher interest rate than canon establishes). My point is to remind players that banks cannot be stupid, or they will not stay in business. So your banker will take into consideration anything he knows about you. Best not tell him about the fraud charges on Omicron V last year when trying to get a starship loan...

 

[CosmicGamer]

The reason that I rejected thing like having to enter codes is that such systems could leave ships stranded and cause a lot of deaths.

The FTs do not disable the ship (well, not after the Pecunious Magnus disaster). They only broadcast the fact that the shipowner is in default.

Your repeating what was done to you. While I don't say what you suggest is not a possibility, I never say it is either. I simply say "or else there are consequences". This could be very similar to your very own example where certain broadcasts are made notifying authorities, or in some cases anyone listening, that a ship is not operating within compliance.

I'm purposely vague because even in my own games this can vary from one region of space to another. From one mortgage lenders requirements to another. From how one Mega Corporation decides to do things vs another. And so on

I'd figure for instances where systems could leave ships stranded and cause deaths is a possibility "not entering codes" probably means people are already dead or otherwise incapacitated otherwise why are the codes not being entered?

What if the codes are incorrectly written down? Etc.

First, let me apologize. My use of the term "codes" might not be the best. Here I envision multiple possibilities for how these "codes" could be provided. These "codes" could be anything from a much higher TL car remote needed to open the ship when you return to it, a much higher TL physical access smart card with biometrics, and all sorts of possibilities imagined by anyone now or in the future.

I'm not sure why a written code that is used, perhaps with high tech real time hand writing analysis, would be an issue. As always, I really don't want to get into specifics of how this is handled as if this is the only way in the entirety of the universe. What happens if you enter the wrong password for a computer or a bank account or an email account? What happens if you walk up to a car with a remote that is for a different car? What happens if you use a swipe card to try and access a location you are not authorized? What happens when you have a really bad cold and are using voice recognition software?

What if the captain dies?

Too many variables to answer and I don't like getting specific because yet again it is not always the same in all situations. From a small scout ship operated by two people who both share 100% access vs a ship with thousands of people on board. From a Captain being the sole owner of a ship and owning it 100% outright so the ship is held until such time as a will or other proceedings determine who is now the rightful owner. To whoever the XO or first officer or whatever the rank structure is, someone is promoted to Captain. To the ship is owned by a business and their rules, laws, regulations or whatever you want to call it will determine how a new captain is put in place. To a mortgage agreement allowing the lender to require immediate payment in full or request return of the ship if the vetted Captain listed as part of the business plan submitted to get the loan dies or is otherwise no longer capable of running the vessel. And so on.

 

[rancke]

And I'm breathlessly awaiting a more plausible explanation for how Traveller banks would protect their investments.

They carefully examine the life and character of the prospective loan-taker, evaluate his business plan, and figure out the likelihood that he will be willing and able to service the loan. If he defaults, they take over the ship and refinance it for the next optimist. If he skips, they put up a reward for the return of the ship. (Or they cash in the insurance and the insurance company puts up a reward).


Hans

 

[HG_B]

They carefully examine the life and character of the prospective loan-taker, evaluate his business plan, and figure out the likelihood that he will be willing and able to service the loan. If he defaults, they take over the ship and refinance it for the next optimist. If he skips, they put up a reward for the return of the ship. (Or they cash in the insurance and the insurance company puts up a reward).


Hans

Correct Hans. And with 20% down payment, they can hire the best to get the ships back for a re-loan AND still make a hefty profit. Very obvious stuff based on how loans have been made throughout recorded history.

 

[tbeard1999]

They carefully examine the life and character of the prospective loan-taker, evaluate his business plan, and figure out the likelihood that he will be willing and able to service the loan. If he defaults, they take over the ship and refinance it for the next optimist. If he skips, they put up a reward for the return of the ship. (Or they cash in the insurance and the insurance company puts up a reward).
Hans

Glib, but hardly plausible IMHO. In societies where the only effective recourse for lenders is to "avoid loans to people who may not pay you back", loans are limited to family and tribal groups. Loan terms are typically far shorter and interest rates are typically FAR higher than the terms/rates in Traveller canon. This seriously hinders the development of a modern economy, since collateral is effectively worthless in such systems.

See Hernando deSoto's "The Mystery of Capital" for an extensive discussion of this problem.

In any case, if that's how you want it in your campaign, it's okay with me.

 

[tbeard1999]

Correct Hans. And with 20% down payment, they can hire the best to get the ships back for a re-loan AND still make a hefty profit. Very obvious stuff based on how loans have been made throughout recorded history.

Not at all, really.

 

[rancke]

Glib, but hardly plausible IMHO.

I was of your opinion until a few months ago where I had a long vigorous discussion on this very subject. It turns out that that is just how (some) ships were financed back in the first half of the 20th Century. Shipyards promoted that sort of financing in order to have ships to build.


Hans

 

[Fritz_Brown]

Not on my mortgage, nor the few times I have financed a vehicle, nothing that onerous.

On a line of credit I have, the late fee penalty is 20% of the payment. That might be because the minimum payment is somewhat small (though, that's a relative term - it's definitely small compared to a Traveller ship loan!), and a lot of American institutions have set fees below a certain point. I can definitely see 5% be a late payment fee. (I also have seen grace periods built-in to loans: a loan due on the 1st doesn't have any late fees until the 15th; which means the effective due date is the 15th. Odd, but I don't own the bank, though I do appreciate the leeway.)

Glib, but hardly plausible IMHO. In societies where the only effective recourse for lenders is to "avoid loans to people who may not pay you back", loans are limited to family and tribal groups.

I think Hans just said there was effective recourse. That was his point.

 

[HG_B]

Not at all, really.

That was non sequitur. Responding to a different post?

 

[SpaceBadger]

However did they manage in the Age of Sail when communication lags were much longer than in the 3I? Or how about during the Roman Empire, as I believe they also had lender financing of merchant fleets and goods?

Lending decisions were made on judgments about character and credit-worthiness, including references, connections, and history of past conduct. A lender who made a bad decision could go broke. A lender could also go broke if a bad storm sank the fleet or some part of it; I believe this is why Lloyd's of London came about to connect merchants w persons willing to underwrite insurance for them.

 

[aramis]

However did they manage in the Age of Sail when communication lags were much longer than in the 3I?

generally, they weren't longer delays. A Traveller bank might be up to 6 months from the ship. The same is true for age of sail ships.

Most age of sail ships were not long-haul, either - most were simply sailing the med, and thus not more than a month away.

Generally, tho', the lending decisions were made by investment, not by banks. (Tho' banks often invested, and later required riders to ensure the bank's interests were met.)

Captain X would buy his commission. He would then seek investors to buy him a ship for a return on the profits for X trips or X total return. Sometimes, he'd rent a ship instead. Often, if the voyage failed to make the needed profit, the stockholders would get the crown to force the ship to be sold and the proceeds distributed amongst the stockholders.

The key determinants were (1) the commission as a civil ship's master, (2) a history of sailing or a competent sailing master on crontract, (3) a history of proven runs as an officer of a company (4) attestations from notables as to the good character of the master(s) involved.

 

[tbeard1999]

I was of your opinion until a few months ago where I had a long vigorous discussion on this very subject. It turns out that that is just how (some) ships were financed back in the first half of the 20th Century. Shipyards promoted that sort of financing in order to have ships to build.


Hans

I'm aware of that, having handled financing deals like that.

But again, the collossal problem with using the 20th century as a template is that the 20th century has instantaneous communications. Lose that and the entire paradigm changes.

 

[tbeard1999]

That was non sequitur. Responding to a different post?

Nope, responding to you. Re-read it; I think you can figure it out (particularly since I quoted what I was responding to).