FBSL Beginning Banking Operations

Yes. This will happen eventually. One day I predict every transaction in SL will be monitored and taxed. Enjoy nice time until that happens

FBSL ATM now up and running, providing information only at this stage. The FBSL office is located in New BonnyDoon (Living Cities) in the BonnyDoon Sim located just across from the USL Library and the Free Money Tree. You can obtain information about the bank, privacy policies, rate information, and account information. I'll be adding the ability to purchase CDs/bonds shortly.

The ATM will eventually provide account status, balance, payment, deposit, etc. If you have an account, please contact Hank Ramos directly. I'm logged in most days, and will return your messages as soon as I can.

I'm a little suprised by your bank but it all seems reasonable.

Something that comes to mind that you will need to form is a credit reporting agency.

In moments of lapses of judgement i've lent out money and yet to see any of it return to me. But i kept thier names on file. I wouldn't want you making the same mistake.

My thoughts exactly. I plan on keeping internal records of "bad credit risks", and possibly sharing it with other banks and financial institutions. But I don't like RL credit reporting agencies in a big way, they have screwed me over several times with wrong info. So I'll be taking a light approach.

Excellent!

Things get done in SL by those who do and those who take the risks...

If you have a FBSL note card drop it on me sometime.

I may be one of the first people to come abegging at the FBSL. Anshe Chung recently made some land available in my sim, and after having carefully considered the risk in letting it get purchased by some random Joe Schmoe, I decided to take out a mortgage for the value of the land which I couldn't currently cover. Hank came by immediately, and we discussed the terms of the mortgage. In the end, I was very comfortable with the way he dealt with the loan. I never felt as if he were trying to scam me, nor did I worry that I would become the victim of an SL loan shark. He was flexible in the extreme, and incredibly expedient. He definitely went above and beyond the call of duty, especially since his net profit will be less than 2000 lindens when the entire mortgage has been paid off.

I just thought I'd offer some real experience with Hank and the FBSL enterprise, to temper the speculation and debate.

I already thought of a solution to this, while thinking of SL banking the other day: have those getting a mortgage or loan bank it up with their computer as collateral, and require them to submit some verified identity information, at least like Paypal's verification system. If they default on the loan, they forfeit their computer. (Well, some other RL collateral could be considered...)

What about something like this? I assume that loans in SL will be fairly small amounts, for the most part, so some kind of simple collateral and collections system might be possible to develop to back it up, with some kind of RL basis.

(Another thing that could be considered is having co-signers for loans, which would enable the utilization of informal trust networks.)

Yeah, that'd work. Let's have the SL bailiffs round your house.

Bailiffs are the fucking scum of this earth, and the less we see off them the better. Keep ideas like this OUT of SL.

Hiro, as long as Congress, the States and tax lawyers cannot agree on determining where electronic purchases are made, the status quo will hold up. For example, if I am conducting business with Anshe and she is in Europe, which tax rate applies and how is it collected?

Some would argue that it all goes through LL so California rates should apply. But, that won't hold water for the 'ban online poker' people who claim that if you are playing poker online in Ohio, the game and transactions are occuring in Ohio, not Aruba.

I wouldn't expect taxation or regulation anytime soon. If anything overlaps rl law and SL it would be something like the division of SL property being part of a rl divorce case. That would make thesmokinggun.com

What do you mean by bailiff? The image that word brings to my mind is an officer in a courtroom. http://en.wikipedia.org/wiki/Bailiff says "In the United States the word bailiff has no special significance. It is sometimes applied to the officer who takes charge of juries and waits upon the court. The officer who corresponds to the English sheriff's bailiff is termed a deputy or under-sheriff."

I assume you mean somone serving summonses and warrants. Or... bill collectors?

Anyway, my main point is that in order for serious banking to occur in SL, at least some of it will have to be backed up by collateral or, at a minimum, some kind of formal identity verification. This would, of course, be a voluntary option that only some people would be interested in taking up.

There are complications involved in getting into debt, including possibility of being harrassed by debt collectors upon default (though their ability to do this is highly regulated due to the potential for abuse) or even being sued, which, yes, would involve getting the court system into it. Bankruptcies are a startlingly common outcome these days, due to people getting into debt that they cannot pay off.

There are a range of strong ideas about how much SL ought to be treated as a fantasy game vs. a manifestation of RL concepts. Those people who don't want to bring RL processes into SL have the option of not participating in activities that involve them.


I agree. One thing that I think will keep these agencies at somewhat of a distance is that most of the transactions involved in SL are basically pocket change, and therefore are likely to fall below the radar of those agencies. However, I think that no matter what LL's policy is, or whether or not they exchange currency themselves, as long as L$ have a de facto value, including convertability to US$, if the amounts involved are large enough there would be little question about the applicability of relevant laws governing commerce, banking, investment, and gambling. However, who exactly those laws apply to, and at what dollar amounts they become relevant, don't seem to be well-defined yet.


I think it could be argued that L$ really is a kind of "actual" currency. This is a very interesting question, as it has a lot of implications. As I wrote in the above paragraph, I think what this question will come down to is the amounts of money that are involved. In fact, while it's all a bit experimental, land or money owned in SL really does have some real-world correlates at some level. My current level of knowledge isn't sufficient enough to sort through these various arguments about "virtual game money" vs. "RL money". But I find the whole set of issues very intriguing and I intend to research them further.

Is it time for someone to start a mortgage-default-insurance company? Someone with a lot of capital? Anshe, I'm looking in your direction...

I have successfully completed 3 land mortgages (paid in full) and have land mortages currently (in good standing). The borrower and I work out a payment plan that they are comfortable with before taking on the loan.

If there is a default, the land itself is already secured by the bank (the only real property that can be secured in Second Life right now), and is sold at auction if needed to payback the remaining balance of the loan.

Some of us are in the real world outside of the United States. A bailiff is someone who knocks on your door, announces to you that Company X has not received payment from you for good / services rendered / credit card debt etc. and they will be taking possessions from you tp the value of the money owed. In many cases, people lose their homes to these surplus parasites.

Excellent!

Is CD/Bond money being used to finance the mortgage business?

I donno...L$42 to hold my L$10,000 for 84/SLdays (nearly 2 weeks). I'd make more money visiting events with moneyballs passing out money and I'd be more likely to win more than L$42 in 2 weeks.

Lemme know when the Bank offers more than 10% per week, otherwise my Stipends are a better investment.

I love the idea, but the reward/benefit just isn't there..

Yes, interest rates aren't that high. But, you'd have to expect that from a stable business model If I were to give out 10% interest per week, I'd have to charge sky-high mortage rates. I only expect investment from folks who have L$ sitting idle in their accounts.

Yes, you can make more L$ by actually working in SL. This allows you to make money on your L$ without doing anything at all!

wow.. nice idea...

how did u come to this idea? its so original

I do not know about any of the math or tech of this idea or how reliable any of the systems are or can be.

But I would trust Hank with money or land or just about anything. He was my neighbour for a long time in Tehama and I trusted him with both extensive land and money and he is a great and honoured friend. I know from experience I could give him all my lands and money to look after and that so far as he could control he would be the most trustable person I could find and would protect my interests no matter what.

Good luck Hank

Oh yeah, no doubt about it. Hank is trust worthy. I'd stick my red money into his pockets for safe keeping too. But until I see a better ROI, its not worth it to me. But hey, thats just me..

My overall base line is Stipends. If an investment pays more than base stipends per wk, its a done deal. But L$42 just doesn't kick it for me.

Stipends aren't investments. They are handouts from Linden Labs.

An investment is where you put your money into something, and expect a return. If you want more return than I'm offering, you must have found something that needs the money and can make a lot of money from that, or it's a scheme of some kind.

I'm offering sustainable return on low risk loans offered through the bank. Not some kind of get-rich scheme. If you want 2000% return, find someone doing that. Chances are they will take your money.

Hank, Hank, Hank. I'm not talking about Get rich schemes or 2000% returns. I'm talking about reasonable returns actually worth something that are in line with the game itself.
L$231 profit 2/months from now for holding up L$10,000 is worthless. Its only a 2.31% gain. Is it something better than nothing? Sure it is. But its closer to nothing, than something. Yet you seem to speak as if myself or others should be grateful that you are providing use with a measely 2.31% return after 2/months. Even less for shorter term Bonds/CDs.

The average player receives L$250-L$500 a week for doing nothing. To even exceed that income level, they would need to deposit over L$20,000 with you to be held for 8/weeks. Yet if they hold their money and do nothing, LL gives them that much money. I know you are saying Stipends are handouts and not investments, but the fact of the matter is that your investments don't exceed stipends which have ZERO risk.

The 1st player who figures out how to pay 5%, 8%, 10% ROI per week will steal the show. The problem is that your income to fund the Bonds/CDs comes from interest on mortgage payments. And in a declining land market, players who default on loans leave you with land that is worth less than what you bought it for. In turn, it makes it hard to sell to recoup a profit, which then means the interest you payout in CDs is at risk of you not having the cash to fund people.

But don't get me wrong, its a great idea. But low risk, I don't think so. All CD holders are really doing to loaning you cash to become a land baron/loan officer and risk CD holders cash on shakey land transactions. Now if we had corporations in SL which could issue stock, pay dividends, and average a steady reason ROI which your CDs could be backed up against. No problem. Because it would take the collapse of SL's businesses to put the diversified CDs into jeopardy. But CDs backup by land-mortgage is RISKY....

Unless there is some scheme that is backing up CDs besides land. But from what I can tell, your source of income to fund the bonds is off the interest from mortgaged land. One cannot live without the other. And with LL pumping endless supplies of land into SL with no end in sight and an ever declining market price, its just not worth the risk to be the guinea pig when things go of track.


And I quote:


Q: Will I lose all of my money? What are our deposits backed by? Are they insured?

A: You will not lose all of your money. The money you invest is used to fund land mortages. All deposits are backed by the land that we have mortages on. If someone defaults on a mortage, we take their land. There is no FDIC insurance in SL, and LL will not (well, I never asked) insure your deposit. There is always risk in investments




But this does bring up and interesting idea.. Insurance Companies in SL. Now if such existed to insure your mortgage company against defaults, then CDs/Bonds just might be a grand idea. Although the lack luster 2.31% or less on L$10,000 just seems too little for so much considering the average SL user only holds L$1000.

How can you compare the stipend with interest on investment? The stipend is not a return on investment. You didn't invest in anything. /me is confused. Yes, the return is small. But it's in-line with RL CDs/bonds. Those investments are safe and backed by me personally.

As for the land market being soft, yes. That's why I insist on 20% down, and I tailor the amount I finance to the amount that I believe I can get by auctioning the land off. Land will not go below L$2 per sqm for the forseable future, IMHO.

Yeah, I'm confused about your question as well!

You seriously think SL businesses are more stable than land? Wow Alby, explain that further.

Seriously, land is a much better investment than investing in businesses where people have 0 liability if they close-up shop, steal people's investments, or just simply leave the game.

I'm not loaning cash to become a "land baron". None of the money will be used to buy up and sell land. That's what a "land baron" does. The bank simply finances the purchase of land (from any seller) at a fixed interest rate and payment plan.

In any investment, the higher the return, the more the risk. A low return investment that is backed by insurance (in this case me), is always secure. If you invest in a SL company promising 10% returns, you are putting your money in serious jeopardy compared to my investments.

When I say that SL businesses would be a much better backing to CDs than land, what I'm refering to is diversified risk. Overall, CDs are backed by 1 industry, and that is real estate. If CDs were backed by, lets assume dividends from SL businesses", what you can do is diversify the risk among hundreds of SL businesses. Sure will a few go under, corrupt players not pay dividends, etc? Yes, it most likely will. But the overall majority wil continue to sell their Tshirts, Dance Scripts, Club equipment, etc... And with such a diversified industry backing up the CDs, SL would have to implode before the CDs backing become a risk. Unlike land which can drop 50% in value by next month. Not to mention that Land/Real Estate has no protection against inflation, unlike diversified dividend holdings of various SL businesses which would only increase the L$ payouts as inflation rose.

Overall, the tools at our disposal are about as good as it gets for right now. And I suppose I'm not really fussing about your banking center, so much as I'm fussing about the lack of LL attention to creating the tools to grow the financial centers in SL... Incorporation of SL businesses, a Stock Market to trade SL securities, Banking Centers to provide liquidity for growth, etc.. All these possible features LL could create are just left on the table.

I run Horse Racing Track and net about L$1,000k-L$2,000k in profit a day. I would love to issue stock in that business, sell ownership and increase the 'market' value of the business, issue dividends to owners, and share the wealth. Which in turn provides me fund to invest into the next business idea. And on goes the growth of SL with investors who get rich riding the coat tails of this growth. But we just don't have the tools...