The difference is whether we consider the bank a legal entity in its own right, one that can enter into contracts, sue and be sued, etc. Even today, with quite liberalized systems of general incorporation laws as opposed to requiring charters to incorporate, you still need to file paperwork to establish an LLC or an NGO or the like.
So to give a modern analogy, let’s say I decide to open a bank – I rent some office space, hire some people to help me run the bank, put out a sign saying “Bank of Steve now open,” etc. If I don’t do the paperwork to establish the bank as a formal institution, I’m going to have some serious trouble if someone defaults on a mortgage, because the “Bank of Steve” can’t sue someone in court and the defaulter didn’t borrow any money from Steve Attewell personally.
Moreover, banks do more than just give out loans. They also borrow money and invest money, they own real estate and other forms of property, they act as depository institutions, they act as financial middlemen, and so on and so forth. You need some legal framework to legalize these functions and to formalize how disputes that arise from these functions could be resolved.
So in the Westerosi context, without a royal charter that sets out the structure, rights, privileges, and limitations of the Bank, there’s no way to resolve major questions like: can the Bank own land? Who owns the lordship of that land, since “nulle terre sans seigneur”? Can the Bank be summoned to fight for the liege lord of that land, and can it be convicted of a felony if it doesn’t show up? (Likewise, can the Bank summon people to fight for it, and can it convict people of felonies for not showing up?) If someone who’s defaulted on their debt dies, does the Bank inherit their land or the eldest son of the defaulter?
there’s no way to resolve major questions like: can the Bank own land?
… there’s not?
I mean… realistically speaking, wouldn’t those questions be resolved in the same way as any other legal question, with the Iron Throne and/or the Lords Paramount ruling on them?
The answers might not be to the liking of the hypothetical Golden Bank, of course. The answers to “can the bank own land” and “can the bank seize land” and “can the bank sue people” might be “no, no, and no. You’re out of luck, Lannisters.”
I had just assumed that in the absence of a royal charter, any business a hypothetical Golden Bank did would be, notionally, done via personal loans issued by people. The Golden Bank would not loan golden dragons to a Reacherman or Stormlander; a specific person within the Golden Bank would issue the loan as one person loaning money to another (in the same way Tytos Lannister issued loans), and because individual people have rights even though the bank does not that person would be able to sue to enforce them.
It would be very much a legal fiction… but in the same way flags of convenience and shell corporations are legal fictions. The Bank could exist in a very real way and have very legal ways of exacting its pounds of flesh despite the lack of a charter.
This is an extremely awkward way of doing things but I don’t why it isn’t workable if the Lannisters decided they wanted to get into moneylending in a big way.
Historically speaking, a charter is exactly how the crown (and not the Lords Paramount, save for the Great Councils and even then that’s not just the LPs) would rule on the matter, by creating a legal identity for the bank that delineated the bank’s rights and responsibilities.
In the scenario you outline, there are some real difficulties you’re assuming are just workable. If a specific Lannister is originating the loan, if they take possession of a fiefdom upon default, do they pay feudal relief as the heir would, and if they don’t do they actually own it? Do they conduct the ceremony of “livery of seisen”? What happens if the liege lord of that fiefdom summons that Lannister to fight for them? If that Lannister dies unexpectedly, how is inheritance sorted out?
And those are just the legal difficulties: imagine the political difficulties that could arise if land, wealth, and title aren’t concentrated in the head of the House but by necessity has to be distributed among all the members of the House. How do you prevent embezzlement and fraud when the subordinate has legal title and the superior doesn’t? How do you prevent the heirs of the “placeholder” from claiming the inheritance of their fathers, when all of Westerosi law says they can?
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