What is the Iron Bank Up To?

[digger]

The first part is easy. Sweeping away the fragile narrative that is presented to the POV characters. It is so flimsy that any scrutiny makes it crumble. And yet I see very little discussion of what their actual agenda might be. The POV characters accept the narrative because they mostly have other things to pay attention to, and most of them know next to nothing about high finance anyway.

Supposedly, the Iron Bank is an innocent money lender. They lent money to the crown in good faith, with expectation of getting their money back with interest, or perhaps just receiving debt service until the end of time. When the crown reneged on the debt service, the Iron Bank had no choice but to call in all Westerosi loans and lend even more money to Stannis, in a last ditch hope to get their money back in the end.

This seams extremely unlikely. The narrative explanation for the crown's debt is that Robert is spendthrift. But others with far bigger calculators than mine have shown that Robert's spending doesn't even come close to explaining the massive scale of the debt. It's been a very long, relatively peaceful summer. If the crown can't stop running up huge debts in the best of times, it's a fool bank that would keep lending them more good money after bad. And the Iron Bank are no fools.

The second thing to realize is that Littlefinger is most likely in league with the Iron Bank. Iron Bank representatives are coming to King's Landing throughout the story, and POV characters always send them off to Littlefinger without a thought. He's the master of coin, and no one can even understand his books, even if they were inclined to look at them. But the Iron Bankers can understand them. And they would definitely want to look at the books if they were being asked to pony up even more money on top of the existing debt. No good bank would fail to perform due diligence.

When we accept that Littlefinger and the Iron Bank must certainly have some sort of understanding, Littlefinger's rise to power looks somewhat suspicious. He wasn't just handed the position of Master of Coin. He showed the ability to make money appear out of nowhere as a port master. The Iron Bank could have been bankrolling him from the start, installing their man in the perfect place to promote their agenda.

There's a good chance that the Iron Bank hasn't actually shipped any gold to Westeros in quite some time. We only have Littlefinger's and the Iron Bank's word for it that they have. The crown has also been borrowing a lot of money from the Faith, and from the Lannisters. That, on top of actual taxes, should more than cover actual expenses. On top of that, Littlefinger has been investing in the crown's name. But everyone who's even capable of sorting the books out is either dead or exiled or too busy fighting the war that Littlefinger arranged. So for all we know that's just a house of cards ponzi scheme and Littlefinger skipped town with all of the cash. We also know that Littlefinger had an extensive system of embezzlement. The biggest peak we get into this is the Black Cell jailers who didn't exist drawing salaries. Nobody was watching the hen house, and this fox had his way for years.

Another thing that Littlefinger spent a lot of money on was creating a culture of corruption and graft in the court and Gold Cloaks. This had two effects. It gave Littlefinger outsized influence, the ability to impact events directly. We see this in the immediate succession fight after Robert dies. Littlefinger is throwing a ton of money around, and so he's the one who's really in charge. The secondary impact is a destabilizing effect. When the crown and the richest house in Westeros are both broke because Littlefinger has been sucking money out of them for years, how are they supposed to govern a capital city with a court so used to graft and corruption greasing the wheels? Especially when the Iron Bank calls in all their loans, and suddenly nobody has any money to throw around, but everyone needs it.

The Iron Bank and Littlefinger both seem to have the same end game in mind. Destabilizing the realm politically, financially, and militarily, until they can install a puppet king on the throne. Littlefinger is more interested in power. But the Iron Bank just wants an austerity regime servicing debt until the end of time. And the beauty of it is that the Iron Bank probably didn't even have to put much money in, besides some start-up funds to convince everyone that Littlefinger was a financial magician.

They don't even really need Stannis. He's tied up in the North and who knows when or even if he'll make it back South. They're going to use him as a figurehead to spend their own money to buy sellswords and sellsails in Braavos and the other free cities, and in the end tack it on to the bill and make Westeros pay for their own invasion, and say yes thank you may I have another.

[AdesteFideles]

22 minutes ago, digger said:

No good bank would fail to perform due diligence.

If only that were true in the real world.

[Michael Mertyns]

The Iron Bank will have its due.

The state of Westeros in the beginning of the series seems pretty good for the Iron Bank. The Iron Throne is in debt, but it seems to be paying the Iron Bank something. If the Iron Throne continues to pay, but doesn't fully pay off the loan, the interest on the loan will accumulate and the Iron Bank ends up with even more money.

[digger]

8 hours ago, AdesteFideles said:

If only that were true in the real world.

In the real world, we've got, ahem, iron clad evidence that the best banks had full knowledge of what was going on, and were making a profit while playing the rest of us for fools. For instance, Goldman Sachs was specifically bundling bad debt into AAA rated securities and selling them to unsuspecting customers.

A good bank does perform due diligence. It just doesn't tell everyone else about it. If the Iron Bank acted the way they want everyone to believe they're acting, they wouldn't stay on top of the high finance game for long.

[digger]

So let's say my interpretation is wrong. It very well could be. I'd still like to see some discussion of what's actually going on. There's a whole lot of money borrowed the crown's name, during a long, relatively peaceful summer when the crown really ought to have been running a surplus. Where's the money at?

[CJ McLannister]

36 minutes ago, digger said:

 Where's the money at?

In the coffers of the lords of Westeros.  Robert wasted plenty of money on feasts and trappings, but not enough to run up a debt.  In a feudal society debt is caused by either war, famine, or mismanagement.  The Crown spent money, but didn't collect enough.  I blame Jon Arryn.  He essentially bought peace by keeping taxes low and allowing Robert to be generous with his favors.  Sure, Littlefinger was padding the books, but, again, not enough to run up debts like that.

[The Drunkard]

In this instance I'd blame it on GRRM not being great with numbers. He wanted to hammer home the idea that Robert was an irresponsible spender and that Littlefinger was a corrupt Master of Coin but went too far and came up with an unreasonable level of debt. 

The Iron Bank's actions seem consistent with their stated motives and history. They were happy with the prior arrangement in which they were receiving repayments, but, when Cersei called a stop to that, they did what they always do for the sake of their dangerous reputation: back a rival candidate. Stannis was the only viable one around at the time and he happens to be a great military commander with a reputation for meeting his responsibilities, so they decide to throw their weight behind him. I don't think a conspiracy theory is more believable or adds anything, given Varys and Illyrio are already doing basically the same thing.

[Magnus9]

I hope you guys are right in some combination of your speculation - that there's a REASON for the crown's insolvency. Because, yes, without a war being fought or a massive building program underway (which there wasn't), the treasury shouldn't have been so compromised under Robert. If it's just sloppy writing that will be a major bummer.

[Runaway Penguin]

Not sure, for example the Czech king John of Luxembourg managed to throw the Crown pretty heavily into debt by very similar lifestyle as Robert

[Lord Vance II]

43 minutes ago, The Drunkard said:

In this instance I'd blame it on GRRM not being great with numbers. He wanted to hammer home the idea that Robert was an irresponsible spender and that Littlefinger was a corrupt Master of Coin but went too far and came up with an unreasonable level of debt. 

I've always wanted some reference as to how much the crown's debt really means to the Iron Bank. It's what, a bit less than 3 million gold dragons? It's obviously a massive amount, but in the grand scheme of the Iron Bank, how much is it? If they have, say, 50 million out to various groups, it may not be that massive deal, but more about keeping their reputation. If they have 10 million out, then they need that money. 

I've also thought it's interesting that the Lannisters own even more of the crowns debt than the IB. Yes, they are ridiculously wealthy and can literally print money and the Lannisters are probably just fine holding the debt over the crowns head...but if one family can have 3 million out, the largest bank in the world can't need it that badly, from a pure nickle and dime view. 

45 minutes ago, The Drunkard said:

Stannis was the only viable one around at the time and he happens to be a great military commander with a reputation for meeting his responsibilities, so they decide to throw their weight behind him.

Exactly. Backing Stannis isn't as dumb a move as many think. It's a long shot, but if Stannis pulls it off they're almost guaranteed their money will start to flow back. 

[cyberdirectorfreedom]

Honestly, I think the Iron Bank's game is exactly what it seems to be; they want money. Banks become wealthy because people feel secure with giving them their money. People wouldn't feel secure giving money to the Iron Bank if it turned out that they had some plot to scam Westeros and put some puppet King in charge.

They lend money, they get money back, plus interest. I'm sure that's all there is to it; sure, they have the reputation, but that's because banking is a relatively new thing; banking in our world was created, in large parts, by the Templars and the Knights Hospitaller. Military orders. They had their own protection, their own way of forcing their clientele to keep faith, ensuring debt was paid. The Iron Bank don't, really; but they (probably) have the Faceless Men on their side, and they ruthlessly finance their debtors enemies in order to receive the payment they are owed.

So, I really think that they're just a classic example of a medieval bank, only that they use assassins and underhanded tactics to ensure they get paid rather than a military force.

If it turns out that they're something more, I'd honestly be rather surprised.

[Seams]

I think you're right about Littlefinger and the bank working together. I suspect that Littlefinger went to Braavos after he "lost" his duel with Brandon Stark (the uncle) and that he may have spent some time with the Faceless Men. (He probably told Catelyn about his travel plans in the letter she burned without reading.) If the story of his family origin is true, he might have family ties in Braavos, too.

I like the idea that the Bank backed him when he was still at Gulltown, building his reputation as a skilled financial manager. I have this sneaking suspicion that Littlefinger has found people to be "gullible" and that this began with his Gulltown work.

The gold dragon coin is a clue to both Littlefinger and the Bank of Braavos, I think. Geoffrey, of all people, compares the coins to real dragons when he tells Sansa about the death of Viserys Targaryen who had molten gold poured on his head. I think that was a hint for the reader that we are supposed to look for other comparisons between the animal and the coin. If that is a correct interpretation, it might be that the Iron Bank went to great lengths to strike a deal with Stannis because he lived on Dragonstone. They may be trying to gain control of his home (one of the few tangible things he could offer as collateral for a loan). Dragonstone is the best location to hatch and raise dragons . . .

[NorthernXY]

2 hours ago, Lord Vance II said:

Exactly. Backing Stannis isn't as dumb a move as many think. It's a long shot, but if Stannis pulls it off they're almost guaranteed their money will start to flow back. 

Tycho being sent to support Stannis I think shows how much the IB is desperate.  Stannis is my favorite, but backing him when the IB does isn't smart because it's such a long shot, better to wait out winter and finance someone when the dust settles and Westeros is in even more tatters.  LF was ruining the crown's finances, but also applying the adage, "Owe the bank $100,000 and the bank owns you, owe the bank $100,000,000 and you own the bank".  LF is buying up everybody's debt, buying houses "allegiance" and consolidating the IB loans to one person.  Now the IB best chance of getting that money back is to back LF for the throne.  LF doesn't care about titles the way most in Westeros do, they're a means to and end, not an end.  He's almost lowborn so he doesn't have anything to lose, his empire is in finances, something you can't swing a sword at.  

The Iron Bank is being had by Littlefinger.

[Lord Wraith]

I think the Iron Bank is symbolic of the Braavosi notion of power in this case soft power. In the last two centuries Braavos has fought six wars with Pentos over the issue of slavery, they have won four including the last in 209 AC . This supposedly banned slavery in the city of Pentos. Yet as we see in Dany's early chapters that a form of "slavery" is alive and well in Pentos. Military victory did not meet the Braavosi goal of ending slavery, probably much to their annoyance.

Braavos has the biggest fleet in the world and their purple hulls are known worldwide. Both in warships and merchant fleet. Also the Arsenal in Braavos is reported to be able to build a ship in a day.

Quote

Neither prince nor king commands in Braavos, where the rule belongs to the Sealord, chosen by the city's magisters and keyholders from amongst the citizenry by a process as convoluted as it is arcane. From his vast waterside palace, the Sealord commands a fleet of warships second to none and a mercantile fleet whose purple hulls and purple sails have become a common sight throughout the known world.

Quote

"Perhaps a Braavosi ship? One hears of purple sails as far away as Asshai and the islands of the Jade Sea."

Braavos is the richest and most powerful of the Free Cities just as the Iron Bank is the richest and most powerful of all the banks in Essos. In fact the Iron Bank is bigger than the rest of the banks in Essos combined, a staggering feat.

So I think that the Braavosi have built up a trifecta of power. The military power of Sealord, the economic power of the Iron Bank, and the intrigue power of the Faceless Men. These groups work together to strengthen Braavos. The Iron Bank has its due and the Faceless Men will replace kill anyone not willing to pay their debts and place someone more friendly to Braavosi interest.

I do think Baelish has some connection to the Iron Bank or the Faceless Men. I figured after healing from the wounds Brandon gave him he went to Braavos and learned economic manipulation and possibly poisons. I think he is working as a secret agent for the Iron Bank or at least working with the Bank to help meet it goals.

I think Stannis was helped by the Iron Bank merely to extend the war in Westeros, increasing the eventually debt that the Iron Throne will own the Iron Bank.

 

[Seams]

8 hours ago, Lord Wraith said:

I think the Iron Bank is symbolic of the Braavosi notion of power in this case soft power. In the last two centuries Braavos has fought six wars with Pentos over the issue of slavery, they have won four including the last in 209 AC . This supposedly banned slavery in the city of Pentos. Yet as we see in Dany's early chapters that a form of "slavery" is alive and well in Pentos. Military victory did not meet the Braavosi goal of ending slavery, probably much to their annoyance.

Braavos has the biggest fleet in the world and their purple hulls are known worldwide. Both in warships and merchant fleet. Also the Arsenal in Braavos is reported to be able to build a ship in a day.

Braavos is the richest and most powerful of the Free Cities just as the Iron Bank is the richest and most powerful of all the banks in Essos. In fact the Iron Bank is bigger than the rest of the banks in Essos combined, a staggering feat.

So I think that the Braavosi have built up a trifecta of power. The military power of Sealord, the economic power of the Iron Bank, and the intrigue power of the Faceless Men. These groups work together to strengthen Braavos. The Iron Bank has its due and the Faceless Men will replace kill anyone not willing to pay their debts and place someone more friendly to Braavosi interest.

I do think Baelish has some connection to the Iron Bank or the Faceless Men. I figured after healing from the wounds Brandon gave him he went to Braavos and learned economic manipulation and possibly poisons. I think he is working as a secret agent for the Iron Bank or at least working with the Bank to help meet it goals.

I think Stannis was helped by the Iron Bank merely to extend the war in Westeros, increasing the eventually debt that the Iron Throne will own the Iron Bank.

 

Yes! This is a good summary of my own thinking. Your quote about the purple fleet is interesting, too - the wine that Joffrey drank at his wedding feast was purple, while other wine on the same table was described as red. I wonder whether that is a clue about Braavosi involvement in that kingslaying?

Don't forget that the Sealord of Braavos gave Penny and Groat each "a grand gift." Since there are parallel details in the stories of Groat and Vargho Hoat, I wonder whether Groat was an agent for the Sealord in the way that Vargho was an agent for the Lannisters (until he turned on them) . . .

[estermonty python]

I would dispute the idea that the Iron Bank is that interested in installing a puppet king or anything of the sort.  I don't think they care.  They want the crown indebted to them, the bigger debt the better, and they want to receive regular payments from the crown in perpetuity forever and ever amen.  It's a mutually beneficial arrangement.  The problem isn't the debt itself - reputable government debt as a concept is actually a good and desirable thing, as it legitimizes the central government in the eyes of the world and allows for stable international trade, etc.  Cersei's statement that she's never going to pay, though, forces the IB's hand, so they have to do something to specifically depose her, both to install someone who will agree to make payments but also to maintain their "street cred" in the eyes of the world - "this is what happens when you defy us."  I don't think they care if the king is Stannis, Gendry, or Pate the pig-boy, as long as the ruler agrees to honor the debts of the crown.

 

The actual wild card for me when it comes to the IB is the fact that their one soft spot is their deep anti-slavery roots.  it's the one thing that seems to transcend cold transactional logic to them - i.e. we know they won't lend money to slavers or the supporters of slavers.  So this could have 2 implications:

1) it could inspire them to back Dany in her push for the throne, partly to depose Cersei but also partly to honor her role in liberating slaver's bay.  I suspect they may already have a plan in place to do exactly this.

2) it could be the key to getting the economy of slaver's bay back on track.  It's a big issue thus far, and unlike the American South during Reconstruction, there aren't even fertile farming lands to exploit (we know the wine sucks, etc).  The fact that the IB may presumably lend money to those city-states now, where they wouldn't before, is the biggest (only?) economic advantage to ending the slave trade in those cities.  

[Little Scribe of Naath]

But if the Iron Bank want to invade Westeros, why do it just before Winter? Why would a bank want to invade and take control of an massive, diverse, unwieldy region like the 7K?

I don't see much reason to really doubt the IB's actions at this point - it's pretty straightforward. Cersei says she might never pay their debts back, so they approach Stannis who has a much more reliable reputation and offer to back him for the throne. 

 

Regarding Dany, however, it seems more like they are against her dragons. (Tycho hints at their dislike for dragons in ADWD). 

[Runaway Penguin]

Getting positions just before winter makes it hard for opponents to suppress them and gives time to strenghten positions.

[Lord Wraith]

14 hours ago, Little Scribe of Naath said:

But if the Iron Bank want to invade Westeros, why do it just before Winter? Why would a bank want to invade and take control of an massive, diverse, unwieldy region like the 7K?

I don't see much reason to really doubt the IB's actions at this point - it's pretty straightforward. Cersei says she might never pay their debts back, so they approach Stannis who has a much more reliable reputation and offer to back him for the throne. 

 

Regarding Dany, however, it seems more like they are against her dragons. (Tycho hints at their dislike for dragons in ADWD). 

I don't think the Iron Bank is literally going to invade but simply use the debt as a way to put someone more friendly to their interests. That is how they go around doing manipulating people. Remember the IB will have their due, if you don't pay them back they will install someone who will.

Yes the IB don't like Dragons but they hate slavery more. Its interesting how Dany is using dragons to free slaves while her Valyrian ancestors used dragons to create slaves. Must be an interesting conundrum for them.

[Minstral]

21 minutes ago, Lord Wraith said:

I don't think the Iron Bank is literally going to invade but simply use the debt as a way to put someone more friendly to their interests. That is how they go around doing manipulating people. Remember the IB will have their due, if you don't pay them back they will install someone who will.

Yes the IB don't like Dragons but they hate slavery more. Its interesting how Dany is using dragons to free slaves while her Valyrian ancestors used dragons to create slaves. Must be an interesting conundrum for them.

It would literally be nigh impossible for Braavos to invade Westeros. The material advantage is too greatly in Westeros's favor if it ever came to that, and trying to invade (Braavos doesn't have the population for such a feat) would truly ensure that the Iron Throne will never repay the debts.

As to the second point... There is a theory that something in Braavos started the doom.

To the OP: we don't need to see a conspiracy behind every Stark. Braavos is acting just as any political entity would in the face of having their power challenged. The thing here though is that I don't think they have ever tried to meddle in the politics of such a large kingdom. It can work out for them in many ways, but there is many more variable for things to backfire on Braavos when meddling with such a powerful entity.