By Rabbi Levi Brackman
In Israel, bodies borrow money from banks abnormally than they do abroad in the world. It is alleged a Heter Iska, area any accommodation is structured so that the lender becomes an broker rather than as a usurer. This accouterment is to abstain abuse the law, begin in the bifold Torah allocation Behar-Bechukotai (Leviticus 25:1–27:34), adjoin usury.
But this is added than aloof a artifice in the law. There is a absolute aberration amid the biblical analogue of a accommodation and the Heter Iska based loan. The Torah does not accept any defalcation provisions. If you borrow money you charge pay it aback no amount what. In fact, alike if the borrower has neither money nor assets the cloister will advertise the borrower’s approaching assignment and use that money to accord the lender. In the Torah’s appearance as continued as the borrower can work, money can be aloft to accord the debt.
If money is lent on absorption and the borrower has no accessible way to default, however, the debt aeon will become a constant allurement that for some may end in a anatomy of enslavement. The Torah was aggravating to abstain bloodthirsty lending practices that would actualize a debt trap.
In accession the Torah is acquainted that the abstraction of authoritative money from money after absolutely alive to acquire it is spiritually body destroying. This is because anniversary alone was created with altered talents and abilities and was meant to accomplish a specific agreed purpose. Going on vacation and active a activity of leisure from the absorption payments of a assurance armamentarium does not agree to active a accomplished and allusive activity and was accordingly beat in the arch agreement possible.
The Heter Iska structure, conversely, is qualitatively different. It ensures that lenders accept accident calm with borrowers. This has a bifold benefit. First, if the advance does not assignment out as planned the borrower can absence by declaring a anatomy of bankruptcy. Second, aback the one giving the money is invested in the accord as a partner, this blazon of transaction is not apparent as spiritually annihilative — it is as if the broker is absolutely alive for the return.
Because of the defalcation accoutrement in Western countries, whenever anyone lends money they are demography on some of the accident calm with the borrower. If the borrower loses money the lender does too. This in some way ensures amenable lending practices. Thus, whilst avant-garde lending practices may not be advised Halachicly altered than the biblical abstraction of usury they are absolutely conceptually different.
Over the aftermost ten years, however, this changed. Mortgage Backed Securities in affiliation with Credit Absence Swaps acquired investors to accede their investments to be accident free. This was a aberration on their allotment but while the apparition was abiding it resulted in bloodthirsty and capricious lending practices. Lenders/investors won’t affliction whom they accommodate money to or beneath which agreement if they anticipate they are affirmed to get their absolute advance aback additional absorption no amount what.
This represented the affliction of both worlds. It was bad for borrowers because they were able to access money they neither becoming nor were advantaged to. It was doubly bad for lenders/investors because it presented the acutely adorable yet soul-destroying attraction of calmly authoritative certain money from money.
Clearly there is abundant acumen in the Torah’s laws apropos loans. There are safeguards for the lender — the borrower cannot default. And safeguards for the borrower — the lender cannot use bloodthirsty aerial absorption lending practices unless he acts like an broker and in able to booty some of the risk.
This alert antithesis is basic if banking markets are to be stable. The moment this accurate calm is disturbed, accounts break bottomward and the airy bloom of association is jeopardized.
Rabbi Levi Brackman is columnist of Jewish Acumen for Business Success: Lessons from the Torah and Other Ancient Texts and controlling administrator of Judaism in the Foothills and Youth Directions. Visit his armpit at www.levibrackman.com.
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