Heter Iska Need Not be Signed Under Halacha | IRR Part IX

Interest, Ribit and Riba: Must These Disparate Legal Concepts Be Integrated or Is a More Nuanced Approach Appropriate for the Global Financial Community?

By: Leonard Grunstein

 

WHY THE HETER ISKA NEED NOT (AND UNDER US LAW AND PRACTICE SHOULD NOT) BE SIGNED BY PARTIES UNDER THE HALACHA

The concept of a “Shtar”[1] under Halachah is to be distinguished from a contract under New York law.  A contract is a legally binding agreement entered into by the parties thereto where there are mutual expressions of obligation or other consideration in support of the agreement between the parties.  A Shtar, on the other hand, is not  an agreement.[2]  It therefore need not necessarily be signed by the parties.  It does not require consideration.  Indeed, classically it is signed by two witnesses; not the parties.  A Shtar  is an attestation by the two witnesses as to the existence of an agreement and the terms thereof.  The actual agreement between the parties is accomplished by way of a formal act of “Kinyan.”[3]  There are various types of Kinyanim,[4] all of which are intended to symbolize the effectuation of a transaction between the parties.  Classically, under the Halacha, there is no concept of an agreement that can be enforced.  There are only completed transactions.

Thus, a Heter Iska may be properly entered into under Jewish law as described above, but nevertheless not be enforceable as a contract under US law.  On the most basic level, if the parties themselves do not sign and deliver the Heter Iska in accordance with the formalities required under US law then the document does not constitute an enforceable contract under US law.  There may or may not be an enforceable oral agreement depending on the circumstances.  However, a written agreement must be signed by the party charged in order to be binding.  By following this kind of a procedure, (i.e., of complying with Halachah, with witnesses and not the parties executing and delivering the Heter Iska so as not to become a binding written agreement under US law), in effect, the requirements of the Halacha can be complied with, but not US law.  A situation can thereby be avoided which causes the Halacha or US law to be dishonored because of the unfortunate tactics practiced by some borrowers to avoid their obligations.

Given all of the potential issues associated with trying to enforce a document promulgated wholly under Halacha and never intended to be consistent with US law or any other law, it is no wonder that issues of the sort described above have cropped up, from time to time.  This also helps explain why certain banks have adopted the practice of displaying a Heter Iska on the wall, as opposed to signing an individual Heter Iska.  They do not wish to take the risk that the Heter Iska document will be enforced in a manner that was never intended This is because it is virtually impossible to satisfy the evidentiary requirements that are a precondition to the debtor asserting a defense of no profits under the Heter Iska.  This kind of a nuanced tradition has been developed over the centuries.  A secular court, relying on outside religious experts (who are often in dispute) cannot be expected properly to apply the Halacha as intended.  The reliance by secular courts on outside religious experts to explain the intricate details of the Halacha is just not appropriate.  There may also be constitutional infirmities, as discussed below.  The proper forum for enforcing Halacha is a Bet Din, comprised of Halachic expert judges who are well versed in the nuances of this arcane area of law and practice.

1. II.              THE SHA’ARIAH- SOURCES OF THE PROHIBITION AGAINST RIBA.

The Sha’ariah[5] is not a monolithic legal code. The Koran[6] and the Sunnah[7] (upon which the Sha’ariah is said to be derived,) are also not a legal code. Instead of containing precise answers to questions of religious law, they set forth broad guidelines.

In the period since the Koran, Islam did not experience a phase of codification in the development of the Sha’ariah of the sort experienced by the Halacha. There is no Sha’ariah equivalent to the encyclopedic work represented by the Talmud. There are also no codes of law like that compiled by Maimonides or represented by the TUR or Shulchan Aruch.

There is also no comparable body of legislated laws or common law to that in effect in the US. The US has federal, state and local laws that have been legislated and are binding on its citizens. The US also has a body of common law, with established legal precedents, that can be relied upon in courts or other proceedings. Neither of these hallmarks of the US legal system exist in Islam. While, some Sha’ariah scholars have sought to establish some sort of consensus (known as “Ijma”), this has not necessarily been successful in practice. It does not appear that such scholarly positions have actually been accepted as binding by most who profess to be members of the Islamic faith.

There is also no supreme authority that can determine questions of law like the Supreme Court of the US. In this regard, both the Sha’ariah and Halacha suffer from this same disability in modern times. Hence, the many conflicting views of greater or lesser authority or acceptance, that remain unresolved.

The Sha’ariah might fairly be described as a collection of views over the years, from a variety of sources. As noted above, many of them are in conflict. The sources of the views expressed include those of recognized legal authorities such as the Mufti of a particular Islamic state, as well as, those reputable scholars. It also includes the views of self-professed authorities and spokesmen of differing backgrounds, education and authority. All claim to derive their views from the Koran or the Sunnah. However, sometimes the Koranic text quoted in support of a particular position may not be so clear. As noted below, these claims may or may not survive genuine scholarly scrutiny. Indeed, as noted below, self-appointed spokesmen for Islam, such as Osama Bin Laden, apparently can successfully challenge the views of such leading legal authorities as the Mufti of Egypt’s Al Azhar Institute[8]. This is often done in the name of advancing a particular brand of Islam. There is often not even the veneer of a legal or scholarly approach to these pronouncements. As discussed below, just because someone says that the Koran says so doesn’t make it so. Fortunately, extremists, no matter how strident, cannot actually legislate and control how most members of Islam act in practice. Nevertheless, the extremists have caused a great deal of conflict, discussion and debate by established legal authorities.

In this regard it should be noted, that there is a dispute among recognized Sha’ariah authorities as to the very meaning of the term Riba and its application. Yet, there is no supreme authority, recognized by most of Islam that is capable of deciding the matter.

What is a Moslem in a non-Islamic state to do? How is a determination to be made given the lack of a supreme authority? Is everyone to make his or her own personal decision as to which Sha’ariah authority to follow? Are there mitigating circumstances applicable when living in a non-Islamic state? What about those who reside in an Islamic state that purports to apply Sha’ariah law; but, nevertheless permits foreign banks to make loans on interest and its own banks to do so, directly or indirectly, as discussed below? Moreover, which of the conflicting views is right? Absent a supreme Islamic authority recognized by most Moslems, does any Islamic state have the right to decide on its own?

Notwithstanding all the clamor about prohibited Riba and the pedantic distinctions between “interest bearing” instruments vs. “interest based” interments, the reality is that interest or its equivalent is being charged by all manner of banks or other lenders. This includes loans or its equivalent by Moslems to other Moslems. Indeed this has been the case both before Islam, after the inception of Islam and to date.

Is everyone just wrong or is there another interpretation of the Koran? Are there views espoused by religious authorities and scholars that can help explain these practices?

This article suggests that not everyone who charges or pays interest or its equivalent is wrong. But, the fact is many disagree with this proposition. Furthermore, as a practical matter, many Moslems can and do vote with their feet on the issue. Thus, as noted below, many Moslems have bank accounts. Many also borrow from banks using traditional interest bearing loan documents (and not Sha’ariah compliant forms,) because it costs less. In line with the foregoing, HSBC has reportedly closed its Sha’ariah compliant mortgage lending department in London. Consider, why should HSBC or any other bank offer something more expensive and complicated than a traditional mortgage loan when there is no genuine demand for the product. It would appear that Moslem borrowers rightly prefer the simplicity and lower cost of a traditional bank mortgage loan product. They also apparently want to earn interest on their insured bank deposits.

Is right to prohibit these beneficial financial products to Moslems? Is it better to offer Moslems only non-competitive financial products, that are at rates and costs less favorable than prevailing market terms? Is it fair to require Moslems to do so, all in the name of an interpretation of the Koran that may not be justified or appropriate? What about the relevant scholarly views and Fatwas issued by noted Islamic authorities that purport to permit the same, as discussed below; are they just to be ignored?

The answer is not clear. Thus, as discussed below, there appears to be no accepted definition of the word Riba, or of the rules governing the application of the prohibition against Riba, in practice. Instead there are conflicting views of the sort described below and practices accepted by some, but not all, of Islam.

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[1]A written document that is signed by witnesses who, in effect, testify as to transaction described in the document.

[2] Traditionally, the Halacha does not recognize the common law concept of an executory agreement (i.e., a contractual obligation to sell or buy property).  Rather, under the Halacha, there are only completed transfers of property effectuated by a Kinyan.  If, however, the buyer does not pay for the property, then the Halacha recognizes that there are various rights and/or remedies, including rescission (see Shulchan Aruch-Yoreh Deah 236:6).  In addition, the Halacha also deems the right to payment of the purchase price as a debt of the buyer, which is secured by a floating lien on the property purchased, as well as on the buyer’s other property.  See Talmud Tractate Bava Metzia at page 49a and also Bava Metzia: 47b (regarding a vendor claim of fraud), as well as, Bava Metzia: 44a (regarding “Mi Shepara”).  See also Bava Metzia: 49a (absent a formal Kinyan, it is all just words).  Moreover, see Bava Batra at page 3a and Shulchan Aruch-Choshen Mishpat 198:1-5.  For a fuller discussion of the matter, see Understanding Rights in Context; Freedom Contract?  A Comparison of the Various Jewish and American Traditions and Michael J. Broyde and Steven S. Wiener (2010); The Metaphysis of Property Interests in Jewish Law, by J. David Bleich (2010); and when Religious Practices become Legal Obligations; Extending the Foreign Compulsion Defense by Michael A. Helfand (Journal of Law and Religion Vol. 23: page 101-2008).

[3] A symbolic method of effectuating a transfer of property.  In modern times, this includes a Kinyan known as “Situmta”.  Rashi describes the origin of the term “Situmta” as the mark made by wine merchants on their barrels to identify them as having been sold (see Rashi on Talmud Tractate Bava Metzia: 74a).  Tosafot (Bava Metzia 66a) explains that Situmta embodies a class of actions, which are recognized by custom as methods of accomplishing a transaction.  This, even though they are not recognized as Kinyanim in the Torah.  Aaron Levine (in The Oxford Handbook of Judaism and Economics) defines Situmta as a mode of acquisition in practice in a particular place.  He concludes that by employing the law of Situmta, Halachic authorities have, in effect, recognized halachically, prevailing modes of acquisition (despite the fact that they are not sourced in the Talmud).  I discussed the matter of modern contract law and practice under the common law with Menachem Elon. I noted to him that there was no such thing as an enforceable executory contract in the Talmud.  Rather, there were only executed transactions (i.e., transfers by way of Kinyan) and, in effect, a debt for the purchase price.  He responded that as a matter of custom (“minhag”) contracts were recognized.  He went on to say the basis of the applicable minhag was “diamonds”.  I responded that diamonds were consignment arrangements not a contract for the sale and purchase of real estate.  He smiled and said that it was nevertheless enforceable as a matter of custom (minhag).

[4] Plural of Kinyan.

[5] Loosely defined as the way or the path. It appears to be similar in meaning to the term Halacha, which may also be loosely defined as the path or the way.

[6] A book attributed to Mohamed that is said to be authored with prophetic inspiration.

[7] The Sunnah are a collection of reports by others of the (i) sayings of Mohamed (“Hadith”) and (ii) actions of Mohamed.

[8] A scholarly institution of authority and position within the Egyptian governmental and religious establishment of Egypt

Bank Treatment Under the Halacha | IRR Part VII

Interest, Ribit and Riba: Must These Disparate Legal Concepts Be Integrated or Is a More Nuanced Approach Appropriate for the Global Financial Community?

By: Leonard Grunstein

 

IS A BANK OR OTHER ENTITY TREATED DIFFERENTLY UNDER THE HALACHA AS IT APPLIES TO RIBIT?

The Halacha applicable to a bank as a lender would appear to be somewhat different than that of an individual lender.  The entire prohibition against Ribit may not be applicable.  Similarly, if the borrower is an entity as opposed to an individual, there are those who hold that the prohibition against Ribit is inapplicable.  Consider the Biblical construct referred to above of one individual who lends something of value to another individual.  If both are not individuals, or if what is loaned is not a thing of value, then the literal Biblical proscription may not applicable.

A bank is an entity, not an individual.  Indeed, a bank may be considered a “Vaad”,[1] which is separately treated for purposes of determining the applicability of the prohibition against Ribit, as more fully discussed below.  For example, a trust (Vaad) for the benefit of an orphan is permitted to loan money on interest under certain circumstances.[2]  Similarly, a charitable trust may also be permitted to loan money on interest under certain circumstances.[3]

Some have suggested that the prohibition against the payment or receipt of interest does not apply to a payment made by a personal check.[4]  This is because a personal check does not itself have any real intrinsic value.  It is a direction to a third party to pay over funds to the account of the payee.  Even the drawee bank itself is usually not the party that delivers the funds.  Rather, it is typically a clearinghouse or the Federal Reserve itself , which ultimately delivers the thing of value (i.e., the funds).  A bank check or a certified check, unlike a personal check, may itself have value like a commercial instrument.  Of course, legal tender, like US cash, is treated as a thing of value (even though the paper it is printed on does not have sufficient intrinsic value[5]).

In considering the nature of a bank (in contradistinction to an individual), some Halachic authorities have analyzed how the bank is organized and functions in practice.  In a typical bank, there are shareholders, a board and management.  The shareholders in a bank and even the board have no real influence on the day-to-day business activities at the bank.  Thus, under the Halacha, the shareholders in or board of the bank may not be deemed to be the actual lender because they lack the status of so called “Ballut.”[6]  Thus, unless the shareholders have sufficient control over the actions of the bank, so that the bank is deemed to be the alter ego of the shareholders, then the prohibition against making loans on interest may not, as a practical matter, apply to them.  Remember, in a bank, the shareholders don’t determine which loans to make, who to lend to or not or the terms and conditions thereof.  In point of fact, a bank is a highly regulated business in which the shareholders are expressly prohibited from participating in the day-to-day business of the bank, as a matter of law.  This is similarly the case with the board of the bank.  Hence, the shareholders are not deemed to be the lender; rather, it is the bank, as an entity, that is the actual lender.  Therefore, the acts of the bank are not imputed to the shareholders, because there is no so called Ballut by the shareholders under these circumstances.  Whether this would still be the case in a closely held corporation that is not a bank is a separate question discussed below.  However, it would appear that a bank is not the alter ego of the shareholders from a Halachic point of view.[7] As a result, the shareholders in the bank would not be burdened with responsibility for the sin of charging Ribit for loans on interest made by the bank.  In this regard, it should be noted that, as a general matter, the sins committed by one person are not imputed to another person.  A person only bears responsibility for the sins that person commits personally.  The guiding principle is “Ayn Shaliach L’Dvar Aveira” (there is no agent for sin); meaning one individual is not responsible for the sins of another.[8]

The definition of Ballut revolves around a number of attributes as follows:

(a)       authority – the right to deal with the assets of the bank;

(b)       profit – the right to make money;

(c)       responsibility – who is liable for losses.

Consider the typical bank.  The right to deal with the assets of the bank is reserved to management.  Although the board may enact policies in compliance with law, these are general statements of authority within which management has the power to act.  The board, however, cannot itself make a loan.  It is up to management to transact the business of the bank.  Only management (and by extension the staff) at the bank can make a loan.  The shareholders themselves are even further removed as more fully described below.  Indeed, in the US, banking is not only a highly regulated business, but beyond that, the government (through the FDIC[9]), in effect, is almost like a shareholder in a public company for certain purposes.  In addition, the FDIC (and, in effect, other governmental regulators) has many rights that transcend those of the regular shareholders.

It is the bank as an entity, which earns the profits derived from the business transacted, by the bank.  The bank may pay dividends but even that is subject to government regulation.

Any losses incurred in the business transacted by the bank are borne by the bank, as an entity; not the shareholders.  Indeed, as a corporation, the shareholders are not personally liable for any business losses of the bank.  In effect, it is only the capital they invested in the bank that is at risk.

Therefore, shareholders in a bank do not satisfy the standards described above so as to be deemed to have sufficient control and therefore, so-called Ballut over the bank.  The result is not to pierce through the corporate veil, as it were Halachically, so as to deem the shareholders as the lender.  Rather, it is the bank, as an entity, that is the lender).

The Rogachover Rav,[10] in his seminal work the Zaphnat Paneach[11] analyzes the nature of a bank and reaches a similar conclusion.  He notes that the bank is a corporation with limited liability (i.e., limited to the capital invested).  The Rogachover Rav finds that the bank is not considered to be an individual for purposes of the Biblical proscription against taking ribit and neither are its shareholders.

The Maharam Shick[12] and Rav Moshe Feinstein[13] considered the borrower’s side of the equation.  They found that a corporate borrower and its shareholders are not individuals for purposes of the Biblical rule against paying Ribit.[14]  They also held that shareholders in a corporate borrower are not deemed to be the “Balim”[15] or in control, so that the corporation would be deemed to be the alter ego of the shareholders for purposes of violating the Biblical proscription against Ribit.[16]

Rav Asher Weiss[17] recently published a number of written opinions[18] that focus on the nature of entities under the Halacha. In one of those opinions[19] he addressed the question of whether a Jew was permitted to own a majority of the shares in a US bank (eventhough the bank makes loans on interest). In his analysis, he noted the modern corporation is a legal and economic person, as distinguished from the individuals that might own it. Rav Weiss observed that the ownership and control of the corporate entity was divided into three parts, to wit: the shareholders, directors and management, as noted above. Each has its own roles and authority. The directors and managers are not mere nominees of the shareholders and the shareholders have no direct control over the day to day business of the bank. Even the directors can’t directly intervene. It is the management that actually runs the business of the bank. Furthermore, generally, the shareholders are not individually responsible for the liabilities of the bank.

Rav Weiss went on to report that the issue of whether there could be a separate legal entity, as distinct from the individuals owning the same was treated over 150 years ago by the Maharam Schick[20]. He described how the Maharam Schick dealt with what appears to be a credit union like entity. The Maharam Schick held that the indiviual members of the credit union did not have Balut over the entity. While Rav Weiss reported that the Maharshag[21] held otherwise, he went on to discuss the opinion of the Mahari HaLevi[22], who nevertheless held the shareholders don’t have Balut and the entity is a separate legal person. Rav Weiss concluded that the bank is a legal and Halachic person, separate and apart from the shareholders,

In our oral discussion of the matter, Rav Weiss went on to consider the unique qualities of a bank as a separate legal and Halachic person. He reported he felt the bank was responsible for the commandments of the Torah dealing with relations between one person and another (“Ben Adam L’Chavero[23]”). At the same time, he felt that a bank was not responsible for the commandments dealing with relations between a person and G-d (“Ben Adam L’Mekom[24]”). This is nothing short of a stunning analysis and insight. When I inquired about whether the prohibition against Ribit was Ben Adam L’Makom or Ben Adam L’Chavero, he responded that he felt it was more like Ben Adam L’Mekom and therefore, a bank was not bound by the prohibition against Ribit.[25] Rav Weiss reported that he based his thesis in part on the ruling of the Rashba[26], who holds that a charity is permitted to make loans on interest. This is because the Rashba considered a charitable organization to be a separate legal entity and not an individual (and therefore not “your brother” within the meaning of the express biblical prohibition against charging Ribit.[27]) Hence, the prohibition against Ribit[28] did not apply[29].

Interestingly, Rabbi Zvi Hersh Frank[30], held that an Israeli Government owned bank was exempt from the prohibition against Ribit[31]. His view was based on his analysis that no individual has a particular specified ownership interest in a state owned bank and its assets. Therefore it is not a partnership of the people of the State according to Rav Weiss. Rather as noted above it is a separate legal and Halachic entity. Thus, Rabbi Zvi Hersh Frank found that the prohibition against charging iRibit did not apply to a State owned bank.

One of the most striking statements made by Rabbi Aaron Solevetchik, in his discourse on the subject of banks, was that, in effect, without a banking system there existed a circumstance known as “Shaat Hadchak.”[32]  This term literally means overriding times and it expresses a circumstance where ordinary rules may no longer apply.  Thus, Rabbi Aaron Soleveichik considered whether a bank could make a loan and charge interest not just as a matter of Bedeved[33] (i.e., permitted after the fact but not something that should be done in the first instance) but rather even Lechatchilah[34] (in the first instance).

Rabbi Aaron Soleveichick did, however, offer that consideration should be given to having payments to the bank of interest made with a personal check, not a bank check or certified check.  As noted above, a personal check is merely a direction to a third party intermediary to make payment.  The check itself is not legal tender or payment.  It has no real intrinsic value.  Thus, if there is any issue of prohibited Ribit, the maxim of “there is no agent when it comes to performing a sin” (ayn shaliach ledvar aveirah[35]) is applicable.  On the other hand, if a bank check or certified check is used, then a thing of value is delivered, which can be said to be a direct payment (as opposed to a direction to make payment through an intermediary).  He went on to suggest that, since under these circumstances there was no prohibition against Ribit applicable to a bank, there was arguably no need for a bank to have a Heter Iska.

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[1] A separate entity with a legal identity under the Halacha , separate and apart from the individuals involved. Thus, the overseers of a minor orphan are referred to as a Vaad.

[2] Talmud Tractate Bava Metzia page 70a.

[3] Ibid. See also Maharam Shick Section 158.

[4] Rabbi Aaron Soleveichik in oral communication with the author (see discussion summarized below).

[5] Historically, though certain denominations were once also a direction to pay (e.g.:  so-called gold certificates and silver certificates also included a right to redeem in specie).  However, these are no longer in circulation.

[6] The concept of Ballut can have many far-reaching consequences. Thus, if an entity is deemed the alter ego of an individual then sinful actions of the entity are attributed to the individual. Consider the case of a restaurant that serves non-kosher food. Is this the responsibility of the restaurant corporation or the owner? In this regard it is  important to clarify that, while the Iska relationship creates a venture that has certain attributes of a partnership, it is by no means a genuine partnership.  It is, as noted above, an Iska. Thus, if funds advanced by the lender were used by the borrower for. something forbidden under the Halacha, then these actions would not be ascribed to the lender. Interestingly, not all Sha’ariah scholars would agree with this conclusion.

[7] According to Rabbi Aaron Soleveichik (in oral communication with the author), as more fully discussed below.

[8] This principle has sometimes been misused in the context of loans intentionally made by a Jew through a non-Jew, as an intermediary, who then re-loan the funds to a Jewish borrower. There are a number of problems with this construct.  It would appear that the Mishna in Talmud tractate Bava Metzia on page 70 condones this type of practice. However, the referenced case involves an idol-worshipper as either the intermediary or the source of funding (it permits a Jew to act as an agent on behalf of an idol worshipper to loan money to a fellow Jew, as well.) The key to understanding the exception is the nature of the individuals involved. As Rabbi Judah Lowe, the renowned Maharal of Prague, noted in the 16th century, taking of interest is not forbidden because of commercial corruption; it is rather a matter of Scriptural decree (Chiddushei Aggadot on Bava Batra 75b, Part I, at page 134; See also Philosophy of Halacha by Rav Chaim Navon). Thus form does matter. Since the express prohibition is of a Jew lending to a fellow Jew, the Biblical prohibition is not triggered when an idol-worshipper is involved.  Moreover, the concept of a loan on interest to any non-Jew (as opposed to a genuine idol-worshipper) being permitted is likely wrong as well.  (See for example Rashi on pages 70b-71a of the Talmud text cited, where Rashi notes it’s inappropriate to loan on interest to an idol-worshipper as well.)This was the subject of public Disputations in the Middle Ages and whether it was the Rabbi Joseph Albo, a 15^th century Halachic scholar and philosopher or Rabbi Issac Abravenel, another major 15^th century Halachic authority and commentator on the Bible, it appears they asserted that the prohibition of Ribit applied to Christians as well as Jews. The only exception appeared to be loans to idol worshippers. See also Rabbi Abraham ben Mordecai Farissol who participated in the Disputation at Ferrara.  Interestingly, it is reported that David de Pomis, a Jewish physician and 15^th century scholar and author of De Medico Hebraeo Enarratio Apologetica, argued that a Jew could lend money to a Christian just like to another Jew, according to then recent Halachic literature, using a Heter Iska. See discussion thereof in Money lending, The Religious Context, as reported in Jewish Virtual Library.org.

[9] Because of the system of FDIC insurance of accounts

[10] Rabbi Yoseph Rosen

[11] Volume 1, Section 194.

[12] Rabbi Moshe Shick, a 19^th century Halachic authority.

[13] In his seminal Halachic work, the Igrot Moshe (Y.D. 2:63)

[14] Rabbi Moshe Feinstein’s focus on the matter of personal liability of the borrower provided a backdrop to a very interesting discussion between Rabbi Aaron Solevetchik and the author.  As noted above, if the borrower is a corporation and individual shareholders are not personally liable for repayment of the loan, then this mitigates against any issue of Ribit.  I queried Rabbi Aaron Solevetchik concerning how far this concept could be stretched.  Logically, under US law, there is in effect always some form of limited liability.  This is because under the bankruptcy code and various provisions of state debtor/creditor laws, there are generally protections built in for the benefit of debtors, which limit liability.  There is also no concept of debtors’ prison under US law or of selling an individual into slavery in order to pay back debts.  Therefore, at the very least, the debtor’s own person is not subject to enforcement of debts.  Furthermore, there are provisions under State law that protects at least a minimum of property.  For example, there are homestead exemptions under many State laws. (Both Florida and Texas exclude the debtor’s residence from claims by creditors.  NY has a limited homestead exemption.)  There are also exclusions from garnishment for 90% of a debtor’s wages under most circumstances.  (NY law does however provide for the possibility of an installment payment order if the wages are not spent on living costs and are instead just put into savings, subject, however, to overriding federal bankruptcy protection.)  Moreover, under the federal bankruptcy code, future wages are generally protected from creditors of the bankrupt’s estate so that the debtor can begin life anew.  Does this not constitute some form of limited liability, analogous to the corporate borrower, albeit by operation of law.  Rabbi Aaron Solevetchik, however, did not accept this line of reasoning. He felt that the prohibition against Ribit nevertheless continued to apply to loans between individuals, despite these limitations on liability implicit under US law.

[15] See definition of “Ballut” above. The term “Ballim” refers to the kind of owners of an entity who satisfy the tests of Ballut  outlined above.

[16]  Rabbi Zvi Pesach Frank (in his Halachic work, Har Zvi Y.D. at page 126) , however, disagrees with Rabbi Feinstein’s analysis and conclusions.

[17] A leading contemporary Halachic authority and author of the Mincaht Asher.

[18] Sheilot U’Teshuvot Minchat Asher-Volume I.

[19] Ibid, Section 105 at page 357.

[20] Rabbi Joseph Schick, a 19^th century Halachic authority, in YD: Section 158.

[21] Rabbi Shimon Grunfeld, a 17^th century Halachic authority in YD: Section 3.

[22] Rabbi Ya’akov LeBeit HaLevi (Manzanti), a 17^th century Halachic authority in Volume 2: Section 54

[23] The term is loosely defined as matters between one person and another and is intended to incorporate by reference the body of Halacha dealing with such interpersonal relationships (such as monetary matters).

[24] The term is loosely defined as matters between mankind and G-d and is intended incorporate by reference the body of Halacha dealing with observances, services and other commandments included in this category such a observing the Sabbath and the prohibition against Chometz on Passover.

[25] I noted to Rav Weiss that the prohibition against charging Ribit is set forth in the Section of the Schulchan Aruch legal code (promulgated by Rav Yoseph Karo) known as Yoreh Deah (dealing with matters Ben Adam L’Makom) and not Choshen Mishpat (dealing with monetary matters) and didn’t this have some significance. He responded that this was not authoritative, because the TUR (a legal code authored by Rabbi Yakov Ben Asher, a 13^th century Halachic authority, who first set up this categorization (in his predecessor legal code to the Schuchan Aruch, known as the Arba Turim or TUR) apologized for not following the format of the Rambam, who included the laws against charging Ribit in the Section dealing with the laws of lending and borrowing (ie: Ben Adam L’Chavero) in his predecessor legal code. The TUR noted that he did this because in his editing process he sought to juxtapose the laws of Ribit right after a similar exposition of the laws of lending to idol-worshipers and hence the placement in Yoreh Deah. He therefore implicitly did not mean to determine the matter by mere placement.

[26] (Rabbi Solomon Aderet ) Volume 1:669.

[27] Rav Weiss in discussions with the author also based his view on Talmudic sources including one in the Tractate of Pesachim (at page 46a) in which the Rav Yehoshua holds that the prohibition of owning Chometz on Passover does not apply to the portion of the dough separated for the Cohanim as Challah. This is because once separated it belongs to the Cohanim and not the householder baking maztot with the dough. Hence if the dough set aside unbaked rises and, as a result, becomes Chometz, the householder is not the owner of that dough and therefore is not liable for the prohibition. Rav Weiss pointed out that Rashi (on Page 46b) notes that neither the householder nor any individual Cohen is responsible for the prohibition. This is because while title to the separated piece of dough passed to the Shevet of Cohanim but no particular Cohen. As Rav Well notes there is a concept of Shevet Cohanim, which  is a legal and Halachic entity that is capable of acquiring title to the item. However, as an entity it is not responsible for the commandment prohibiting Chometz on Passover. Until an individual Cohen takes possession of the item neither is an individual Cohen responsible. It belongs to the entity Shevet Cohanim. (See also Tractate Nedarim at page 47b dealing with the concept of “Oleh Bavel” which can be defined as the equivalent of we the people represented by the body corporate and Rambam Laws of Trumot, Chapter 9, section 9, which echoes the concept of Shevet Cohanim noted above. On the other hand, see Tractate Yoma at page 11b, which seems to take a different view dealing with Mezzuah. However, Rav Weiss distinguished this source in a discussion beyond the scope of this article.

[28] See also Talmud Bava Metzia at page 57b describing how the Temple treasury is not in the category of “your brother” as discussed above. See also Bava Metzia at page 70 dealing with the funds of an orphan, as noted above. Rav Yosef Karo and Rav Moshe Isserles (in Schulcahn Aruch YD 160:18) permit funds for orphans, the poor, schools and synagogues to charge only rabbinically proscribed Ribit. They reject the practice in some places of charging even Biblically proscribed Ribit.

[29] Rav Weiss also noted in a discussion with the author that interest charges were in essence “schirot” (rental). This is, based on a Rasba  ( Teshuvot Meyuchedet L’Ramban- Section 223), who  analyzed  the nature of Ribit , conceptually, without reference to the Biblical prohibition  against the same. Thus, in the examples given of an entity not responsible for this Biblical prohibition, there is no conceptual basis for prohibiting a rental rate for the money. On the other hand,, where the Biblical prohibition applies, the device of renting the money cannot be used to circumvent the biblical prohibition (see Talmud Bava Kama at page 69b).

[30] A 20^th century Halachic authority, who was the Chief Rabbi of Jerusalem.

[31] Sheilot U’Teshuvot Har Zvi, Orach Chaim-Section 146, as cited by Rav Asher Weiss in a written Teshuva on whether the assets of the State of Israel or its army were subject to the Torah and commandments, which he graciously shared with the author.

[32] Under extreme circumstances, where actions ordinarily prohibited in the first instance are permitted.

[33] Not in the first instance; i.e. with the reservation that should not do so in the first instance, however, if did any way, then not liable for wrongdoing. Nevertheless, an individual should refrain from doing so in the first instance.

[34] In the first instance; i.e.: without qualification.

[35] Talmud Tractate Bava Metzia at page 10a.