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The Bible and the Financial Crisis in America

Over the last year we have had terrible news in the American financial markets. The financial crisis in the U.S. is so deeply rooted in the international banking system that it is affecting the whole world! Jewish traditional teaching has much to say regarding the proper management of finances. The present crisis is related to the topic of usury or lending money at interest. As Messianic Jews we should teach the proper biblical perspective on lending. The present turmoil requires that we should speak out on this matter.

The Nature of the Crisis

Here is a brief summary of what happened. This is an incredible story of corruption and greed and contrary to the ethical teaching of Torah.

One of the difficult patterns over the last decade has been the increase in housing prices. This is obviously related to supply and demand. If the supply of houses is large and the demand low, then housing prices fall. People who own houses do not want to see this; they want their properties to appreciate. Prospective home buyers would like lower prices so they could afford to make a purchase. The contemporary market has required families to put two salaries together to afford housing prices (unlike 40 years ago when one salary would suffice). The prices continued to climb as more and more money is pumped into the system, chasing the commodity in an upward pricing spiral. People have been willing to pay.

Mortgage brokers and mortgage companies all make huge money by getting people to sign up for mortgages. To keep people buying in a highly charged market a new method of creative financing was invented - mortgages were offered to people who could not afford them! There were many variations but the basic outline is quite simple; a prospective buyer is offered a super low interest rate, often 1%. At this rate, a person can afford the payments. However, at the end of the first year the rate was adjusted to the standard rate of variable mortgages, or if the person had bad credit, to an even higher rate of interest. The incredulous dimension of this scheme is that the broker is fully aware that the borrower will not be able to pay.

Mortgage brokers foolishly justified their methods, assuming that because the housing prices are going up, the person who will not be able to make the new adjusted mortgage payment would be able to sell their house at a profit and the lender would then recover the loan. He can then make a new loan for the same property and make even more money. In some ways it is like a ponzi scheme, the difference being that the house appreciation is the assumed factor that will cover potential losses. Speculators who had no interest in home ownership added into this already toxic mix by purchasing properties assuming they could flip them at a profit in the ever rising housing market.

As reprehensible and irresponsible as this already was, the scheme became even worse. The market was so heated that mortgage brokers engaged in outright fraud and had people lie and put down false income figures to qualify for loans. The companies did not even seek verification of income from employers. These mortgages were then bundled as investments and sold as bonds. Investment banks and brokerages held and sold these toxic investments.

Eventually and inevitably the whole house of cards (pardon the pun) came crashing down, the housing bubble broke and millions of loans instantly went bad. Homeowners who bought into these bogus loans could not make their mortgage payments after their interest rate was normalized; neither could they sell the house to cover their loan. Therefore the company that held the mortgage could not recover their loss. Foreign banks had bought these securities en masse and as a result, world markets have been shaken. We are looking at over a trillion dollars in losses. I have never seen anything so widespread and so corrupt in my lifetime.

What Does The Bible Say?

The whole ugly mess is based on a deeply immoral violation of biblical standards. The Bible says:

"If you lend money to one of my people among you who is needy, do not be like a money lender to him; you shall not charge him interest." Exodus 22:25.

This verse has been the source of intensive reflection and debate in both Jewish and Christian social-ethical thinking. Generally, both Christian and Jewish ethics have taught that in a modern capitalistic society lending at interest, even to the poor, is not usury. Scholars have reasoned that the intent of the passage is that people in need not be put at risk of greater poverty.

In modern capitalistic society responsible lending can be a useful tool to lift people out of poverty. For example, a low interest mortgage may cost the same as rent. By offering a mortgage to a qualified recipient, the mortgagee pays the same amount as the equivalent rent and comes out ahead as the property appreciates over time. Also a business can be started through incorporation. The individual is not personally at risk but the loan enables him to make money and pay back the bank while making a sensible income. Lending is a key part of capital formation that enables modern societies to develop economically.

However, there must be clear rules to insure that loans are not predatory and do not unduly put needy people at risk. One requirement is that the interest must be low; the other obvious requirement is that the recipient of the loan must have sufficient means to pay off the loan. The system is advantageous when the loan will likely increase prosperity for the recipient and there are protections for business failure. Modern Jewish and Christian thinkers who take the Torah seriously have embraced these principles as being in accord with the command against usury (defined as predatory lending).

Rebellion Against God's Law

The whole financial meltdown today is a manifestation of rebellion against God's Law. The needy were given loans they could not afford. Greed blinded financial institutions into believing that through housing speculators and re-sales, the party could go on forever. This all should have been illegal. As preposterous as the motives and faulty reasoning that fueled this crisis have been, this was all perfectly legal.

So what is the point? Messianic Jews claim to take the Law seriously, but often our focus is not on the practical teaching of the Torah, but rather on our distinct Jewish life patterns. If we claim to take the Torah seriously we should be in the vanguard in teaching ethics, including personal ethics, civil law and business ethics. It all comes down to one command: "Love your neighbor as yourself."

Generosity During a Time of Financial Crisis

Some believers have suffered in the economic downturn and have written to us that they have had to curtail their giving. Some ministries have said they are hurting due to a great fall off in giving. However, I have learned from my friend and partner Asher Intrater that in good times or bad we must keep up generous giving. Asher gives a generous percentage of funds they receive (33%); much more than a tithe of his personal and ministry funds. All of our ministries give away a good amount to support others. In the midst of this crisis, I want to urge our readers that generous giving is always the right response! It is the way of faith and assures us of God's favor. Our prosperity after all, is a supernatural matter.

By Daniel Juster

Dan Juster leads the overall ministry Tikkun International. Donate to Tikkun International.

Let us know what you think - why not comment to this article. The authors of these articles are often involved in intense ministry and are thus unable to respond to most comments. As is normal with print and online magazines, Tikkun reserves the right to publish only those comments we feel are edifying in tone and content.
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11:54 05Nov08 anonymous -
Thank you for clarifying the real issue in this crisis. May God have mercy on us.

12:01 05Nov08 Michelle Jalleh Kante -
Thank you for your article. Thank you for exhoratation, encouragement and comfort that always comes from our Abba in Heaven's Words.

12:29 05Nov08 Tom Dolph -
The doctrine on USURY was brought to my attention more than 40 years ago. Salient points were explained to me. Since then I have done considerable study. My initial instruction has held firm. God (as always) got it right! Space doesn't permit a complete study here, however let me say that usury protects the lender and forces the borrower into penury and "forced" servitude if he fails in business. The "corporation" theory invites unwarranted risks because the borrower can often walk away with a whole skin while the lender goes broke (just ask Wall Street). Personal loans (for medical care, food, rent, etc.) is an act of charity for which the lender OUGHT NOT to ask/expect repayment. THE SOLUTION IN BUSINESS is "Partnership" in which both borrower and lender share equal risk and benefit. That is NOT usury. That promotes responsible lending and responsible borrowing. If we accept God's Word at face value, it is ALWAYS dead on target.

  -- Dr Juster replies: Great comments. I agree, but in the recent case loans were made to people who the loan officer and company knew could not pay. Amazing.

14:05 05Nov08 Peter Dickson -
Excellent article. Thank you for touching a biblical topic which is not often commented on, because of the nature of our society. The scripture quite plainly says, "Don't do this," many times, yet our economic system is built on it. Contrary to modern Christian and Jewish thought, it doesn't say, "Unless it's a non-predatory interest rate." But I digress. An interesting side question is that the money the banks were using to make these loans belongs to the people who had accounts with them, who were receiving interest from the banks. Does that make us partially responsible as individuals, with savings accounts, CDs, and IRAs for being a part of a corrupt economic system and making money off of banks doing usury to other people? I don't know, but I am sure we will find out when we stand before the judgment seat of God...

  -- Dr Juster replies: What an interesting question. I do still think for responsible business plans and loans, that capital formation is legitimate. Yet, I do not think you are responsible for the bank's evil. They basically misused your funds!

15:14 05Nov08 Glenn -
I recently read an article on Islamic banking which is growing by 15% a year with expectations to hold 10 percent or more of the market in just one or two decades. This current crisis has helped fuel the growth of the Islamic banking system and thus the current economic crisis should be seen as a major security issue. This banking system is solid and is protected from the current financial crisis. Derivatives, credit default swaps and excessive risk taking are not allowed. Many also ban interest and trading in debt. Depositors are partners and share in profits while funds are put in very conservative low risk investments. Are there any Jewish or church related banking systems today? Do you see the church leading the way to help secure finances for believers who seek to uphold God's moral precepts?

  -- Dr Juster replies: I do not know of parallels to what your speaking about except in old Mennonite and Amish societies. They are an example.

17:43 05Nov08 D. J. Wells -
Yes, over 25 years ago the Lord revealed to me what you've explained well here, regarding lending and usury, and literally our economy was a house of cards, as you've shown. While I've practiced these principles in my personal life, what about the fact that this has now been foisted on the NON-PARTICIPATING public INVOLUNTARILY through the "bailout" plan? (And that including executive bonuses, golden parachutes, etc.) Please help to explain that. Why was that seen as "necessary"? What could've been done about it? The fact that the practice was "legal" doesn't make it ethical, OR GOOD BUSINESS. I still believe there IS illegal activity to be uncovered as well. God help us, and as our tender still declares, "In God We Trust". Time to find out.

  -- Dr Juster replies: Basically we are so dependant on these companies that the government rewarded them with the bail-out to prevent a worse crisis. I am not sure there was any good answer.

02:47 07Nov08 Max Legg -
This is excellent teaching. I understood that usury was interest "with a bite in it" ... That has certainly been the case in NZ. I see the prophecy of Nahum 3:13-19 happening right before our eyes."Nothing will heal the wound" of the financial crises which in the end will totally collapse.

19:13 10Nov08 Charles Reece -
This topic raises an even LARGER issue; that being, why hasn't the evangelical Church in America long ago cried against such greedy monetary wickedness -- as "usury" itself??? Tragically, evangelicals love to "pick-and-choose", out of both the Old and New Testaments, what "sins" in the United States that they personally believe to be most rampant today, such as homosexuality and abortion. But what about America's old long-lasting "sin" of covetousness [or materialism]; especially as this same sin has, for centuries, manifested in the financial world, as USURY??? The lack of spiritual "fire" of the American Church to condemn such Biblically-defined wickedness only serves to embarrass the Church herself; showing her ignorance on the importance of the of Hebraic background of the New Testament; as the study of "Jewish roots" would indeed apply in the case of which particular Mosaic Laws are STILL applicable under the New Covenant; AND with those same particular Old Testament laws that are specifically designed to regulate the world of commerce and finance.
In the history of the Christian Church in America, there is very little record -- if any -- on a great outcry by religious leaders against this country's old sin of usury. Again, this fact demonstrates the American Church's latent anti-semitism -- via its contempt for the WHOLE Law of Moses; and right here, what is also being shown is that the American Church has always lacked enthusiasm for diligent study in searching God's heart in the matter, in regard to which Mosaic laws still APPLY under the New Covenant; for both the Church itself and for the governments of the world.

12:01 11Nov08 Tom Dolph -
In response to Mr. Reece's comments. From what I have learned, virtually all churches and denominations rigidly avoided any matter that included "interest" until about a hundred years ago. For instances, until the beginning of the 20th century, Churches were built entirely with donations or NON-interest loans, in strict accordance with God's rule against usury of any kind. This had always been the practice and was so commonly understood that few sermons were preached on the subject. The secular world, however, had long been corrupted. History tells us it was the Knights Templar who re-invented usury by calling it "rent" and/or a "service charge" for caring for their depositors' funds. You can also learn a great deal of "insider knowledge" about our economic culture by researching "The Hanse" the true founders of our Consumer Culture. Every CORPORATION is the direct descendant of the Hanseatic League (who called themselves, "The Equal of Kings and Princes).

Also in this issue of the newsletter:

Ron McDaniel: SHOFAR 2008: A Pilgrim's Perspective
Eitan Shishkoff: Reflections on the Akko Riots
Asher Intrater: Glorified and Human Appearances of Yeshua
Eddie Santoro: Immersion of the Eight