Religion & Beliefs

Time Mag: What Would the Talmud Do about the Credit Crisis?

Between the Jewish establishment’s imposition of silence and the loosely coupled throng of Jew-hater’s who zealously proclaim conspiracy, the discourse over Jews and money is pure zealotry on either side.  The result is a vacuum of alternative perspectives and the … Read More

By / October 13, 2008

Between the Jewish establishment’s imposition of silence and the loosely coupled throng of Jew-hater’s who zealously proclaim conspiracy, the discourse over Jews and money is pure zealotry on either side.  The result is a vacuum of alternative perspectives and the absence of any shred of an enlightened public discussion, which only provides fertile soil for a perpetual harvest of rhetorical hate.

That’s why Jewcy feels it’s critical to highlight voices like Brackman and Jaffe, as we are doing all week, and it’s also  why we’re very happy that Time magazine just published an article highlighting two Jewish scholars that are publicly filling the vacuum by putting forth an alternative discourse — one that cites Jewish law as a basis for criticizing the behavior that led to the current financial crisis. The scholars are Yeshiva University economics professor Aaron Levine and Rabbi Eliezer Diamond, a professor of Talmud and Rabbinics at New York’s Jewish Theological Seminary. 

The article draws on Jewish scripture (the Torah, the Talmud, and the Mishna) as well as various rabbinical opinions to extrapolate ancient principles relevant to our current economic times:

Bamboozling the "Blind" Much Jewish ethical thought flows out of Leviticus 19:14, which reads "Thou shalt not curse the deaf, nor put a stumbling-block before the blind." From an early date, rabbis expanded this into a general prohibition on bad advice. In time, it became part of the language specifically regarding loans, mostly regarding the need for witnesses. But Diamond says it now applies to the whole loan debacle and "any expert who tells someone who probably shouldn’t take out a mortgage ‘you’ll be able to do it, no problem.’" There are a lot of financially "blind" people out there, and a lot of people mis-advised them.

Hidden Flaws and the "Reasonable Man" Medieval jurists like Maimonides identified a more specific kind of bad advice. They tackled the idea of the "hidden flaw," which, Levine points out, leads directly to a demand for fiscal disclosure. "If you sell an animal, you had to disclose to the buyer what the hidden flaw is," he explains. Not only that: "the disclosure has to be made so that a ‘reasonable,’ or average man can decide" whether to buy. Once again, almost the entire chain of transactors in the mortgage crisis is guilty: predatory brokers for not alerting working-class borrowers to the fine print; middle-men selling mortgage debt to investment banks sliced and diced into "tranches" that obscure their riskiness; bankers who used hard-to-fathom financial instruments that leave ultimate responsibility for a loan a mystery even to experts. Like many observers, Levine is particularly exercized about credit default swaps, a largely unregulated field since 2000.) And anyone who willfully ignored the fact that real estate prices must eventually come down.

The Bath House Rule An extension of the disclosure concern, Diamond reports, was explored by Jews through the unexpected vehicle of marriage law. The tractate Ketubot in the Mishna dictates that a betrothal is valid only if the bride-to-be has no hidden blemishes that would have disqualified the match, had they been public. However, there is a heavy responsibility on the groom: if he has relatives who could have observed the disfigurement by checking out his fiance in the womens’ bath but neglected to do have them do so, he can’t complain. This suggests (feminist complaints notwithstanding) that culpability in sub-prime crisis does not lie solely on the mortgage broker who glided over the fact that payments ballooned in the third year; but also on the buyer who happily neglected to read the fine print: : "Ignorance of the facts is no defense," Diamond says.

Morals of the Mark-Up Leviticus 25 of the Bible explains that you cannot charge the same price for land that is about to become useless (in this case, by reverting to its original tribal ownership) as for a parcel that still has decades of use left. Rabbinic tradition, says Diamond, interpreted that as a check on price-gouging and ruled that nobody should charge more than one-sixth above market value for anything.

[Time Magazine]

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