HB 333 And The Moral Boundaries on Interest
The issue of Payday Lenders is the latest “social concern” of Ohio area pastors. As I have noted already, they are behind current proposed legislation (HB 333) to limit such lenders to a 36 APR rate on short term loans. My previous essay noted that the Bible does not lend its support to “usury” laws, if such legislation is designated as “limiting the interest rate to a specified ceiling.” Depending on who does the lending and who receives the loaned funds, the allowable interest varies. If an Israelite makes a charity loan to a poor Israelite, no interest is allowed to be charged. None. (Ex 22:25).
However, this is not a universal rule. If the recipient was not a “poor Israelite” then the rules changed markedly. If the loan was made to a “foreigner” then the interest rate could be anything agreed upon by the lender and borrower. There was no rate on what this rate could be. It could be 2%, 36%, 391% or higher. As I noted in my last article, “usury begins at anything above zero if you are an Israelite lending to a poor Israelite and it does not exist at all if you are not.”
So to evaluate the Bible’s instruction regarding interest rates, and therefore the solidity of at least the Christian pastors’ approval of HB 333, we have to answer two questions regarding the Bible’s instructions: 1) how were “foreigners” defined? 2) How do theses provisions relate to the New Covenant situation? I will discuss the first in this post; the second in the one to follow.
Defining the “foreigner” and the “stranger” is a little harder than it first appears, in at least the English translations of the Bible. Hebrew has two words that our Bibles (including the CGV) variously translate as “stranger,” “foreigner,” “resident alien,” among others. The two Hebrew words are “nekhar” and “ger.” According to the Jewish Study Bible:
Foreigner, Heb “ben nekhar,” a non-Israelite; normally used of foreigners living or visiting in the land of Israel temporarily, usually for business. It is contrasted with “stranger” (”ger”), which refers to a long-term resident. (Pg. 131 commentary on Ex 12:43)
The word “foreigner” in Deut 23:20 is the Hebrew words, ben nekhar, which per the above would best be translated as “temporary resident,” or “visitor.” These were non-Jews who lived or resided outside of the land of Israel and were in Israel for business or other purposes. In essence, they were just passing through. It was to these people that Israelites (and presumably other “foreigners”) were allowed to charge whatever interest rates they wanted. They were not protected by the zero rate limitation given to poor, resident, Jews.
Most likely the rates charged to foreigners were high, since the risks in making loans to such people were also very high. Defaulting on such debts would be high, since the recipients had no permanent ties to the land nor even an obligation to honor such debts with outsiders (which the Israelites would be to them). Interest charged had to at least cover this risk. In fact, the sky was the limit, subject only to market forces and competition from other lenders willing to take the risks.
However, the situation with the ger, the non-Jewish long term resident, is less clear. These people were “in Israel” to a degree that the short term foreigner was not. Accordingly, they gained more “rights” than did the “visitor” or “temporary resident.” Reading between the lines, it appears that the poor non-Israelite would be entitled to the protection of zero interest “charity loans” the same as was the poor Israelite; at least if the lender was a better off Israelite. For instance, we read in the case of a poor Israelite who is redeemed from poverty by selling himself as in indentured servant:
And if your brother is growing poor, and his hand fails with you; then you shall uphold him: [ as ] a stranger [ who is a ] sojourner he shall live with you. Take no interest of him or increase, but fear your God; that your brother may live with you. You shall not give him your money on interest, nor give him your provisions for increase. (Lev 25:35-37)
As noted here, the brother (and by that I assume the passage means a real, physical, brother as opposed to a fellow Israelite) is to be accorded the same provisions as the “stranger who is a sojourner.” The word for “stranger” in this passage is ger the long term, non-Jewish resident. The provision specifically mentioned in this passage is that the loan shall be without interest. Therefore, I cannot punish my brother for his falling into poverty (and don’t think that was not a temptation then anymore than it would be today). I have to at least treat him as with the same degree of grace as I would a resident alien who has fallen into poverty. I must loan him funds to get out of his predicament without interest. For this passage to work, therefore, the resident alien, if he fell into poverty within Israel, was also to receive the benefit of a “charity” loan from his Jewish benefactor.
So again, the rate of “allowable interest” varied within Israel. It was either zero or as high as the market would bear. In order for the rate to be zero, the recipients had to be either poverty-struck Jews or poverty striken long term non-Jewish residents. Poverty-struck “visitors” or “short term” business men apparently were not entitled to these same provisions (though of course it was not forbidden to do so). Certainly, non-poor people were not entitled to such loans, whether they were Israelites or not; whether they were long term resident “aliens” or “just passing through.” For them, if they borrowed it was presumably at the same rates offered to the “foreigner;” that is, with no restrictions other than that people would pay.
Therefore, ethnicity determined the boundary of lenders who were subject to an interest limitation. Only Israelites were required to make “charity loans” at zero interest on behalf of the poor. There is no verse that requires foreigners, even those who resided on a semi-permanent basis in the land of Israel, to provide such loans. They could charge interest at any rate they wished, although since at least the poor has a zero rate alternative it is unlikely that they could do so. But the point is that there was no Law, even that of God, that required foreigners to any ceiling on the interest rate they charged.
Since the majority of Payday Lenders are not ethnic Israelites, they are not subject to this provision of the Law. Therefore, they are under the same moral ceiling that the foreigners within and without the Land of Israel were under: none.
Also, it is apparent that the land of Israel was the defining “boundary” relating to those who could receive zero interest loans. Only Israelites and long-term resident aliens within Israel were entitled to receive such loans; and only those that were poor. The last time I heard, Ohio was not and is not within the borders of ancient Israel. On that point alone the recipients of payday loans are not entitled to any restriction on their interest rates except that determined by the competitive market. What they agree to in writing is their only limitation.
Like the nations outside of Israel, they must pay what the market will bear. Per my post entitled At Least HB 333 is not 666, it appears that is precisely the Payday Lenders, as businesses, are charging.
Next: HB 333 and the “New Israel”