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Taking Interest: Difference between revisions
From Halachipedia
→Lending Commodities for Other Commodities
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# It is Biblically forbidden to lend an item for a greater quantity of that item. For example, lending 100 apples for 120 apples is Biblical interest.<ref>Shulchan Aruch YD 160:21</ref> | # It is Biblically forbidden to lend an item for a greater quantity of that item. For example, lending 100 apples for 120 apples is Biblical interest.<ref>Shulchan Aruch YD 160:21</ref> | ||
# Short selling is a violation of borrowing commodities with interest. This type of transaction between two Jews is forbidden since the leniencies of borrowing commodities, namely, having a fixed market price that endures for a long time or having a position in that the stock one is short selling, are inapplicable.<ref>[https://traditiononline.org/short-selling-and-jewish-law/ Rav Aharon Levine (Tradition Spring 2010 pp. 67-71)] explains that short selling involves borrowing a commodity which is repaid with that commodity and not merely a cash loan. The commodities in this case are the stocks being sold short. Since the marketplace price is in flux constantly that doesn't permit the seah b'seah transaction. Additionally, the fact that selling outside the box is illegal prevents a person from shorting a position he already owns stock in. Therefore, it isn't possible for someone to have the stocks that he is borrowing while doing a short sell.</ref> For a Jewish marketplace this is a serious issue because either way there is an interest charge for borrowing the stocks for the time. Therefore, these issues need to be solved with a heter iska.<ref> [https://www.toraland.org.il/%D7%A9%D7%90%D7%9C%D7%95%D7%AA-%D7%95%D7%AA%D7%A9%D7%95%D7%91%D7%95%D7%AA/%D7%9B%D7%9C%D7%9B%D7%9C%D7%94-%D7%95%D7%9E%D7%A9%D7%A4%D7%98/%D7%9B%D7%9C%D7%9B%D7%9C%D7%94-%D7%95%D7%94%D7%9C%D7%9B%D7%94/%D7%9E%D7%9B%D7%99%D7%A8%D7%94-%D7%91%D7%97%D7%A1%D7%A8/ toraland.org.il] cites Torat Ribbit 17:33 that since stocks don't represent ownership of the company it isn't considered ribbit or seah bseah. However, since there's a payment of interest for the value of the stocks that is certainly considered interest and requires a heter iska.</ref> | # Short selling is a violation of borrowing commodities with interest. This type of transaction between two Jews is forbidden since the leniencies of borrowing commodities, namely, having a fixed market price that endures for a long time or having a position in that the stock one is short selling, are inapplicable.<ref>[https://traditiononline.org/short-selling-and-jewish-law/ Rav Aharon Levine (Tradition Spring 2010 pp. 67-71)] explains that short selling involves borrowing a commodity which is repaid with that commodity and not merely a cash loan. The commodities in this case are the stocks being sold short. Since the marketplace price is in flux constantly that doesn't permit the seah b'seah transaction. Additionally, the fact that selling outside the box is illegal prevents a person from shorting a position he already owns stock in. Therefore, it isn't possible for someone to have the stocks that he is borrowing while doing a short sell.</ref> For a Jewish marketplace this is a serious issue because either way there is an interest charge for borrowing the stocks for the time. Therefore, these issues need to be solved with a heter iska.<ref> [https://www.toraland.org.il/%D7%A9%D7%90%D7%9C%D7%95%D7%AA-%D7%95%D7%AA%D7%A9%D7%95%D7%91%D7%95%D7%AA/%D7%9B%D7%9C%D7%9B%D7%9C%D7%94-%D7%95%D7%9E%D7%A9%D7%A4%D7%98/%D7%9B%D7%9C%D7%9B%D7%9C%D7%94-%D7%95%D7%94%D7%9C%D7%9B%D7%94/%D7%9E%D7%9B%D7%99%D7%A8%D7%94-%D7%91%D7%97%D7%A1%D7%A8/ toraland.org.il] cites Torat Ribbit 17:33 that since stocks don't represent ownership of the company it isn't considered ribbit or seah bseah. However, since there's a payment of interest for the value of the stocks that is certainly considered interest and requires a heter iska.</ref> | ||
===Yesh Lo=== | |||
# If a person owns some of the commodity that he is borrowing he can borrow as much as he wants and it is like he sold the lender his commodity. It works even if the borrower only has a little bit of that commodity since it is like he borrowed it several times each time selling to the lender his commodity. It is permitted to do such a loan all at one time.<ref>Gemara Bava Metsia 75a, Shulchan Aruch 160:2</ref> | |||
# Initially both parties should be aware that the borrower has some of that commodity. If they weren't aware of that, the transaction is nonetheless permitted and can be collected.<ref>Shach 160:7, Taz 160:3, Bach 160:2, Chelkat Binyamin 160:25, Laws of Interest 14:8 p. 271</ref> | |||
# Ideally both parties should be aware that it is as if the borrower is selling his commodity to the lender.<ref>Chachmat Adam (Shaarei Tzedek 134:2)</ref> | |||
# The borrower needs to actually own some of the commodity to permit this transaction and it isn't enough that people owe his some of that commodity.<ref>Gemara Bava Metsia 63b, Shulchan Aruch 160:2</ref> If the borrower has some of that commodity that is deposited with someone else that is sufficient to consider him yesh lo.<ref>Bet Yosef YD 162:2 writes that an item deposited with someone else (Pikadon) wherever it is is considered yours that it should be considered yesh lo for seah bseah. Tosfot Bava Metsia 6a writes that a person owns his pikadon can he sanctify it.</ref> If the borrower has some of that commodity but he borrowed it previously in a permitted fashion, some poskim say that it is sufficient to consider it yesh lo.<ref>Shulchan Aruch 160:2 holds that if he borrowed the commodity it is considered yesh lo since currently it is his. However, in Bet Yosef it is clear he is disagreeing with the Talmid Harashba who says it isn't yesh lo since he is going to have to return it. Bach 160:2 sides with the Talmid Harashba. Shach 160:8 follows the Bach. Taz 160:4 differentiates between where the original loan was made separately from the loan in which case it is yesh lo, whereas if the permitted loan was done only to permit the later loan which isn't yesh lo.</ref> | |||
===Yatza Hashaar=== | |||
==Involvement with Interest== | ==Involvement with Interest== | ||
