2019/5780

The Scope of the Ribbit Prohibition

We then learned the Mishnah (Bava Metzi’a 5:12) which sets forth the scope of the Ribbit prohibition. The prohibition, surprisingly, does not devolve solely upon the lender, but even upon the borrower as well. Moreover, anyone who facilitates the loan, such as a guarantor, witnesses, or even a scribe, violates the prohibition (or at least the prohibition of Lifnei Iveir, facilitating another individual’s sin).

The contemporary analogue of the scribe for a loan is the attorney. Without the assistance of an attorney, most large loans, especially mortgages, would not be transacted. Thus, it is clearly forbidden to serve as an attorney for an interest-bearing loan that violates the Issur (prohibition) of Ribbit.

At that point, a student raised his hand in panic, noting that his father works as an attorney for Quicken Loans. He asked if his father routinely violates the Issur Ribbit on the basis of what we learned.

The Bold Ruling of Rav Asher Weiss – An Introduction

In response, I shared a favorite ruling of Rav Asher Weiss, the great Poseik from Jerusalem. But first, I will give a bit of an introduction to Rav Asher Weiss and what makes him a very special Poseik and arguably the leading Poseik of our time.

Rav Asher was born in Borough Park, Brooklyn in 1953 to parents who were Holocaust survivors. His father worked as a real estate professional. His family made Aliyah in 1966 and he lives until today in Israel. Rav Asher speaks fluent English, Modern Hebrew, and Yiddish as a result of his full immersion in a variety of cultures. He has an extraordinary breadth of Torah knowledge and extraordinary insight as well into virtually all facets of Torah.

Most interestingly, it is told that at a parent-teacher conference in Brooklyn, when Rav Weiss was in fifth grade, a secular studies instructor told his parents that their son was a great genius and that they should purchase an encyclopedia for him to read. His parents subsequently purchased the set, and it is said that the young Asher quickly devoured the entire set and knew all of its contents by heart!

The Jewish community remains in great debt to this teacher, for as a result, although he has no formal advanced secular education, it is clear from learning his Teshuvot Minchat Asher that Rav Weiss has a full grasp of business, medicine, and many other practical areas of life. He serves as the Poseik for Jerusalem’s great Sha’arei Tzedek hospital among his many responsibilities and positions.

Rav Weiss’s Teshuvot are characterized by a bold willingness to disagree with his predecessors and his insistence that the Halachah be applied in a reasonable and sensible manner. Despite or because of this, Rav Weiss is highly respected in all Orthodox circles ranging from Sephardic to Ashkenazic, non-Chassidic to Chassidic, and from Modern Orthodox/Religious Zionist to Chareidi. Questions are posed to him from all sectors in the community, from Rav Hershel Schachter of Yeshiva University to Chareidi Roshei Yeshiva to Chassidic Rebbes.

An Introduction to Twenty-First Century Halachah

A review of Rav Weiss’s Teshuvot Minchat Asher reveals, among many other interesting phenomena, a rise in the economic status of many Orthodox Jews. For example, a celebrated Teshuvah of Rav Moshe Feinstein (Even Ha’Ezer 2:14) written in 1960 discusses whether it is permitted to ride the subway during rush hour. The concern is unintentional brushing against members of the opposite gender. By contrast, in the early twenty-first century Rav Asher Weiss (Teshuvot Minchat Asher 1:87) was asked if it is permitted to be a passenger on a private jet if the pilot is a member of the opposite gender.

Similarly, Rav Moshe Feinstein (Even Ha’Ezer 1:7) was asked in 1960 whether one may own shares in a company that operates in violation of Shabbat. By contrast, Rav Asher Weiss (Teshuvot Minchat Asher 1:105-106) was asked in 2004 as to whether one is permitted to obtain the majority of the controlling shares in an American bank that has many Jewish customers.

Rav Asher Weiss – The Halachic Status of a Corporation

In his response, Rav Weiss begins by outlining the Torah definition of ownership. He notes that there are three hallmarks of ownership. For example, owning a fruit tree expresses itself in three ways. First is that the owner derives the profit generated by the tree. Second is that the owner determines how the item is to be used and operated. Third is the owner's right to sell or transfer the title of the item he owns to someone else.

In a corporation, these features of ownership are divided in three parts: the shareholders, the board of directors, and the chief executive officer (CEO). The shareholders enjoy the exclusive rights to the profits generated by the corporation. This expresses itself by their receiving dividends from the company’s earnings and ownership of the company’s assets should it cease to operate. The operation of the corporation is the exclusive domain of the CEO. The CEO, Rav Asher clarifies, is most decidedly not a mere agent of the board of directors. The running of the corporation is entirely not within their domain or sphere of influence. Finally, the board of directors appoints the CEO and other senior positions and determines the broader policy issues of the corporation.

Thus, the three hallmarks of classic ownership are divided in three with regard to a corporation. In addition, a major characteristic of a corporation is that the shareholders, board of directors, and CEO are shielded from any personal liability for the debt incurred by the corporation.

A Classic Example of a Modern Day Halachic Issue

The bifurcation of a previously simple and straightforward matter is a hallmark of contemporary Halachic issues. Many previously straightforward and unitary processes are now divided into its component parts. For example, motherhood used to involve a woman contributing genetic material and then carrying the baby to term. Today, motherhood can be bifurcated, and thus the Halachic question becomes which of the component parts determines motherhood. This question is intensely debated by Halachic authorities in our time.

Classic Halachic Approaches to Corporations

Rav Weiss begins by noting that civil law worldwide does not classify any of the three components of the corporation as the owner. Rather, a corporation is considered to constitute a distinct legal entity. The core question becomes whether the Halachah respects the identity of a corporation as a legal entity separate from the shareholders, the CEO and board of directors.

Rav Weiss proceeds to review the classic Halachic approaches to corporations. Poskim began to discuss this issue in the mid-to-late nineteenth century. We begin with Teshuvot Maharam Schick (Yoreh Dei’ah 158) who argues that the shareholders are not the Halachic owners of the corporation. Rather, they are viewed as lending money to the business by their purchase of shares. His great student the Maharshag (Yoreh Dei’ah 3) disagrees, arguing that if the shareholders are lenders, then who is the borrower? Since we cannot identify a borrower, the shareholders cannot be identified as lenders. Rather, the Maharshag argues, they are the owners of the corporation. The Kitzur Shulchan Aruch (65:28) and Rav Meir Arik (Teshuvot Imrei Yosher 1:189) rule in accordance with this view. They go so far as to say that we may not own even a very small amount of shares in a bank since one is viewed thereby as lending money to another Jew with interest.

In the twentieth century, two of the leading Poskim ruled that the shareholders are the owners of the corporation but limit the application of this idea. Dayan Weisz (Teshuvot Minchat Yitzchak 3:1 and 7:26) rules that the shareholders are considered Halachic owners of the corporation only if they own voting rights in the company. Rav Moshe Feinstein (Teshuvot Igrot Moshe op. cit.) rules that only if one owns the majority of the controlling shares of the company is he considered the Halachic owner of the corporation.

Returning to the nineteenth century, Teshuvot Beit Yitzchak (Yoreh Dei’ah 2 Kuntress Acharon number 32) argues that the members of the board of directors are the owners. This idea, however, is summarily rejected by Teshuvot Harei Besamim (2:115) who argues that the fact that the board does not enjoy the rights to the profits is the best proof that they do not constitute the Halachic owners of the company.

No one regards the CEO as the owner of the company since the board of directors can and often do fire the CEO. How can one be considered the owner if he can be fired? Rather, the CEO is employed to operate the company, but by no stretch of the imagination is he viewed as a co-owner.