Part 3: Loan Generosity & Predatory Interest


This series of articles attempts to analyze Biden’s student debt forgiveness program, and especially some Christian reactions to that program, in light of Scripture’s ethical teachings. In PART 1, we noted some important presuppositions. These included the following: (1) It is exceedingly difficult to apply ancient ethical command in contemporary contexts; (2) we distort Scripture when we allow one passage or set of passages to become the “interpretive control” over all others; (3) what the Bible says matters; and (4) our emotional reactions are not moral arguments.

In PART 2, we reviewed Scripture’s attitude and commands as it relates to the dual issues of hard work and compassion. We noted that both are God’s divinely-ordained means for establishing human flourishing. Hard work is meant to enable an individual to provide for himself and his community, for which compassion is a necessary precondition. When we refuse to engage in hard work (when perfectly able to do so), or when we refuse to extend compassion, we are operating sinfully. In PART 3 (this article), we will begin exploring the Bible’s approach to debt and debt-forgiveness.

The “Three Pillars”

The Bible’ approach towards debt can be described as “cautious.” Debt is assumed to be a necessity of life, especially in a dysfunctional and fallen world. As God told Israel in Deuteronomy 15:11, “There will always be poor people in the land. Therefore I command you to be openhanded toward your fellow Israelites” (that is, there will always be a need for loans). However, the Bible also cautions again debt. Proverbs reminds us that, generally speaking, “the borrower is a slave to the lender” (Proverbs 22:7). Elsewhere, it reminds us that putting up collateral for a debt brings inherent risk to the borrower, “Whoever put up security for a stranger will surely suffer harm” (Proverbs 11:15). The most significant risk was that borrowers would be at the mercy of unscrupulous lending practices, “Be not one of those who give a pledge, who puts up security for debts. If you have nothing with which to pay, why should your bed be taken from under you?” (Proverbs 22:26-27).

Yet, Scripture’s many passages about debt are multifaceted and cover a multitude of scenarios, ethical commands, and prohibitions. We could perhaps divide all these passages into four basic categories, or “three ethical pillars” intended to guide the financial life of the ancient God-fearing Israelite:

  1. Loans must be generously given
  2. Interest can never be charged to fellow Israelites.
  3. All debt must be forgiven periodically.

We will deal with the first two pillars in this article (See PART 4 for #3). As we shall see, these four pillars were intended to operate together. When we remove one or more pillars from the equation, the whole system comes crashing down.

Pillar #1: Give Loans Generously

Would it surprise you to learn that loaning money in the Old Testament was not a voluntarily act, per se. It was an ethical requirement God placed upon all Israelites who had the means to do so. While one could disobey this command (and seemingly most did), it was never morally justified to do so. Refusal to offer a loan when one had the means to do so was a serious act of disobedience, resulting in the unrighteous and unjust treatment of the disadvantaged.

Deuteronomy 15:7-8 makes this clear, “If anyone is poor among your fellow Israelites in any of the towns of the land the Lord your God is giving you, do not be hardhearted or tightfisted toward them. Rather, be openhanded and freely lend them whatever they need.” A few verses later it says, “Give generously to them and do so without a grudging heart” (v. 10a), and again, “Therefore I command you to be openhanded toward your fellow Israelites who are poor and needy in your land” (v. 11b). Significantly, God promises blessings to those who obey him in this matter, “…then because of this the LORD your God will bless you in all your work and in everything you put your hand to” (v. 10b).

Even more shocking, God already anticipates a possible “loophole.” In this passage, God commands the debts be forgiven every seven years (we discuss this in PART 4). Anticipating that some Israelites might have a conniving heart, God commands, “Be careful not to harbor this wicked thought: “The seventh year, the year for canceling debts, is near,” so that you do not show ill will toward the needy among your fellow Israelites and give them nothing. They may then appeal to the Lord against you, and you will be found guilty of sin” (Deut 15:9). Even when the lender knew he would never be repaid (due to the required loan-forgiveness), he was nevertheless commanded to generously give it anyway. While this passage is shocking to many, in this situation God demands the lender suffer a financial loss so that the borrower might experience a transfer of wealth resulting in his financial gain.

We should also note that this command for loan-generosity was in addition to other commands about generosity to the poor. Loan weren’t given to those who were utterly destitute, but rather to those rightly classified as poor but who still, presumably, had the means to repay the loan over time. For the utterly poor, the Old Testament commanded acts of generosity. For example, landowners were commanded to leave a portion of their fields unharvested so the poor could pick up the gleanings (see Leviticus 19:9-10). Notice that this command isn’t given to the poor. The Bible nowhere commands the poor to glean the fields. Rather, it commands the wealthy to intentionally leave some of their crop behind, thus sacrificing greater profit, for the sake of human flourishing. Other acts of compassion were also commanded, such as tithes that would be used to feed the poor within the community (see Deut 14:28-29).

The overall picture is clear: God wants his people driven by the desire to see their fellow humans flourish, not by the desire to retain their money or increase their profit.

Pillar #2: Never charge interest

If the Bible is clear about anything as it relates to debt, it is crystal clear that Israelites were absolutely forbidden from charging interest to fellow Israelites. The Lord told the Israelites, “If you lend money to one of my people among you who is needy, do not treat it like a business deal; charge no interest” (Exodus 22:25). Later, when the Covenant was renewed with the second generation of Israelites, Moses reminds them, saying, “Do not charge a fellow Israelite interest, whether on money or food or anything else that may earn interest” (Deuteronomy 23:19). In Leviticus, Moses again commands, “take no interest from him or profit, but fear your God…you shall not lend [the person] your money at interest” (Leviticus 25:36-37).

While it seems this command was never consistently obeyed, the greatest spiritual figures in the Old Testament routinely called on Israel to embrace this important command. In Psalm 15:1, David asks, “Who shall dwell on Your holy hill?” He immediately answers this question, “He who walks blamelessly and does what is right…who does not put out his money at interest” (Psalm 15:1-5). Elsewhere, the one who God blesses is one who “is ever lending generously” (Psalm 37:26), that is, freely and without charging interest.

Later, greedy Israelites are rebuked for disobeying this command. One of the charges Ezekiel makes against lenders is they “take interest and profit” from loans (Ezekiel 22:12). In Ezekiel 18, the Lord contrasts an unjust lender who “lends at interest and takes profit” (18:8, 13) with the righteous lender who “takes no interests or profit” (18:17). The former shall die (18:13b) but the latter will live (18:17b). In Nehemiah 5:7 we read, “I brought charges against the nobles and the officials. I said to them, “You are exacting interest, each from his brother.” And I held a great assembly against them.”

Restrictions on Collateral

This went beyond interest. Taking collateral was also severely restricted. Collateral could be taken as long as it didn’t negatively impact the person’s ability to make a living or otherwise increase that person’s risk of misfortune or harm.

For example, God commanded lenders, “If you take your neighbor’s cloak as a pledge, return it by sunset because that cloak is the only covering your neighbor has. What else can they sleep in? When they cry out to me, I will hear them, for I am compassionate” (Exodus 22:26-27). A similar command is given in Deuteronomy 24:10, “If the neighbor is poor, do not go to sleep with their pledge in your possession. Return the cloak by sunset so that your neighbor may sleep in it. Then they will thank you and it will be regarded as a righteous act in the sight of the LORD your God.” Notice how God not only gives these commands, but also ties them directly to his righteous character. Centuries later, the prophet Amos would call God’s judgment down on those lenders who “lie down beside every altar on garments taken in pledge” (Amos 2:8). Likewise, Israelites couldn’t take collateral if it prevented someone from flourishing financially, “Do not take a pair of millstones, not even the upper ones, as security for a debt, because that would be taking a person’s livelihood as security” (Deuteronomy 24:6).

The predatory nature of interest

At this point, we would be wise to remember what we discussed in PART 1. Namely, it is exceedingly difficult to apply ancient commands in modern times. Our modern economy doesn’t neatly fit into the economy depicted in the ancient biblical world. Since gold and silver were fixed commodities, money had a relatively stable value. In today’s economy, our currency loses value over time. The buying power of $10,000 is stronger today than it will be seven years from now. Thus, if I lend you $10,000 and agree to be repaid over a period of seven years, I will lose monetary value at the end of that process even if you repay the entire loan. Clearly, some adjustment is needed if we seek to apply these ethical commands today.

Yet, before we dismiss the application of these commands, we should ask the question, “Why would God take such an absolutized stance against charging interest or taking collateral?” What is God reacting against? Without interest, there is zero benefit to the lender. When I was discussing these commands several years ago with a successful Christian business owner (who came from a strong Dutch-heritage that valued smart business sense and hard work), he simply responded, “You don’t understand business.” True enough (I’d really be quite bad at it). From the standpoint of business, God’s command makes no sense.

But that is the point. God wasn’t looking at this from the standpoint of business or profit. He was looking at it from the standpoint of human flourishing. God did not want His people to be driven by profit, but rather by a desire to see their fellow Israelites flourish. While our application of these Old Testament commands will not be 1-to-1, there is a serious problem when the modern Christian’s ethical outlook on loans has more in common with a Ferengi than with the sovereign Lord of the Universe.

Scripturally, interest is seen as an oppressive burden that harms the poor. The Hebrew verb, nāšak, (pronounced as NAHshock) is often translated as “to charge interest.” While there is some dispute about its meaning, many believe the word-root comes from a word meaning “to bite.” Charging interest was like taking a bite out of someone (there is a legitimate question if this is a shared root or if a wordplay is taking place, as the words sound nearly identical in Hebrew). The whole reason the poor need a loan in the first place is because they do no have sufficient means to either (1) provide for their needs or (2) improve their situation. Interest compounds the difficulty. We see an example of this in Nehemiah 5. I’ll quote several verses below for context:

     Now there arose a great outcry of the people and of their wives against their Jewish brothers. For there were those who said, “With our sons and Now the men and their wives raised a great outcry against their fellow Jews. Some were saying, “We and our sons and daughters are numerous; in order for us to eat and stay alive, we must get grain.”
     Others were saying, “We are mortgaging our fields, our vineyards and our homes to get grain during the famine.”
     Still others were saying, “We have had to borrow money to pay the king’s tax on our fields and vineyards. Although we are of the same flesh and blood as our fellow Jews and though our children are as good as theirs, yet we have to subject our sons and daughters to slavery. Some of our daughters have already been enslaved, but we are powerless, because our fields and our vineyards belong to others.”
     When I heard their outcry and these charges, I was very angry. I pondered them in my mind and then accused the nobles and officials. I told them, “You are charging your own people interest!” So I called together a large meeting to deal with them."

Nehemiah 5:1-7

In this situation, many of the lower class were unable to cover the costs necessary “for us to eat and stay alive” (v. 2) and “pay the king’s taxes” (v. 4). Those that had the ability to mortgage property did so, while other seemingly took unsecured loans (i.e. loans with no collateral). What is significant is that both categories were unable to repay their loans and were falling further behind into debt.

Notice that last statement: Falling further behind into debt. With non-interest loans, this is impossible. If I borrow $10,000 at zero interest, I can never owe more than $10,000. I might not be able to pay it back, but I certainly would never fall further behind (unless I took out more loans). To Nehemiah’s great horror, he discovers the reasons these Israelites were falling further behind. Not only were lenders violating God’s commands regarding unjust approaches towards collateral (seizing property, seizing children), they were also charging interest in clear violation of God’s commands. In Nehemiah’s word, “you are doing this to your own people!”

Biblically speaking, while debt makes the debtor a “slave” to the lender (at least in some sense), charging interest creates an abusive situation that is ultimately untenable to the poor. It diminishes their flourishing rather than enhances it. Consider the contemporary American who takes out a loan for $250,000 to purchase a home. Per his terms, the loan is a 30-year fixed mortgage at 5.1%. At the end of those 30 years, he will have paid nearly $728,000 for his home. That is nearly 3 times its value at the time of purchase (though we would need to factor inflation into this calculation). In our modern world, we simply shrug and tell ourselves that is the way of things. In the biblical world, this would be considered a blasphemous example of wicked lending practices. Entire Old Testament prophetic books were written, in part, to rebuke practices such as these.

In 1 Samuel 22:1-2 we learn that some of David’s mighty men were individuals who were fleeing oppressive debt, “All those who were in distress or in debt or discontented gathered around him, and he became their commander” (v. 2). While we don’t know the nature of this predatory debt, we can assume it was either because the lenders were charging interest or refusing to forgive their debts as required by the seven-year debt cycle command given in Deuteronomy 15:1-2. Because the lenders were disobeying God’s commands concerning debt, these borrowers were trapped under a mountain of debt they couldn’t repay. The fault for this ultimately lay with King Saul, who had long turned his back on God’s ethical commands. These experiences most likely impacted David greatly, and perhaps explain his zeal for prohibiting the charging of interest during his reign as king.

Implications for our Study

First, all Israelites were commanded to be compassionate towards those in deep poverty. This generosity was specifically defined as providing them basic provisions and income, even if that meant sacrificing one’s potential profit. It most certainly included giving up a portion of one’s wealth to meet the needs of others.

Second, this principle of generosity was also extended to loan giving. Those with monetary resources were commanded to give loans to those of lesser means, and it was considered a great act of wickedness to disobey this command.

Third, the giving of loans was required even if the lender knew he wouldn’t be repaid due to God’s required debt-forgiveness (more on this in PART 4).

Fourth, charing interest for loans was strictly and utterly forbidden by God. Though Israel clearly disobeyed this command, righteous leaders such as David, Nehemiah, and Amos attempted to lead the Jewish people back to obedience.

Fifth, even collateral was zealously restricted so that it wouldn’t prove to be an undue burden upon the borrower.

Sixth, the reason for these prohibitions is that Scripture depicts interest as being inherently predatory.

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