Lending and Collateral (Exodus 22:25-27)Bible Commentary / Produced by TOW Project
Another set of case laws regulated money and collateral (Exod. 22:25-27). Two situations are in view. The first pertains to a needy member of God’s people who requires a financial loan. This loan shall not be made according to the usual standards of money-lending. It shall be given without “interest.” The Hebrew word neshekh (which in some contexts means a “bite”) has garnered a great deal of academic attention. Did neshek refer to excessive and therefore unfair interest charged, on top of the reasonable amount of interest required to keep the practice of money-lending financially viable? Or did it refer to any interest? The text does not have enough detail to settle this conclusively, but the latter view seems more likely, because in the Old Testament neshek always pertains to lending to those who are in miserable and vulnerable circumstances, for whom paying any interest at all would be an excessive burden. Placing the poor into a never-ending cycle of financial indebtedness will stir Israel’s compassionate God to action. Whether or not this law was good for business is not in view here. Walter Brueggemann notes, “The law does not argue about the economic viability of such a practice. It simply requires the need for care in concrete ways, and it expects the community to work out the practical details.” The other situation envisages a man who puts up his only coat as collateral for a loan. It should be returned to him at night so that he can sleep without endangering his health (Exod. 22:26-27). Does this mean that the creditor should visit him in the morning to collect the coat for the day and to keep doing so until the loan is repaid? In the context of such obvious destitution, a godly creditor could avoid the near absurdity of this cycle by simply not expecting the borrower to put up any collateral at all. These regulations may have less application to today’s banking system in general than to today’s systems of protection and assistance for the poor. For example, microfinance in less developed countries was developed with interest rates and collateral policies tailored to meet the needs of poor people who otherwise have no access to credit. The goal—at least in the earliest years beginning in the 1970s—was not to maximize profit for the lenders, but to provide sustainable lending institutions to help the poor escape poverty. Even so, microfinance struggles with balancing the lender's need for a sustainable return and default rates with the borrower's need for affordable interest rates and nonrestrictive collateral terms.
The presence of specific regulations following the Ten Commandments means that God wants his people to honor him by putting his instructions into actual practice to serve real needs. Emotional concern without deliberate action doesn’t give the poor the kind of help they need. As the Apostle James put it, “Faith without works is also dead” (James 2:26). Studying the specific applications of these laws in ancient Israel helps us to think about the particular ways we can act today. But we remember that even then, these laws were illustrations. Terence Fretheim thus concludes, “There is an open-endedness to the application of the law. The text invites the hearer/reader to extend this passage out into every sphere of life where injustice might be encountered. In other words, one is invited by the law to go beyond the law.”
A careful reading reveals three reasons why God’s people should keep these laws and apply them to fresh situations. First, the Israelites themselves were oppressed as foreigners in Egypt (Exod. 22:21; 23:9). Rehearsing this history not only keeps God’s redemption in view, but memory becomes a motivation to treat others as we would like to be treated (Matt. 7:12). Second, God hears the cry of the oppressed and acts on it, especially when we won’t (Exod. 22:22-24). Third, we are to be his holy people (Exod. 22:31; Lev. 19:2).