Bans on Usury Confront Modern Law

NE OF THE curiosities of history is that all three of the great world religions that originated in the Middle East – Judaism, Christianity and Islam – have laws against “usury,” meaning the payment of any interest for borrowed money. Christian rules against the payment of interest became a dead letter hundreds of years ago in most countries as kings stripped the church courts of their power over secular matters, but both the Jewish and Islamic legal prohibitions against “ribit” (as it is known in Jewish law) or “riba” (as it is called in Islamic law) retain some force in the modern economy. Islamic banking in particular, both in the United States and abroad, has evolved to create novel forms of financing which provide the same benefits of a traditional loan without offending Islamic law.

The friction between these legal traditions and the federal and state laws governing contracts and financial transactions occasionally affects the secular attorney, and one must be alert to the ramifications of those traditions. Although there are similarities between the two laws, Jewish and Muslim laws are quite different in their details, and Jews and Muslims have adopted very different approaches to handling the friction between the secular world and the demands of their religions.