One of the great ironies of the financial meltdown of 2008 which was really more of a values meltdown is that very few U.S. laws were actually broken. This paper investigates the financial crisis from a different legal perspective that of Jewish law, using six framing principles: misleading with bad advice; deception and fraud; bribery, both outright and subtle; honest weights and measures; conflicts of interest; and transparency. Each of these is used as a lens through which to view the activities and behaviors that caused the current financial debacle and, in the process, almost totaled the global economy. The paper concludes that Jewish law was violated at every step of the way towards the current financial catastrophe. Had the bankers, auditors, rating agencies, politicians, regulators, and mortgage brokers followed the principles of business ethics described in Jewish law, the global financial crisis would not have occurred.
A recurrent theme in this review is that while U.S. law allowed, ignored, and even encouraged the fraudulent, misleading, and opaque activities that led to the current economic collapse. Jewish law takes a different view of much of what happened. Scholars from both the Orthodox and Conservative branches of Judaism have noted that the global financial crisis would not have occurred had the business ethics principles discussed in the Talmud and the Torah been observed; Jewish law was violated at every step of the way to the current financial disaster (Biema, 2008). Jewish law is tied to ethics and insists that individuals go beyond the mere letter of the law. It is obvious that the current financial crisis could not have occurred had various parties, ranging from mortgage bankers to regulators, obeyed Jewish law. Indeed, the parties involved in the financial meltdown did not even abide by the minimum standards of Jewish law.
What of the Obama Financial Reform? Why good is any reform if regulatory bodies turn the other way? There is little or no punishment to wrongdoers?
The prophet Jeremiah (22:13) excoriated those who did not care about honesty and justice; in his words: Woe to him who builds his house with unrighteousness and his upper stories with injustice. The cause for this is (Jeremiah 22:17): But your eyes and your heart are only on your dishonest gain. The current financial crisis is due to greed. Had the bankers, auditors, rating agencies, politicians, regulators, and mortgage brokers followed the principles of business ethics described in Jewish law, the financial meltdown really, more of a values meltdown would not have occurred.
How about they just paid attention? How many people reported Bernie Madoff and he continued to do business?
How many red flags at Freddie/Fannie? Accounting irregularities? Crusade for reform in 2005 ignored by Congress?
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More good reading in the article.
