AG Reveals: Govt. to Oversee Hareidi Money-Lending
The government plans to institute oversight of money-lending within the hareidi-religious community, Attorney General Yehuda Weinstein has revealed.
In a letter this week to the President of the Bank of Israel, Dr. Karnit Flug, and to Finance Minister Yair Lapid, Weinstein explained why the government is getting involved, and revealed the rough draft of a plan.
Jewish communities have traditionally had the practice of giving interest-free loans through organizations known as gemachim. Some gemachim loan various types of goods, but many give loans of money.
According to Weinstein, the growth of gemachim in the hareidi community in particular has led to legal problems. The sums of money being given in some cases exceed the amount that organizations can give without a banking license, he said.
“We don’t have exact data about the extent of gemach activities, but according to the estimates we’re looking at a total in the hundreds of millions of shekels per year,” he wrote.
Some of the loan societies have essentially become banks, he said, “This creates legal issues.” Various government experts in the Treasury and Bank of Israel all agree that the loan groups’ activities must be regulated, he said.
Weinstein clarified that he has no intention of bringing free loan societies’ officers up on criminal charges. Due to the loan societies’ “cultural and social importance,” and due to the need to protect investors’ money, the focus will be on regulation, not punishment, he said.
There is general agreement that the solution will involve creating a regulatory board similar to those that provide oversight of other financial institutions, he wrote. A rough draft of a proposal on the matter focuses on requirements regarding reserve funds, proper management and transparency, he revealed.
He noted that a government body has not yet been found to provide the necessary oversight.
The hareidi community is involved in the process, he added, “It is important to note that the proposed arrangement was presented to representatives of the hareidi community in three meetings that were held between our representatives and theirs. In each meeting it was made clear that the law is intended to help the hareidi community, not to hurt it, and a willingness to hear comments on the proposal was expressed.
“Feedback was provided during these meetings, and it will be examined by the professionals,” he concluded.