[Avodah] Heter Iska

[shalomyitz at comcast.net]

Rn CL: 

>This is if the correct analysis is to look at the device as a whole, then I would agree. 
>But the question becomes, at what point do you look at "the device 
>as a whole"? Because, if you look at a bank as a whole, one that makes a billion loans - 
>then, even with a reasonable (eg well above 5%) risk on every 
>single one of these loans, according to this analysis, the bank as a whole will still 
>"work" and is "virtually guaranteed to make a profit" because spread 
>over that number of loans at a reasonable level of interest, even having a 
>significant number of loans going bad would still leave it with a tidy profit. So if 
>you look at a bank as a whole, then you can say that in fact the bank takes 
>virtually no risk whatsoever, or has only a one in billion chance of not working. 
> Thus if your overall "one in a billion chance of not working" is applied to a bank, 
>whatever heter iska you attempt to write for any individual loan is completely irrelevant, 
>the bank takes virtually no risk, and hence cannot charge interest. 


I don't know about the broader issue under question, but I want to point out that Rn Luntz's analogy 
doesn't really work. Even though the many successful loans cover for the loans that fail, that doesn't 
mean the bank doesn't lose. If the loans that failed hadn't failed, the bank would make even more profit 
than they do. So, the bank has a loss. 

The confusion seems to come from the attempt to compare the bank loans to the 'Shabbos switch' that began 
this discussion (and, similarly, to a coin toss). But, with the switch, you either have a success (the light comes on) 
or a failure (it doesn't). But a bank's outcomes aren't dichotomous like that: Sure, the bank doesn't fail because of 
one failed loan. But, it has less success than it would otherwise... 

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