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Saturday, January 01, 2011

Rabbinic Endorsements, Oy

Recently I saw an advertisement for one of these debt negotiation/settlement companies with a note that Rabbinic Endorsements were available on request. I've done no formal studies, but have noted increased advertisements in Jewish advertisement publications for this type of business in recent years. Other things I've noticed recently: sheitel companies advertising financing plans. Oh, and my favorite, a sterling silver company advertising financing available. Excuse the diversion. Back to the subject at hand.

Now I absolutely do think that a debtor should seek halachic advice from a qualified Rabbinic authority when they have hit a brick wall financially. In fact, it would be wonderful if more people would seek advice in this area far before they hit a brick wall. And, it would be even more wonderful if there was a culture that stressed the importance of living below your means so that fewer people were hitting the financial brick wall.

However, if I were a Rabbi (which I am not and cannot be) I would really want to steer clear from giving endorsement on particular businesses (at all). And especially a particular business within this particular industry.

This industry has (I'd say rightfully) come under a lot of fire recently for an entire host of issues, from faulty advice to faulty and fraudulent practices to questionable billing structures. While there are trade association and some regulation, the industry as a whole lacks the oversight that other professions are subject to.

I am certainly not accusing any company that advertises in any Jewish Ad Publication of behavior that is less than 100% yashar. However, if I was a member of a board employing a Rabbi that was offering "Rabbinic Endorsement" to one of these businesses, I'd be checking the liability policies!

I don't believe there are many accountants or lawyers out there that would be comfortable putting a stamp of approval on too many companies within the industry, at the risk of their own professional reputation (or worse yet, the reputation of their entire firm). And, forgive me for saying this, but I have no idea how a Rabbi can have enough information to endorse a business in this industry.

Also see the post Look Before You Leap: Debt Settlement

31 comments:

ZZB said...

Maybe they're offering this because people may be afraid of violating the prohibitions involved with ribbis in renegotiating loans.

Abe said...

"And, forgive me for saying this, but I have no idea how a Rabbi can have enough information to endorse a business in this industry."

Your problem is not the criticism but the "forgive me" caveat. I know that even your timid remark is heretical in our crazy society, but it's time the rabbis stop thinking that they have the expertise to comment on everything. The less we use such deferential terminology, the better.

ProfK said...

I'm with Abe on this one. Given the complexity of the society we live in (and it's getting more complex, not less) finding expert advice when needed is critical. In the general secular world defining expertise has to do with the experience/knowledge/skills/training of a particular person in a specific field. We don't ask our orthopedist how to cure the mold on our roses, and we don't ask our gardener to treat a broken bone. Nor do we ask our gardener to recommend the best orthopedist nor that orthopedist to recommend the best gardener. And yet, when it comes to certain elements of the frum world, those with smicha are looked at as being experts in everything.

For me, the only way that a Rabbinic endorsement outside of the field of halacha would hold water would be if that endorsement clearly named the experts whose words the rabbis relied on to give such an endorsement.

I'm not saying that consulting your rabbi would be bad if by that consulting you are trying to get some personal counseling about the mess your life might be in, about the choices and practices that led you to be in debt. However, last I checked, the ins and outs of finance,the rules of accounting, the study of secular regulations and applicable secular law for bankruptcy were not part of the curriculum for getting smicha.

Anonymous said...

A lot of Rabbis believe that their study of Torah does indeed qualify them as experts in pretty much all fields of human activity (i.e., science, economics, business, medicine, etc.). We had a Rabbi in our area who actually endorsed a particular type of bond and encouraged people to buy this bond. The bond was being marketed by a member of our shul. The Rabbi should have be enbarassed when the bond defaulted but we wasn't. He later claimed it was a test from HaShem when people lost money.

Pret said...

fewer people, not less people.

JoelC said...

Please don't use claim made by charlatans (the "debt settlement" companies)as probative of any or all particular Rabbi's involvement in financial matters. I don't trust anything these companies say or do, including their supposed rabbinic endorsements.
I do think that Rabbonim have advised their parishioners on all aspects of their lives, including financial questions and that advice can be useful if the Rabbi has insight into the capabilities, needs and lifestyle of his congregant. As long as the Rabbi is aware of his own limitations, his advice is likely to be helpful.

Bob Miller said...

Since we don't know who these rabbis are, what their expertise is or is not in this area, and what they have actually said or done for the debt relief promoters, what good is our speculation here?

Anonymous said...

The Orthodox community is becoming increasingly dyfunctional.

dan said...

you dont know how this went down. Perhaps the owner went over to his rav and said "I have a new method of helping people nebach, get out of debt.
and the Rabbi said " that is a fine thing to do!"

voila!rabbinic endorsement.

Anonymous said...

A rabbi in my town is also a "financial advisor." The problem is that he has no training in this field. When asked about this, he stated that being a rabbi was all the training that he needed and he actually tells customers that he's most trustworhty than the competition because he's a "torah scholar." Several older people invested based on his advice and they all lost a lot of money despite the market being up in 2010. He apparently had their money in high risk stocks because he wanted to produce big returns for them. This was not fraud, but he clearly had them invested in the wrong investments given their age and expressed wish to preserve their money.

Dave in DC said...

Although I'm not a daas torah guy in general, I have an alternative reading here. The discussion on this site has illumniated that many of the financial problems that our community faces are based on the expectations that the community establishes. As the titular heads of those communities, Rabbeim are the best situated to address or debunk those expectations and therefore relieve the structural pressure on family finances.
That doesn't even come close to an endorsement of a debt settlement company nor does it recommend rabbinic stock pickers, but hopefully a good rav could help a family differentiate the d'oraisa from the d'rabbanan in their religiously motivated spending.

Miami Al said...

Davie in DC,

I think we're all too cynical at this point.

The first Rabbinic endorsement we're hearing about is for a Debt Settlement company, a mostly sham industry - they charge high fees to collect your money and tell the creditors to stop contacting you, not really doing anything you couldn't do with a few letters and a savings account.

We're NOT hearing about a 401(k)/IRA/Simple IRA/529 plan being promoted.

Yes, Rabbinic leadership could go a long way toward improving Frum Finances.

However, we're seeing an endorsement of a company from an industry that prays on the poor, NOT an endorsement of a company that helps middle class people accumulate wealth.

Dave said...

When asked about this, he stated that being a rabbi was all the training that he needed and he actually tells customers that he's most trustworhty than the competition because he's a "torah scholar."

So, here is an interesting dilemna.

A Rabbi claims that Rabbinic training is all that he needs to render advice/opinions/expertise in field X.

If I, a non-Orthodox Jew, have some expertise in that area, and I see that the Rabbi is wrong...

How could I possibly trust his claims of expertise anywhere else?

Miami Al said...

Dave,

Which is why the anti-Daas Torah crowd is anti-Daas Torah.

Not only do they give bad advice. They undermine the ENTIRE Halachic system.

JoelC said...

Isn't there a point at which you have eviscerated Judaism of any meaning when you preclude Rabbis from advising their congregants in their lifestyle choices? Orthodox Judaism is not intended to be relegated to books, it is supposed to inform the choices we make in life. I think asking a Rabbi for what the Torah perspective on a major life decision is well within the bailiwick of a Rabbi's pastoral duties.
Obviously, a Rabbis should not, and I am certain rarely does, promote specific investments or financial strategies but I think that many people benefit from discussing question about how they arrange their financial affairs with a wise and impartial observer.
Of course, some rabbis will do a better job and some will do worse but that is true of anyone who gives advice, including doctors and lawyers.

tesyaa said...

JoelC, I understand your point, but at the end of the day, lawyers, doctors, and financial advisors have fiduciary standards and professional standards they have to meet, and can be dismissed from their professional organizations and/or have their licenses to practice revoked if they don't meet them. It's not the same for a rabbi.

JoelC said...

tesyaa, as a professional myself, I feel like we have become over-regulated. Ultimately, you have to do due diligence with any professional you hire. Having seen how the sausage is made, I can assure you that a well meaning Rabbi is far less likely to cause you serious financial harm because of his lack of credentials than a harried and distracted accountant who simply overlooks something and has no personal interest in correcting his mistake. You don't need a degree to have common sense and I sometimes think that the more degrees you have, the less common sense you are likely to exhibit, particularly in financial matters.

Dave said...

Indeed. Imagine the financial guidance you could get from a Rabbinic panel consisting of Rabbi Milton Balkany, the Spinke Rebbe, and Rabbi Eluhi Ben Chaim.

JoelC said...

Using anecdotal evidence does not strengthen your point. It just makes me think that you are looking to advance an agenda and will find the facts to support that cause.
Were Bernie Madoff, Ken Lay and Michael Milken rabbis? I bet they all had sterling credentials.

Dave said...

No, my point was that you were comparing a "harried and distracted accountant" versus a "a wise and impartial observer".

That sort of tilted comparison is nonsensical, especially when we had an example earlier of a Rabbi specifically acting as a "financial advisor" on the basis of his smicha, and then acting against the financial best interests of his clients.

Bluntly, all other things being equal, you shouldn't be going to a Rabbi for investment advice (or debt counseling) any more than you should be asking your accountant whether or not you should eat at a given restaurant.

Nor have I seen any evidence that Rabbi's are endowed with "common sense" at any level beyond the norm. Or do you think most people would need to have a forum created (as Agudah did) to explicitly state that giving fraudulent charity receipts is a bad idea?

JoelC said...

You are conflating "giving investment advice" which a single anonymous commenter testified that a rabbi had done badly, with giving advice to congregants on major life decisions, including financial matters.
My pint was simply that credentials do not guarantee a good outcome or even good advice. I don't think anyone is talking about going to a Rabbi to determine whether an expense qualifies as a miscellaneous itemized deduction or if it is excluded from AMT calculations. The kind of advice that a Rabbi will, and should, give will typically include something like, whether to embark on a career in a particular field, whether to put away money for a childs college education and/0r to invest for retirement as opposed to investing in a business. All of these matters include both personal and financial elements and depending on a professional to both understand and care about the elements that are and should be important to an orthodox Jew is both impracticable and improbable.

I personally find it hard to understand why someone who thinks that Torah does not impart wisdom would want to stay in a religion which dictates that Torah guide every aspect of person's life. Unless you think that Torah is only for shul....I think I have heard that story before.

Dave said...

Look at the subject of the thread.

A Rabbi endorsing a specific debt-consolidation service.

The question is, is the Rabbi qualified to judge a specific financial services company. I submit that being a Rabbi does *not* serve as that qualification.

Dave said...

As an additional note, there have been a number of affinity scams over the years that have been dependent on winning the trust of a communal Rabbi, and leveraging that endorsement.

Anonymous said...

A rabbi at our son's MO yeshiva actually meets with families applying for financial assistance. He advised me to not put money aside for college or in my SEP IRA, as that money would be better spent on tuition. The yeshiva, to its credit, actually takes contributions to retirement, but not education accounts, into account when determining scholarships. Of course I ignored this rabbi's counsel, but I'm still not entirely sure where he was coming from. I know that he also has given people advice about filling for foreclosure in the past and his advice makes me a little uncomfortable.

JoelC said...

Dave,
In my first comment, I expressed doubt that an actual rabbi had actually endorsed the debt modification company. I would say that generally no one should endorse those companies because I don't think they are rife with fraud and deception. So in sum, if a rabbi actually endorsed the company, unless it was the exceptional for this field above-board debt consolidation company, I would agree that the Rabbi erred. I still disputed the general contention that Rabbi's should not offer advice relating to financial matters.
While Rabbi's may have been caught up in affinity frauds, far more sophisticated investors have been caught up scams. I don't think that negates my point that a Rabbi's input can be valuable in making major financial decisions.

Dave said...

Joel,

Your contention -- that a Rabbi is by definition a trusted financial advisor, is part of what makes them so useful to those people conducting affinity frauds.

By targeting a single person, they are able to catapult themselves into a position of trust throughout the community. Moreover, they are able to target someone who is *not* an expert in that field, which makes it easier for them than it otherwise would be.

JoelC said...

I agree that being a Rabbi is a position of great responsibility and the trust reposed in Rabbis should be abused or misused. That does not mean that Rabbi's should abstain from giving advice on financial matters, for the reasons I have explained above.

Anonymous said...

A lot of Rabbis delude themselves into believeing that their area of expertise is larger than it is. This is also true of other professsionals as well. For example, a doctor who thinks that he's an expert at stock picking. There is something to be said for individual responsibility and doing your own reserch before making important decisions. This involves getting information and advice from multiple sources, and my experiece is that many people just want a difinitive answer as to what they should do.

Anonymous said...

Rabbis' should not endorsse corporations' has to do with kashrut.

Chaim B. said...

Rabbis offering their opinion on business affairs is like ba'alei batim offering their opinion on Torah hashkafa / da'as Torah - hard to imagine such a thing.

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