Every Orthodox investor who has ever opened a brokerage account has eventually bumped into the same awkward question: can I own bank stocks? The Torah is famously strict about charging interest to fellow Jews, and modern banks earn most of their money from exactly that. So what gives?

Let's walk through the actual halakhic reasoning, with real tickers and real numbers.

The Source Text

The ribbit prohibition shows up in three places in the Chumash:

Exodus 22:24 says, "If you lend money to my people, to the poor among you, you shall not be to him as a creditor; you shall not exact interest from him." Leviticus 25:36-37 repeats it: "Take no interest from him, neither increase, but fear your God, that your brother may live with you. You shall not lend him your money upon interest, nor give him your food for increase." And Deuteronomy 23:20-21 adds, "You shall not lend upon interest to your brother, whether interest of money, or interest of victuals, or interest of any thing that is lent upon interest."

The rabbis of the Mishnah (Bava Metzia chapters 5 and 6) parsed these verses into a detailed legal system. The result appears in the Shulchan Arukh, Yoreh Deah 159-177, which runs for about 40 chapters of dense material. If you want the short version: any pre-arranged benefit that flows from borrower to lender because of a loan is forbidden. Cash interest. Non-cash interest. Discounts. Preferential treatment. Gifts. All of it is ribbit in some form.

Why This Gets Complicated With Stocks

Here's the knot. A shareholder in JPMorgan Chase (JPM) owns roughly 1 / 2.8 billion of the company (JPM has about 2.8 billion shares outstanding as of late 2025). JPM earns revenue from many sources, but net interest income is the biggest line item. In 2024, JPM reported net interest income of around $92 billion, which was roughly 53% of total revenue.

So if you own JPM, are you earning interest? Are you a lender? Does the Torah prohibition reach you?

Three main positions exist in contemporary halakhic literature.

Position 1: The Corporate Veil (Rav Moshe Feinstein)

Rav Moshe Feinstein, in Igrot Moshe Yoreh Deah 2:62 and 2:63, takes the position that a publicly traded corporation is a separate halakhic person. Shareholders own equity in the corporation, but they are not the lenders. The corporation is the lender. The corporation's transactions with its borrowers are between the corporation and those borrowers, not between the shareholder and the borrowers.

Under this logic, owning shares of JPM, Bank of America (BAC), Wells Fargo (WFC), Citigroup (C), Goldman Sachs (GS), Morgan Stanley (MS), or any other publicly traded bank is permitted. Your dividends come from corporate profit, not directly from interest payments made to you.

This is the mainstream modern Orthodox position and is what most Orthodox Union-affiliated financial advisors rely on.

There's a subtlety though. Rav Moshe qualified the permission by saying the shareholder should not have controlling influence over the corporation's lending decisions. If you own enough shares to direct the company's policies (and have real fiduciary control), the corporate veil argument weakens. For retail investors owning 100 or 1000 shares out of 2.8 billion, this is a non-issue.

Position 2: Partial Ownership Still Counts (Rabbi Breitowitz and others)

Rabbi Yitzchok Breitowitz, in his lectures and writings on contemporary halakha, has argued that the corporate-veil logic has limits. Even if you don't directly lend, you economically benefit from interest income, and that benefit is proportional to your ownership stake. Under this view, a stricter investor should either avoid bank stocks or hold a personal heter iska covering their investment in the bank.

The practical application is more conservative than the Feinstein position but less extreme than full divestment. You can hold bank stocks if you prearrange the halakhic structure.

Position 3: Financial Revenue Thresholds

A third approach, which is closer to how Islamic finance screens handle the question, sets a threshold for acceptable interest-derived revenue. Some halakhic advisors apply a 5% or 10% cutoff: if the company earns less than that percentage from interest-based activity, it's permitted. If more, it's not.

Under a strict 5% threshold, essentially no bank passes. JPM would fail, BAC would fail, and even "light" financials like Charles Schwab (SCHW) or Interactive Brokers (IBKR) would be borderline because their net interest margin is a large part of their income.

Under a 35% threshold (which mirrors how some AAOIFI-style Shariah screens handle it), you start getting a more workable universe. Payment networks like Visa (V), Mastercard (MA), PayPal (PYPL), and Block (SQ) pass easily because they derive most revenue from transaction fees and processing. Brokerages are borderline.

This threshold approach is less traditional from a Jewish legal standpoint but has gained traction among Orthodox financial advisors who want a clearer, more quantitative standard.

What About Israeli Banks?

If you're an Orthodox Jew in Israel, you're almost certainly a customer and possibly a shareholder of Bank Leumi (LUMI.TA), Bank Hapoalim (POLI.TA), Mizrahi Tefahot (MZTF.TA), or Israel Discount Bank (DSCT.TA). All Israeli banks operate under a standing heter iska registered with the Chief Rabbinate.

For shareholders, the Chief Rabbinate's position is that the heter iska covers the underlying lending activity, and shareholders benefit from the corporate profit derived from that permitted lending structure. So owning Israeli bank stocks is considered halakhically clean in a way that US bank stocks technically are not.

This is why many Orthodox Israeli investors prefer the Tel Aviv 35 over the S&P 500 for core equity exposure: the heter iska coverage provides a cleaner halakhic story.

A Walk Through Four Real Bank Balance Sheets

Let me show you what the halakhic question looks like in practice with actual numbers from 2024 10-Ks.

JPMorgan Chase (JPM): Total revenue of roughly $173 billion. Net interest income: $92 billion (about 53%). Noninterest income (trading, asset management, investment banking, card fees, custody): $81 billion (about 47%). Under a 35% threshold, JPM fails. Under the Feinstein position, it's permitted.

Bank of America (BAC): Total revenue of roughly $101 billion. Net interest income: $56 billion (about 55%). Noninterest income: $45 billion (about 45%). Same verdict as JPM.

Goldman Sachs (GS): Total revenue of roughly $53 billion. Net interest income: $7.8 billion (about 15%). Investment banking, trading, asset management: $45 billion (about 85%). GS actually passes a 35% threshold because its business is mostly fees, not lending. Goldman is the cleanest large bank from a pure-ribbit screening perspective.

Charles Schwab (SCHW): Total revenue of roughly $19.6 billion. Net interest revenue: $10.1 billion (about 51%). Asset management fees and trading revenue: $9.5 billion (about 49%). Schwab looks halakhically similar to JPM because, despite being thought of as a brokerage, its income profile is closer to a bank.

The surprise in that list is often Goldman. Orthodox investors who assume "bank = bad" and avoid GS are making an assumption that doesn't match the actual revenue mix.

What About Bank ETFs?

If you're using a sector ETF like the Financial Select Sector SPDR Fund (XLF) or the SPDR S&P Bank ETF (KBE), you're holding a basket of roughly 60-80 names, many of which are traditional banks. KBE in particular is heavily weighted toward regional banks whose revenue is almost entirely from net interest income.

Under the strict threshold position, KBE fails. Under the Feinstein position, it's permitted because the ETF is another layer of corporate separation (the fund is a trust that holds shares in corporations).

Most Orthodox advisors accept XLF-style ETFs for investors who want financial sector exposure, but with the caveat that direct bank stock picks are ethically cleaner because you can evaluate each name individually.

Practical Screening Rules

Here's how to think about ribbit screening for your own portfolio, depending on which position resonates with you:

If you follow the Feinstein position: You can hold any publicly traded bank stock without special concern. The corporate form handles the ribbit question. You still need to screen for other issues (pork, non-kosher food, etc.) but ribbit isn't a blocker.

If you follow the Breitowitz position: Get a personal heter iska through your brokerage or rabbi. Many OU-affiliated financial advisors will prepare one on request. With that in place, you can hold bank stocks with explicit halakhic coverage.

If you follow the threshold position: Apply a 35% cap on net interest income as a percent of total revenue. This gives you:
- Permitted: Goldman Sachs (GS), Morgan Stanley (MS), Visa (V), Mastercard (MA), PayPal (PYPL), Berkshire Hathaway (BRK.B, because the insurance business dominates)
- Not permitted: JPM, BAC, WFC, C, SCHW, USB (US Bancorp), PNC, Truist (TFC), regional banks generally

If you're building a strict halakhic portfolio and want to avoid the question entirely: Exclude the financial sector. You'll miss about 13% of the S&P 500 by market cap but your portfolio will be simpler to defend.

One Note on Consumer Lenders

Separate from banks, the consumer lending sector (Affirm, AFRM; Upstart, UPST; SoFi, SOFI; LendingClub, LC) is cleaner to screen because their business model is essentially 100% interest-based. These names fail every threshold approach. Under the Feinstein position they're still permitted via the corporate veil, but many Orthodox advisors draw the line here because the entire business model is what the Torah explicitly prohibits.

There's a good halakhic argument that even under Feinstein, buying shares in a company whose only business is prohibited activity (for Jews to do directly) crosses a different line: lifnei iver, placing a stumbling block. The argument is that by providing capital to an interest-lending operation, you're enabling the activity. This is the same reasoning some authorities use to prohibit Jewish investors from owning pork producers even though they wouldn't personally eat the product.

Bottom Line

The ribbit prohibition is real and it's serious. It's not a technicality and it wasn't suspended by modernity. But the rabbinic tradition, from the Talmud forward, has developed nuanced tools (heter iska, corporate separation, threshold rules) to let Jewish investors participate in a credit-based economy without violating the core prohibition.

For most modern Orthodox investors, the practical answer is: bank stocks are permitted under the Feinstein position, which is the mainstream ruling. For stricter investors, the threshold approach gives a cleaner screen that happens to exclude most traditional banks while permitting Goldman, payment networks, and insurance-heavy names. For the strictest, just avoid the sector entirely.

Whichever path you take, the key is that you made the choice consciously. The Torah's goal with ribbit was never to make Jews economically impotent. It was to prevent exploitation and create a community where money didn't become a tool of oppression. A thoughtful halakhic portfolio, whether it holds JPM or excludes all banks, can honor that goal.

Ribbit (Interest) Prohibition: How It Applies to Modern Bank Stocks