Rabbi knows exactly what he's doing and why. He never had the opportunity to choose his own fate, but (as he said to Satchel) Satchel will.
Rabbi knows if he told Loy he had Satchel, it would result in Loy hunting for them to bring the boy home (a home right in the middle of a mob war). So, as he told Satchel, they're going to hide out until the dust settles and then, if (and only if) Satchel asks to go home will Rabbi take him back.
As for cruelty, Rabbi also probably doesn't care one bit about the feelings of a father who'd trade his own son to gangsters like a piece of property and mom who didn't (at least as far as he knows) do anything to try and stop it.