It is a dogma of the American public discourse that Sharia is entirely benign and completely compatible with American laws and mores. That is why the mainstream media tried to destroy Ben Carson over his remarks about Sharia and a Muslim President. But Carson’s surge in popularity testifies not, as the media would have it, to a high level of American “Islamophobia,” but to a high level of awareness among Americans of the real nature of Sharia and how incompatible it is with American law. All anyone has to do is look at Sharia states such as Saudi Arabia, Iran, Afghanistan, and Pakistan and see: they’re all human rights abusers, and they all abuse human rights in exactly the same way, since the denial of the freedom of speech and the oppression of women and non-Muslims is part of Sharia.
Meanwhile, Sharia-compliant finance continues to advance in the West, as in this story, without any regard for the fact that Sharia’s finance laws are inseparable from the rest of it, and that opening the door to one aspect of Sharia makes it exponentially more difficult to close the door to the rest of it.
“Seattle considers development of Sharia-compliant financing,” Lexology, September 29, 2015:
As the United States continues to become increasingly diverse with residents from different cultural backgrounds and religious faiths, financial institutions are working to find ways to provide both consumer and commercial loan financing arrangements that meet the specific needs of their customer base. This includes the development of financing programs that comply with the Islamic faith.
Such financing arrangements can take many forms, but an essential component is that they cannot require the borrower to pay or permit the lender to charge interest. Such programs also cannot invest in things forbidden by the Islamic faith, such as alcohol, pork, or gambling. For example, in an Islamic mortgage, a bank does not lend money to an individual to buy a residential property. Instead, the bank buys the property and the customer can then either buy the property back from the bank at a higher price paid in installments (murabahah) or make monthly payments to the bank that include both an amount to repay the purchase price and amount for rent until the customer owns the property outright (ijara).
Recently, this issue received a significant amount of attention when the Seattle Housing Affordability and Livability (HALA) task force issued its comprehensive report to the Mayor of Seattle, in which it addressed the need for an “adequate, affordable supply of housing,” while balancing “the needs of a fast-growing city with almost unimaginable new wealth and the acute needs of people who experience systemic inequities driven by issues of income, ethnicity, and race on a daily basis. “One of the HALA task force’s recommendations for promoting sustainable housing was to explore the development of a “Sharia-compliant Financing Product.” More specifically, the task force noted that “[l]imited options for financing a home purchase are available for Muslim households who abide by Sharia law, which prohibits the payment of interest or fees for loans of money. The City can help fill this gap by convening lenders, housing nonprofits, and community leaders to explore how the market might develop Sharia-compliant loan products. The City should evaluate current available loan products to determine barriers to their use due to religious or other restrictions.”
A number of publications have covered the international scope of Sharia-compliant financing arrangements designed to accommodate an increasing population of borrowers committed to following their faith in financial matters. According to a USA Today article from 2014, the world of Sharia-compliant financing “has grown to more than $1.6 trillion in assets worldwide over the past three decades.”
Indeed, one author has estimated the market as being even larger: “Based on $1.66 Trillion, Islamic Finance assets represented 1% of the global financial market of $127 Trillion in assets.” The Islamic Financial Services Board (IFSB) is an international standard-setting organization that promotes and enhances the soundness and stability of the Islamic financial services industry by issuing global prudential standards and guiding principles for the industry. The IFSB also conducts research and coordinates initiatives on industry related issues and organizes roundtables, seminars, and conferences for regulators and industry stakeholders.
With numbers as large as noted above, and a growing Muslim population both domestically and abroad, lenders based in the United States are increasingly focused on developing a range of financial products that meet the needs of this significant customer base….
Alarmed Pig Farmer says
Sharia is the only solution
Solution to what problem? What is it that the Moslem seek to solve, and why is it so urgent that it requires frequent street protests and even paramilitary action?
News entertainers on the TV never ask this question. What problem? To at least attempt to ask and answer this question would go a long way to building an understanding of Moslems among the Infidel masses.
Jimbo says
To expand on what Alarmed Pig Farmer stated above: Right, there is essentially no problem in the area of finance. It is likely the broader issues presented by employment of Sharia that Islamic leadership is pushing its people to demonstrate about. However, in the field of finance one could argue there’s not much difference in taking out a mortgage with a 5% interest rate vs. having a bank buy the home, mark up the price of the house, then sell it back to the buyer at fixed monthly payments. Depending on how the payments are structured, it is not out of the realm of possibility the Sharia buyer could actually be paying more than 5%, could he not? It would seem that if the Muslim community can obtain Sharia in the realm of finance, then they can go on to obtain Sharia courts to sustain the Muslim man’s superiority over, and submission of, Muslim women. And so on. And it is the “And so on” where conflicts arise with American culture and freedoms. My recollection is that somewhere along the line Americans passed one or more laws to outlaw a man having multiple wives, a facet of Islam that contributes to the Muslim population growing at high rates that they eventually hope will give them an edge at the voting booth, and ultimately the Muslim president Dr. Carson made a case against.
williambonney says
These politicians in Seattle don t have a clue about sharia mortgages, go find one and read it, its a scam on the home buyer. These politicians have not even read these mortgage inducements but want to push this through.
richie says
Once again Islam is given preferential treatment
Dave says
Boycott Sharia…. thats your bumper sticker… if everyone had that on their car I think it would have an impact…act like the left, think globally act locally…
August_West says
In his preamble, Spencer made the slippery slope argument. I agree with this, and have made a short list of possible Sharia expansion areas. This is just of what I could think of from the top of my head:
Society will say -> What is wrong if a private bank designs a Sharia based product and sells it free consumers in a private and competitive market place. At the surface I don’t have an issue with this myself.
HOWEVER
It is very easy to see how this spreads – lets expose the testicles…
1)There will be a movement to offer tax payer subsidized Sharia mortgages (the article basically says this). Fannie Mae, Freddie Mac the FHN the VA and others will get into the business of guaranteeing these loans. It seems like they have enough problems with standard mortgages. This loans will probably have a different (and poorly understood risk/reward profile). I would guess that there is an element of Sharia law that will apply tax payer subsidy related issues…
2)Since the loans don’t require interest and instead payments are effectively principal repayment, then there will be no tax deduction allowance for them. Needless to say there will be a movement to make these mortgages tax deductible. There will be unforeseen consequences to this approach. I would guess that there is an element of Sharia law that will apply here…
3)How is a Sharia mortgage treated in bankruptcy situation? What happens when payments go over 90 days? What is the foreclosure process for a Sharia mortgage? How will the bank charge fees in these events (Sharia finance is not allowed to charge fees)? I would guess that there is an element of Sharia law that will apply here. Do we really want to open the door to Sharia bankruptcy law?
4)What about Sharia credit cards? Car loans? Payday loans? Sharia pawn shops? Will we need those as well? I am sure that Sharia is not silent on t his matter…
5)Will the financial institution be able to re-sell or securitize Sharia loans? Or will they have to keep the assets which they are financing on their balance sheet? I would guess that there is an element of Sharia law that speaks to this issue as well.
6)What happens when an applicant gets turned down for a Sharia mortgage? Needless to say we will hear cries of “Islamophobia”. There will be many staged events similar to the recent “Islamophobia” event manufactured by Obama’s Clock Bomb Boy in Irving TX. These events will of course implicitly lower approval standards making the loans more risky. I can see the headline already… “Islamophobic Wall Street Bank Denies Mohammad Akbar and his Family of 20 a Sharia Mortgage and They Are Now Homeless” I wonder if Sharia law has an element that discusses loan approval?
This is a slippery slope indeed. This matter touches tax payer subsidized loans, tax policy, bankruptcy law, every other kind of loan beside mortgages (except loan sharks we can assume they will be untouched), capital allocation decisions within the banking system itself, and supposed “discrimination” in the loan approval process. Each and every one of these topics will have opportunities for further Sharia encroachment.
I support free markets, and like to see market based solutions evolve when there is unmet demand, but
there are far too many non market based forces at play here. We need to stop all forms of Sharia including Sharia based mortgage finance.
American Laws For American Courts.
Karen says
Thank you for this very thoughtful information. This touches on many financing aspects I’ve never seen mentioned before. The possibilities for conflict seem endless when trying to plug 7th century Sharia Law into our own very complex 21st century legal, financial, and political networks.
Westman says
Good questions and analysis, August. My mind is still doing contortions over how to create the Sharia Credit Card. The debit card was easy.
Karen says
The re-purchase option seems ceremonial/psychological at best. The purchase is cleansed by the buyer paying a higher total re-purchase price, presumably equal to principle + total interest. Potatoe-potaato, not my business. But what is of more concern to me is that another way to ‘cleanse’ a purchase and certain bank holdings is for the bank to contribute to Islamic charities. If that practice lowers earnings, it impacts non-Muslim customers and share holders, which is unjustly preferential. If the charity is an organization like CAIR, it’s disgusting in the extreme, and something I would never tolerate as a bank customer.
August_West says
Or as a bank shareholder…
Kaffir007 says
The paying of “interest” is not allowed in the sharia. To get around this undesireable nomenclature in “Sharia financing” you “rent” money you borrow instead of paying “interest” on it. You probably are thinking “that’s the same thing” and you are right. In the Islamic mind calling something by another, acceptable name, makes it acceptable.
Examples:
1) Interest=haram, rent=halal
2) prostitution=haram, “temporary marriage”=halal
3) lying=haram, taqiya (lying to protect self/Islam )=halal
Note that a lie told in taqiya is not considered sinful/wrong/bad.
Whereas a “white lie” told by a Christian is still considered a sin/a lie.
Kevin says
This is a perfect demonstration of what sets Islam apart from Christianity. Under Sharia Law, interest is prohibited, so instead of charging interest, the financial institution creates a security that does the exact same thing as charge interest, but under a different name. Apparently, God (Allah) is supposed to be pleased with this. In Christianity, it’s not about your actions, per se, but about the status of your heart. To obey the letter of the law of the Word of God but to violate the spirit is not obeying God at all, which Jesus demonstrated when he discussed adultery (i.e. adultery is also looking at a woman who is not your wife lustfully).
Westman says
So, instead of the Bank giving a home buyer other people’s money (OPM) and charging interest, the Bank buys the house with OPM and calculates how much the “rent” and purchase payments would be over the life of the “buying period” to equal the Principal plus Interest for the same period..
This creates a whole new class of “Liar Loans” where the non-loan is the lie.
In math, as well as logic, if A=C and B=C then A=B. This is incredible subterfuge to create exactly the same financial outcome for the Bank and the buyer in a successful, “loan”.
It’s foolish bank that will offer this “loan” because many states have specific laws limiting the ability of a landlord to remove delinquent renters. How many people, would you suppose, will live in the house, cousins, uncles, aunts, etc and what will be its condition if it comes back to the bank? If the garbage trail of the “refugees” is any indication, many of these houses will be trashed.
Angemon says
Interest by another name.
Joe says
I’m not surprised to see Seattle being open to Sharia-compliant financing. Back in 2010, a college professor of mine in the Seattle area was actually teaching that Sharia Banking is going to be the third wave. He argued to his students that Communism failed, Capitalism failed, and that Islamic Sharia Banking is going to be the new world economic system. It is unclear to me if the professor was in favor of Sharia Banking as much as he was in favor of destroying the Capitalism, because he appeared to be a socialist in heart. Maybe it is just another American plan to work with the enemy in order to do away with those who currently in power. A foolish attempt at empowering the “moderate” Muslims in order to do away with Capitalism.
Roger Gangitano says
It is my understanding that EVERY major banking institution in the uS has a Shariah compliant loan program available to its clients. These programs are not very popular, because Muslims have their own Islamic institutions mortgages, loans and the like. For Muslims, the goal is not so much to destroy Capitalism as it is to establish the Shariah in our society – with the ultimate goal to destroy, not only our Capitalist based economy, but to destroy our way of life and have Islam and the Shariah victorious over all other religions and man-made laws.
We need to identify and treat Islam as, not only, a religious system, but also a political system. Shariah compliant banking is just the tip of the camel’s nose in our banking tent.
خَليفة says
The irony is that the wealth in Saudi Arabia, UAE, etc. is from dealing with the kuffar. Name one Islamic country in which the majority of GDP does not come from dealing with the kuffar. Name one Islamic country on the forfeit of any science. Name one Islamic invention that wasn’t taken from another culture and claimed as Islamic. Before you answer, you better do some fact checking.
Arabic numerals – no, they are Hindu
Coffee – read he Islamic accounts and you will realize it was non Islamic Arabs
Chess – was perfected in Persia ( Zoroastrianism ) but from Eastern Europe centuries earlier, besides Muslims are not supposed to play that type of game.
Look at the design of many mosques and see the Byzantine (Christian ) domes.
k reed says
This was only one consideration within a larger report. The concept is good, to help people continue to follow their beliefs and pay for adequate housing. Expanding beyond the financial thing, I don’t think so. Bad idea.