U.S. Interest in Shariah Finance Opens Dangerous Doors.

U.S. Interest in Shariah Finance Opens Dangerous Doors.

www.foxnews.com

Shariah-compliant banking, sometimes called Islamic banking, is growing in popularity in the Western and Islamic worlds. But critics say American interest in the system at a time of economic crisis is opening the door to increased Islamic influence in the American banking system. Worse yet, some fear the banks may be helping to finance international terrorism.

(visit the link for the full news article)


Related News Links:
www.forbes.com

Anyone find this little tid bit hard to swallow? I find this very disturbing. I can not put into words how hard it is for me to accept the fact that this would even be a consideration here in the U.S. Believe me if they embrace Shariah-compliant banking it is end of story for freedom as we think we know it. Turn out the lights and prepare for the end. America will finally be done and Islam will be closer to controlling the world, as is its basic doctrine.




www.foxnews.com
(visit the link for the full news article)

Just a quick reply until I've researched a little to check my knowledge (so my opinion may change shortly).

It's my understanding that Islam is against the lending of money for interest. Thus, because Muslims cannot participate in the conventional western banking system, they have to use alternatives to allow them to gain mortgages and financial business assistance.

I think a lot of western governments might not like the idea of people seeking alternative financial sources because it could (among others) create untaxed income, drawer people toward terrorist groups with finance to loan/hide or create communities they can't govern fully. (This'll not strengthen my argument..) In the U.K, many U.K banks now offer accounts, loans and mortgages that comply with the requirements of Islam (..Britain is quickly adopting Islamic elements into its established systems of justice and finance).

Islam, when seen without its religious elements, is based on old Babylonian legal and mercantile practices. Islam has several elements - religion, culture, societal & mercantile regulation (probably other elements may be added to my observation). This is why when Muslims talk of Islamic nations they refer to them as one country - the Islamic Nation (or, simply, Islam). It is because of the religious element that Islam has remained old world i.e culturally and technologically, the Islamic Nation didn't really get any further than the height achieved during the Moors' attempts to conquer the then known world. It'd be unfair to bias against good Islamic elements just because of its religious element. In the same way, no European or American should be considered Christian or Catholic just because he/she is Western.

As Islamic banking practices go, if they are as I currently believe them to be, then I agree with them. Money should be loaned with out any requirement on the borrower to return an amount that exceeds the original loan plus reasonable compensation (if any) for lost earnings to the lender whilst the money has been out of the lender's (s') care i.e a lender should not seek to profit from a borrower. corollary: a lender must not lend money beyond his/her means and goodwill to do so.

It's my belief that lending money for a financial return (interest) can ruin an economy by creating a financial deficit that resources may not fill: because a borrower needs to find additional finance to cover the loan's interest. There's only one place that extra money can be obtained - it has to be removed from other people. When the lender hoards his money, he/she creates a demand that is greater than supply. At that point, costs go up....and so on until the cycle resets in a recession or depression. And that's probably another reason why Islamic banking practices are being assessed for usage in the Western world.

Off to do some research. Will report back later.

[edit on 15/11/08 by Rapacity]

reply to post by geemony


Instead of spouting raciest nonsense why not checkout what islamic banking is really about?

Todays greed in our western finance markets have caused the mess we are currently in!

Checkout what happened when VW became the worlds biggest company for a short while:

Hedge funds were actually selling stock that they didnt even own and were betting that the stock would fall so as to sell for a profit!
How can that be correct?

reply to post by Rapacity


I totally agree with you, people should actually check what its all about before spewing garbage

Sharia banking isn't going to save anybody money. Sure you don't pay any interest on your mortgage, but they get they get their pound of flesh in the end.

Sharia mortgage - the bank buys the property at the price you negotiated with the seller and then sells it to you at an inflated price. Then it's a real estate transaction and voila! Sharia compliant banking.

Need a sharia complaint credit card? No problem - you'll pay a monthly management fee instead of interest and the bank may give you a rebate if you don't need a lot of 'management'.

Sharia savings account? Great - the banks don't really like paying out interest anyways. That doesn't mean you won't pay the fees though.

Short answer - bankers will suck you dry, no matter what their religious background may be.

Just an update to my earlier post:

Islamic banking refers to a system of banking or banking activity that is consistent with the principles of Islamic law (Sharia) and its practical application through the development of Islamic economics. Sharia prohibits the payment of fees for the renting of money (Riba) for specific terms, as well as investing in businesses that provide goods or services considered contrary to its principles (Haraam). While these principles were used as the basis for a flourishing economy in earlier times, it is only in the late 20th century that a number of Islamic banks were formed to apply these principles to private or semi-private commercial institutions within the Muslim community.

The above quote came from wikipedia

OP, no one can blame you for being worried about the incorporation of Islamic principles into the American financial system. There's a lot of covert and overt thought nudging going on the western world. I think you've allowed it to infect you. In some respects, I agree with people's worries but only when the principles being incorporated are detrimental to society e.g the creation of a multi-tier society by permitting separate legal systems or education systems that teach religious life principles that contradict conventional society.

It has to be remembered that those civilizations that survived longest were those that ingested the good, workable elements of their surrounding competitors; and those that perished did so when they forgot they were still learning to develop. The ability to adapt and adopt are fundamental to survival. (Will add that to my signature). Consider China, the Mongols, Rome, Ancient Greece, Britain, Egypt. The principle applies to language, nature and almost all other elements of any fluid environment.

[edit on 15/11/08 by Rapacity]

Edited to add:

In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments. However, the fact that it is profit cannot be made explicit and therefore there are no additional penalties for late payment. In order to protect itself against default, the bank asks for strict collateral. The goods or land is registered to the name of the buyer from the start of the transaction. This arrangement is called Murabaha. Another approach is EIjara wa EIqtina, which is similar to real-estate leasing. Islamic banks handle loans for vehicles in a similar way (selling the vehicle at a higher-than-market price to the debtor and then retaining ownership of the vehicle until the loan is paid).

An innovative approach applied by some banks for home loans are called Musharaka al-Mutanaqisa that allows for a floating rate in the form of rental. The bank and borrower forms a partnership entity, both providing capital at an agreed percentage to purchase the property. The partnership entity then rent out the property to the borrower and charges rent. The bank and the borrower will then share the proceed from this rent based on the current equity share of the partnership. At the same time, the borrower in the partnership entity also buys the bank's share on the property at agreed installments until the full equity is transferred to the borrower and the partnership is ended. If default occurs, both the bank and the borrower receives the proceeds from an auction based on the current equity. This method allows for floating rates according to current market rate such as the BLR (base lending rate), especially in a dual-banking system like in Malaysia.

There are several other approaches used in business deals. Islamic banks lend their money to companies by issuing floating rate interest loans. The floating rate of interest is pegged to the company's individual rate of return. Thus the bank's profit on the loan is equal to a certain percentage of the company's profits. Once the principal amount of the loan is repaid, the profit-sharing arrangement is concluded. This practice is called Musharaka. Further, Mudaraba is venture capital funding of an entrepreneur who provides labor while financing is provided by the bank so that both profit and risk are shared. Such participatory arrangements between capital and labor reflect the Islamic view that the borrower must not bear all the risk/cost of a failure, resulting in a balanced distribution of income and not allowing lender to monopolize the economy.

And finally, Islamic banking is restricted to Islamically acceptable deals, which exclude those involving alcohol, pork, gambling, etc. Thus ethical investing is the only acceptable form of investment, and moral purchasing is encouraged. In theory, Islamic banking is an example of full-reserve banking, with banks achieving a 100% reserve ratio. However, in practice, this is not the case, and no examples of 100 per cent reserve banking are observed.

The above quote also came from wikipedia

Seems quite fare - lender and borrower share the risk. Borrower and lender profit from the loan. When a business loan, the lender takes an interest in investment (similar to a silent partner). Late fees are prohibited. When the loan is recalled, and the asset realised, both lender and borrower receive proceeds from the realisation (equity and investment share dependent). I've only stated the most appealing parts and I'm aware they come from different approaches to attaining loan practices that adhere to Islamic ethics.

I think my main question to those whom fear an introduction of Islamic financial practices into the American system is this: is it important for you to be right; or is it important to do right?



[edit on 15/11/08 by Rapacity]

reply to post by Duzey


Starred you because you're right. However, the fault is with the banker not the Islamic principles involved.

I think the type of banking you mentioned is just a compromise that some (not all) Muslims can permit their religious derived conscience to accept.

[edit on 15/11/08 by Rapacity]

reply to post by Fett Pinkus


Fett, I am not a racist and if you think what I posted was racist then its you with the problum my friend. Instead of making a intelligent post you went right to "the op is a racist". A typical response whenever anyone says anything bad about Islam.

I posted my belief that if the world embraces an islamic form of finance it will govern every aspect of life in that system. As the article stated and if you do some research into Islam, you will find that Islamic Law not only governs Finance , but every aspect of human life in that system.

I quote from a link I added here,

www.cfr.org...

"Does sharia apply only to religious matters?

No. Sharia governs all aspects of life, from relations between men and women to ethics in business and banking. Some aspects of sharia have become part of modern legal codes and are enforced by national judicial systems, while others are a matter of personal conscience. Entirely secular law is not an option under a classical interpretation of Islam, experts say. "In Islam, there is no separation between the secular and the sacred. The law is suffused with religion," says David Powers, a professor of Islamic law and history at Cornell University."

You see Fett, its not just about money, its about wanting the free world to succumb to a certain form of living. Islam's stated goal is to control the world. Fact

Personally i don't believe in any form of organized religion so please do not try and derail the discussion by making comments about my intentions for posting what I feel is just another step in Islams goal to control the world. And gaining ground in the worlds financial markets will speed up to that end.

reply to post by Rapacity



Thank you for the very intelligent and well-said information. I agree with you for the most part in principle. However, this is not just, about how Shariah-compliant banking or Islamic banking is governed. You see if it only applied to Finance then, maybe it would bring some much-needed fairness to lending and honest banking. Nevertheless, it doesn't stop there with Islamic Law; it dictates every aspect of life under that Law. You can’t just have Islamic finance and not apply the law to everyday life. It’s all or nothing with Islamic Law, total governance under that law. Moreover, we see everyday how Islamic law deals with those who break that Law.

I agree that if we could simply ingest a small portion of Islamic Finance Law into the American system it would prob have a good end. However, sadly it doesn’t work that way when you talk Islamic Law. If capitalism did take just the fair practices of Islamic finance law into its system then yes I feel it would be a good thing, because, capitalism breeds greed and greed will destroy the free world.

But if you take the laws of Islam into your home then you must be governed by that law in every aspect of your life. This is Islams words not mine.

reply to post by Duzey


Thank you Duzey, Yes they get their pound of flesh in other ways. But the point is they make a profit in the end. Same package just a different presentation.

reply to post by geemony


I don't think America would be looking to Integrate Islamic financial practices. I think the principles of the practice are being reviewed as a means of bringing order to a chaotic system. It doesn't follow that because one takes in some parts of a practice that one must take in the other parts too.

The religion encompasses the practices; the practices are only parts of the religion. By themselves, none of those parts form a religion; only together do they do that.

I was brought up in a country where most religious and non-religious belief systems are taught and celebrated. All of those belief systems have elements that are and are not agreeable to my beliefs. I am not any of those religions; nor do any of my beliefs form any of those religions; yet all of those religions have something agreeable with me. Does this mean I am forced to accept all of the conflicting beliefs of all those religions with which my personal beliefs have some commonality?

Whether I developed my beliefs independently of all those belief systems or not (and I tend to believe I did), I do not have to typecast myself as a member of one or other religion and thereby adhere to it. The same principle applies to an economy, a legal system, an education system or science. It is possible to separate and use individual, workable elements, take them and use them without the other, unworkable, disagreeable components.

A big part of our current Western financial system is that it constantly creates (non-real) money on created money out of...created money. Put another way, a loan is used to finance a loan which is used to secure a loan.... a viscous cycle. An apt term for this is Ponzi Scheme. Principles used in the Islamic Banking System help to keep created (fictitious) money at a minimum.

Something else that I feel needs to be pointed out: "Islamic Banking Practices" is a term that denominates an alternative banking practice. "Islamic" could be replaced with Middle Eastern as in Middle Eastern Banking Practices, or Non-Western or Fair... Also, capitalism came from the Islamic world, it was adopted and adapted by Europe in the Middle Ages. It'd be wrong to throw out an idea just because it is also used as part of a religion.

Islamic Banking does fit with Capitalism. The only opposition I can see some financiers having is that it removes the need for a massively credit based economy whereby the more debt you have the better. Let's not forget that if you're indebted then you are largely a slave belonging of your creditor/s.

reply to post by Rapacity


Agreed, and thank you for the very intelligent responses. I appreciate the discussion and appreciate your wanting to discuss this with out already deciding my motives. I do feel that if one can take the good from anything we should do that no matter what it might be. Moreover, yes Capitalism does have its roots in the Middle East.

However, the point is that under Shariah Finance Law, one cannot simply take parts of the practice without taking in the entire governance of Islamic law itself. Islam teaches that if one separates parts of Islam then they are blasphemous to Islam as a whole.

I to do not hold to any religious system as a whole, and yes I to feel there are good parts in most all religious systems. However if America were to allow Shariah Finance Law into its practices, and not embrace the law as a whole then America would be labeled as even more of a threat to Islam wouldn’t we?

Originally posted by Rapacity Something else that I feel needs to be pointed out: "Islamic Banking Practices" is a term that denominates an alternative banking practice. "Islamic" could be replaced with Middle Eastern as in Middle Eastern Banking Practices, or Non-Western or Fair... Also, capitalism came from the Islamic world, it was adopted and adapted by Europe in the Middle Ages. It'd be wrong to throw out an idea just because it is also used as part of a religion.

Here i must disagree; "Islamic Banking Practices" cannot be replaced with "middle eastern”, or "non-western" etc. Islam is all or nothing there is no separation of church and state, Islamic law dictates every aspect of governance period. Religion is one in one with the government period. There is no gray area with Islamic Law.

My intention wasn't to go into religion because well that's another thread and there is no clear answer. But my core point was that if America does take parts of "Islamic Banking Practices" then we open ourselves up a whole new can of worms.

Thank you for the discussion my friend and hope you don't mind I added you to my list of intelligent friends.

Take care