I Support Seattle’s Push for Sharia-Compliant Mortgages

There is a bit of a controversy going on in Seattle. Apparently there is a push for lenders to offer Sharia-compliant mortgages. And taken at just that level, I don’t have an issue with this. As PJ Medias’ Rod Kackley reports:

Buying a home is only one problem facing the Muslims of Seattle. Just as Sharia law prohibits Muslims from earning or paying interest on loans, it also forbids investing in retirement funds that include companies dealing in pornography, alcohol, tobacco or other products that are seen as taboo.

That is the conundrum facing at least 1,000 Muslims who work for Microsoft in Seattle. They’d love to get into their company’s lucrative retirement savings and investment program, but can’t without running afoul of their religious beliefs.
“You have people who aren’t getting the full benefits of their employer’s offering,” Thom Polson told the Puget Sound Business Journal.

He’s the chief executive officer of a new Seattle company, Falah Capital LLC, which works with Muslims to ensure they’re investing without violating Sharia law.

Falah Capital set up its first Islamic exchange traded fund last year on the New York Stock Exchange under the ticker symbol “FIA” in partnership with Seattle-based Russell Investments and IdealRatings of San Francisco.

Polson, who studied Islamic banking and finance and worked as an investment advisor in Saudi Arabia before moving back to Seattle to set up Falah Capital, said he might also be able to help Muslims realize their dream of home ownership in Seattle.

Falah’s clients would be able to buy homes without taking out an interest-bearing loan because Falah would offer Islamic bonds known as “sukuk.” Sukuk bonds are similar to traditional bonds that delay payments to investors until the bond reaches maturity and they are linked to a physical asset. Rather than earning money on interest on money, the investors would realize a return from a share of the profit on that physical asset, in this case a house.

Sharia finance is huge around the world. A Council on Foreign Relations report that came out earlier this year predicted assets held by Islamic banks could grow by more than 15 percent annually and hit several trillion dollars in a few years.

Personally, Sukulk bonds just look like a crapweasel way of pretending you’re not paying interest by tinkering with the definition. But far be it from me to pass judgment on a religious belief that isn’t affecting anyone else but the follower whom it affects. This isn’t all that different from the old practice of Catholics buying Indulgences for their sins or today’s Eco-zealots planting trees to pay for their private jet-setting.

And when we get down to brass tacks, is there anything wrong with a business catering a product to a religious group to drum up business? This isn’t all that different from McDonalds’ annual advertising blitz for its fillet-o-fish sandwiches during lent. If a banks wants to sell sharia-compliant mortgages I have no problem with it, so long as doing so doesn’t require existing banking law to be superseded. As any good capitalist will point out, if there is a market and an organization has the means to legally cater to it, they have an obligation to their stakeholders (shareholders, employees, community members) to do so. But of course, this is Seattle, so it’s not that simple. Kackley also pointed out what made this story controversial in the first place:

Edward B. Murray, the mayor of one of the most politically progressive cities in America — Seattle — wants to make it easier for the 30,000 practicing Muslims in his city to get home mortgages without violating religious Sharia law. It is part of his plan to ease what he says is a “housing crisis.”

Seattle’s economy is booming. That is good. What is bad, as Mayor Murray described in a letter to his constituents, is housing prices and rents have skyrocketed.

“As a result, thousands of families and workers — particularly lower-income people and among communities of color — are unable to afford the cost of living in Seattle,” he wrote.

Here’s his fix: Murray announced a multi-pronged approach to get 50,000 new units of housing built or preserved over the next 10 years, with 20,000 of those homes set up as “affordable housing.”

He and the Seattle City Council City Council commissioned a Housing Affordability and Livability Agenda (HALA) advisory committee last fall. The 28-member HALA committee brought together perspectives from affordable housing advocates, developers, land-use experts, tenants, businesses and nonprofits.

After months of deliberation, they reached consensus on 65 recommendations to consider. One of those recommendations, the most controversial paragraph in the proposal Murray sent to the newly established Seattle Select Committee on Housing Affordability — even more than the idea of making it easier for people with criminal records to buy a house in Seattle — is the idea entitled “Support the Community in Finding Housing Tools for Sharia-Compliant Lending.”

As Murray explained it, strict Muslims can’t use conventional mortgage products for religious reasons. Sharia law prohibits the payment of interest or fees for the loan of money because it is seen as wrong to make money from money.

“For our low- and moderate-income Muslim neighbors who follow Sharia law…there are limited options for financing a home,” wrote Murray.
His proposal would direct Seattle officials to bring together lenders, nonprofit housing organizations and community leaders to talk about how to bring more Sharia-compliant loan products to the city.

Less than a week after Mayor Murray announced his search for Sharia-compliant home mortgage providers, billboards started appearing in Seattle calling for residents to be more tolerant of Islam. The four billboards in Seattle were part of a 100-board national campaign run by the Islamic Circle of North America.

Ah. So this isn’t about free markets, but rather an elected official deciding to either force existing businesses to change their practices or play favorites by helping a new company into the market who couldn’t otherwise compete on its merits. Again, I don’t have a problem with this, as long as it stays local. More from Kackley:

“The mayor of Seattle is opening the door to Shariah, and because he has already shown himself to be compliant, he will receive more demands for accommodation of Shariah in the future,” Geller said. “This is a radical, intolerant, violent, misogynistic, anti-Semitic ideology, and he should not be kowtowing to it.”

There is also the argument made by two members of Congress in 2008, when American International Group (AIG) tried to offer Sharia-compliant insurance, that working with Islamic banks is tantamount to helping terrorist organizations launder money.

“You may defend your decision to offer Sharia products and will probably state that they have no real ties to Sharia law, and therefore pose no threat. You are wrong,” Fox News reported that then-Reps. Frank Wolf (R-Va.) and Sue Myrick (R-N.C.) wrote in a Dec. 18, 2008, letter. “Like Britain, the way to America’s legal code is through its wallet, and if Sharia law gains a strong footing in the United States, it will be through Sharia finance and Sharia products.”

“The funny thing is PC-progressives will stand up for Islam even though the Muslim faith stands against everything the Progressives believe in,” Jason Rantz wrote.

Exactly. I understand the argument for not wanting to see Sharia law take a foothold in our legal system, but if contained to radical leftist enclaves like Seattle I think it will be great to give the left a taste of how some groups reciprocate their tolerance. I look forward to seeing how many openly gay employees these new banks employ. I look forward to seeing Muslim-owned bakeries being forced to serve gay weddings, and who else is excited over the tolerance and respect that will no doubt be shown to the first gay pride parade that trots though a Muslim neighborhood?

But most importantly, let’s ensure that these sharia-compliant banks lead the way in paying every employee a minimum wage of $15 per hour!

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Cross posted from Brother Bob’s Blog

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