Friday, May 26, 2006

Islamic Banking fails in the US..just like it does in the Muslim world.

Debbie Schlussel has an update on University Bancorp, Inc. of Ann Arbor, Michigan, and its highly publicized Islamic Banking division, which garnered national attention in the press.

For those who don't know, Islamic banking is done without paying or charging interest. Muslims are forbidden by shariah (Islamic law) from paying interest on loans, or reciving interest on savings. This attitude has been cited by most economists as a primary reason for the poverty and backwardness in the Islamic world.

At University Bancorp's Islamic banking division, a new Islamo-friendly mortgage alternative loan transaction program - or MALT - replaces a traditional home loan with a redeemable lease.

The bank holds the home in trust, and a home buyer makes monthly payments to that trust. Each rent payment includes a set amount of savings, which builds the buyer's equity in the home. When the savings account equals the home's original purchase price, the buyer owns it. Actually, a profit for the bank is built in, so there IS in fact `interest' charged, unlike Islamic banking in Muslim countries.

Questions both Debbie and I raised at the time were first, could a non-Muslim obtain this loan if they wanted it? If they did not have equal access to this program with Muslims, were turned down and brought this to the attention of the courts, it's a violation of US banking laws as well as grounds for a civil suit.

Second, there's the question of discriminatory hiring practices. All of the employees in the `Islamic banking division' just happen to be Muslims, especially in the `up front' postions that deal directly with customers.And as Debbie reports, she's been following announcements of newly hired employees for the bank as they've appeared in the local Detroit area media and they are all Muslims.

The Feds look at discrimininaton in hiring both interms of actual refusal to hire certain groups and in terms of what's called "disparate impact" in hiring..and with 100% Muslim employees, there's definately a disparate impact against Non-Muslims.

I wonder how CAIR, the Main Stream Media and the ACLU would react if a bank advertised that it was doing `Christian lending' and hired only Christian employees?


The funny thing is that after going to all that trouble to create a little bit of banking sharia in the US, it's working as badly as it does back in Dar Islam. And costing University Bancorp big time.

The Islamic division is doing poorly and losing money for the entire bank, reporting net income of only $14,687 for Quarter 1 of 2006, compared with $163,865 for the same period last year. Earnings per share for Q1 were -O-, compared with 4 cents in 2005.

Considering all the gushing over Islamic banking in the Main Stream media back when this was first established, any bets that they won't be covering the economic hemorrage quite so thoroughly?


Rosey said...

Dog shit by any other name...Those separate payments equal principal and interest, no matter how you slice it.

I once had an affluent tenant (6 figures) who rented a house from me. He was a little odd. When I had to sell, he rented another house. I couldn't figure out why he didn't just buy a house (like mine, I offered it to him). He said he couldn't pay interest for religious reasons. He bought a new car for cash. I tried to explain to him to no avail, that when he rented from me, he WAS paying interest, because the bulk of the rent went to my mortgage payment, with (hopefully) a little left over for me.

P.S. did you get my e-mail regarding the "Suicides" in Turkey?

Freedom Fighter said...

Sorry, no...please resend it.

Rosey said...

I re-sent it...