Islamic Bank of Britain Gets Cash Boost for Sharia-compliant Loans
THE INDEPENDENT ON SUNDAY: A fortnight after it was revealed by The Independent on Sunday that Lloyds banking group had abandoned its landmark Islamic mortgage offer, one of its rivals has outlined plans to expand the number of home loans offered which comply with sharia law.

The Islamic Bank of Britain has secured an extra £20m of investment from Qatar International Islamic Bank so that it can increase the number of sharia-compliant home loans and savings products. Under sharia, the payment and receipt of interest is banned, as is investment in areas such as arms manufacturing, alcohol and tobacco. >>> | Sunday, August 01, 2010

Islamic Banking & Finance: Shariah Investments

Disturbing News about Banking from Across the Pond
ISLAM IN ACTION: Michigan Bank Falls to Islam – This is a very disturbing article about the University Bank in Ann Arbor Michigan. The bank has recently implemented sharia banking, but to make matters worse they have even canceled their annual Christmas party and have stated that no alcohol will be served at after work gatherings. Several employees have quit the bank and hopefully they will sue the bank for religious discrimination. – Christopher Logan

ASSOCIATED PRESS: Michigan Bank Operates by Islamic Law

Big financial institutions have been battered by mortgages gone bad. But a tiny Michigan bank is getting attention in the industry by turning a profit on loans without even charging interest.

It also rules out some of the activity that got Western finance in trouble - subprime mortgages, credit default swaps and the like.

"When you look at the economic crisis we're in, if you were to follow Islamic or Sharia financing, you couldn't have this crisis," said John Sickler, corporate director for the bank, University Islamic Financial Corp. in Ann Arbor. >>> Jeff Karoub,Sebastian Abbot, Associated Press | Tuesday, January 20, 2009

Hat tip: Always On Watch

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Ehrenfeld / Abady – Islamic Banking: Is Treasury complicit?
THE WASHINGTON TIMES: If "cash is king," then Middle East coffers are irresistibly enticing. During a recent tour of Saudi Arabia and the Gulf states, Deputy Treasury Secretary Robert Kimmitt applauded the "growing role" of Arab banks in the U.S. economy. Treasury is seeking buyers for its newly acquired bailout assets because more than $1 trillion in cash is urgently needed to rescue the largest U.S. banks.

However, cash from the Arabian Gulf comes with a vital string attached: Islamic banking, erroneously viewed as an ancient practice. In fact, Islamic banking is a newly invented institution: "Neither classical nor medieval Islamic civilization featured banks in the modern sense, let alone 'Islamic' banks," notes Timur Kuran, professor of economics and law at the University of Southern California. According to the Dinar Standard, "assets managed by Islamic banks are in excess of $700 billion - predominantly concentrated in the Middle East."

Islamic banking took off in the 1970s, but was first concocted by Muslim Brotherhood founder Hassan al-Banna in the 1920s. The stated goal was to penetrate the Western finance system, corrupting it from within in hopes of creating a parallel system to re-establish a global Islamic empire governed by Islamic law (Shariah). Islamic rules of commerce (fiqh al-muamalat) forbid interest (riba) and investing in a prohibited (hara'am) enterprise. They also mandate tithes on wealth (zakat). However, the Koran fails to precisely define these concepts. Imams and ayatollahs differ, for example, on whether riba prohibits all interest or only usurious interest.

While the overhaul of American and Western banking regulations is urgent, Islamic banking cannot be the answer because Muslim clerics - not U.S. laws and regulators - make the rules. In 1969, the Saudis created the Organization of the Islamic Conference (OIC), which is now leading the charge for global expansion of Islamic banking and has established new regulatory, accounting and auditing organizations to govern such banks. Notably, the OIC's charter is to "liberate Jerusalem and Al-Aqsa [mosque] from Zionist occupation." >>> Rachel Ehrenfeld and Samuel A Abady | December 11, 2008

The Dawning of a New Dark Age (Paperback – USA)
The Dawning of a New Dark Age (Hardcover – USA)

Islamic Bankers See Sharia System Strengthening
THE GUARDIAN: JEDDAH, Saudi Arabia - The global financial crisis is an opportunity for Sharia-compliant Islamic banking to further its position internationally, bankers said at a forum in Saudi Arabia on Saturday.

Islamic banks have been barely bruised by the global credit crisis so far, although falling property and commodity prices and slowing economies are starting to affect the sector.

But bankers at the forum, on how the world finance crisis could affect Islamic banking, saw the sector strengthening.

"It is a must for Islamic finance to seize the opportunity that came with this global financial crisis," Ahmad Ali, president of the Jeddah-based Islamic Development Bank (IDB) said at the discussion organised by IDB.

"Global investment banks should be set up that realise the Islamic economy and offer the world a new vision and different way to manage assets, invest wealth and create products." >>> By Asma Alsharif / Reuters | Saturday, October 25 2008

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Islamic Banking Not Immune from Global Financial Crisis
Economic Woes, Commodity Slump Could Hit Islamic Banks >>>
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Non-Muslims Turn to Islamic Bank as a Safe Option
THE BIRMINGHAM POST: Growing numbers of non-Muslims are turning to Islamic banking as customers spooked by turmoil in the Western banking system increasingly see the sector as a safe haven.

The Birmingham-headquartered Islamic Bank of Britain said it had seen significant growth in non-Muslim customers since the onset of turbulence on financial markets as Islamic banks, bound by strict religious principles, are largely seen as insulated from the credit crisis.

Islam’s prohibition on the charging or paying of interest - riba - as well as rules on the kinds of investments they can make are among the reasons Islamic banks are coming through the crisis unscathed.

Islamic Bank of Britain head of marketing Steven Amos said: “Our core business will always be Muslims but the numbers of non-Muslims are really picking up.

“We’ve had massive interest and it’s down to the number of reasons why we’re insulated from the credit crunch.

“There were two reasons for the credit crunch. The first is liquidity - banks lending to each other on the money markets - but Islamic banks do not borrow or lend on money markets because interest is not allowed.

“The second reason Islamic banks are insulated is to do with assets - everything has to involve an underlying asset or service and if you are going to trade in an asset you have to own it first.”

The explosion in complex derivative products over the last few years has left Western banks reeling from exposure to toxic assets often far-removed from their everyday activities.

In contrast the more risk-averse Islamic finance system did not embrace this kind of deal.

“Conventional banks didn’t know what they were buying in these derivatives but we have no exposure to subprime as we just don’t deal in it full stop.

“That is one of the fundamental reasons we are insulated.”

Stipulations that you must own the asset you are trading in also mean practices such as short-selling are not a feature of Islamic banking. Non-Muslims Turn to Islamic Bank as a Safe Option >>> By Anna Blackaby, Business Staff | October 3, 2008

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Shari’ah-compliant Finance
I should like to remind my visitors that anything of interest concerning Shari’ah-compliant finance generally appears on my other blog, The Shrewd Economist rather than on this blog, since that blog is for economics, banking, and finance. So please be sure to check out the blog frequently.

Islamic Banks Join Race for Africa
Turning towards Mecca >>>
The Dawning of a New Dark Age (Paperback - UK)
The Dawning of a New Dark Age (Hardback - UK)

Frank Gaffney Jr: Shariah’s Trojan Horse
TOWNHALL.COM: Suddenly, a new national debate is beginning about the national security, economic and other implications of Persian Gulf potentates using their petrodollars to buy up strategic American assets. Most recently, the Emir of Dubai’s purchase at fire-sale prices of 4.9 percent of the largest U.S. bank, Citigroup, has caused a level of unease not seen since he tried to buy his way into a large number of this country’s port facilities.

Almost completely unremarked thus far has been a parallel – and in many ways far more insidious – effort to penetrate, influence and dominate America’s capital markets: so-called “Shariah finance.” Some estimates suggest that there are approaching $1 trillion now being invested around the world under this rubric. If present trends continue, all other things being equal, such funds may grow to many times that amount within a few years.

Shariah is, of course, the term used by adherents to the totalitarian ideology practiced by the Saudi Wahhabis, the Iranian mullahs and the Taliban to describe the all-encompassing theocratic code they use to justify repressive rule at home and to extend their dominance elsewhere. While it is often depicted by its promoters as Koranic in character, in fact, it is largely man-made, the product of dictates and rulings by caliphs and scholars over many centuries.

For non-Muslims, Shariah is best known for its sanction for the brutalization of women, homosexuals and Jews. Beheadings, amputations, flagellation and stoning are among the prescribed punishments for those who transgress this barbaric code, punishments plucked from primitive tribal practices in the Arabian deserts dating back to medieval times. Shariah’s Trojan Horse >>> By Frank J. Gaffney Jr.

Frank Gaffney Jr. is the founder and president of the Center for Security Policy and author of War Footing: 10 Steps America Must Take to Prevail in the War for the Free World (Hardcover)

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