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Sharia Compliant Bank Opens in Michigan

PRESS RELEASE $15,581,000 Deal Forms 1st U.S. Sharia'a Compliant Banking Sub

You have probably already heard about this. I heard about it on December 30th while listening to the Michael Savage Show. I dismissed for sometime because there are a lot of people, including Michael Savage, getting all worked up about this. The reason the bank was created is that Sharia Law (Islamic) does not permit the acceptance or payment of interest. So, this bank operates without collecting or paying interest.

Mike was all up in arms about this. He is under the impression that 1) They are FDIC insured, and 2) Get to buy their homes at market value at zero percent interest. Here is what we know: the bank is FDIC insured and home owners pay zero percent interest. I know, it sounds backwards, and it is, but it is all about semantics.

Technically, the bank should not be FDIC insured. It should be NCUA insured... which is basically the same thing (because it provides the same coverage) but is for credit unions, which is basically what this "bank" is, beyond that the fact that they are not a non-profit establishment... they are publically traded. So, that is why they are FDIC insured.

How do their mortgages work if they do not pay interest? Do they really get away with not paying fees to borrow money? Calm down a bit for a second on this one. They pay fees... just the same as anyone who goes to a non-Sharia compliant banking institution. Here is how their "mortgage" works: 1) Borrower applies for a "mortgage" and the bank approves it and sends funds to seller, 2) The bank sets up a trust account which amortorizes when its value equals the original principal of the amount borrowed, 3) Borrower pays "rent" each month where a portion goes to the trust account. Essentially, they are buying the home in a lease-to-own contract and will pay the same amount as if they got a normal mortgage. So, what do we have? A moral sham. Instead of following their moral convictions, they are rationalizing some way of making themselves feel moral by doing the opposite of what they believe. I do not see anything wrong with interest... but I see something wrong with people who do not hold true to their own convictions. If your convictions restrict you from interest and you rationalize your way into paying interest under a different name... well, you figure it out.

Here is the part that really makes it a credit union. When customers open savings accounts, they are not paid interest, but they are paid a share of the profits. This is what a credit union does... it is still interest, but when you place money into your savings account, you are purchasing shares of the credit union. The only difference here is that it is a publically traded, for-profit, company. So, they are purchasing "phantom-shares" and get to share in the "profits" rather than receive interest. Mike was under the impression that no matter how much money you put in, be it $10 or $10,000, that you received an equal share of the "profits." This simply is not the case. As a matter of fact, I am sure they give an "APY" for your investments... but they call it something like a annual return yield or something...

I only have two problems with this: 1) they are FDIC insured and only provide services to muslims which seems like a violation of the First Amendment (isn't it funny how people are quick to jump to that conclusion for Christians?), and 2) It is just rationalizing moral, or more correctly, it is an experiment in moral relativism, and it is a sham.

By the way, shout out to Michael Savage! I am not criticizing you... you were just emotional at the moment, and I understand... that is why I listen to you!

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Anonymous yamikah214 Says:

January 26, 2008 11:30 PM 

wow. christmas happens every year and I have to "not work" on Christmas, what's the problem you ask? well eventhough i can take hannukah off, i must return to work feeling "special", as if i have to catch up on a bunch of shit... it they want a bank let them have it, and so what if it is FDIC insured.... have you every seen a broke arab in th US, these are the people these banks will lend to... they don't borrow what they can't pay back (unlike all of us normal-american morons)-- so look at it as a way for FDIC to collect premiums from a bunch of anti-christs and never having to pay any claims, ultimatley benefitting the banking system.

i can't believe you wasted your time in creating a blog just for this. i think you are anti-muslim and anti-arab. michael savage may be a fellow jew, but i'll be the first to tell you he is seceretively anti-american.

Anonymous Anonymous Says:

January 27, 2008 10:29 AM 

If you thought this was not worth a post, why did you waste your time in commenting? Further, just from one blog post, you think you can see into the heart of someone? You are a hateful person. Nothing about the post was hateful... it was about how hypocritical it is and also about how silly it is to have the government involved in something religious. I think the government needs to stay out of it in hopes of keeping religion for the religious.

You have things backwards... you seem to be the one who has issues.

Anonymous Anonymous Says:

May 13, 2008 4:54 PM 

Thank you for this article. This was the clearest explanation of Shariah Banking that I have been able to run across on the entire web.

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