Consider this: Around 10 years ago, a Muslim loan applicant turned up at a local bank called Devon Bank in Chicago's North Side, a neighborhood filled with South Asian and Middle Eastern immigrants, and, according to a news report in USAToday, asked for a loan to open a neighborhood store, demanding that he pay no interest. Predictably, he was turned away, if not laughed off.
But that was a decade ago. Since then, Devon Bank has done its research and discovered what side its bread is buttered on, thus transforming itself into the kind of interest-free financing establishment the customer had sought.
Today, Islamic financing accounts for more than 75 percent of the bank's mortgage portfolio, offering loans compliant with Shariah law in 36 US states.
Islamic banking is booming worldwide.
According to Global Islamic Review, a banking industry publication, the Islamic financial sector has grown to over $1.6 trillion in assets, managed by 300 banks and 250 mutual funds and the heavyweights of global finance have taken note, including those among them in the US.
According to Moody's Investors Service, a banking industry publication, large banks like Citigroup and JP Morgan have affiliates devoted exclusively to Islamic banking law, and giant mortgage investor Freddie Mac began buying Sharia-compliant mortgages as far back as 2001.
JP Morgan, for example, the largest bank in the US and a major provider of financial services, with total assets of $2.5 trillion, tries to attract Muslim customers by claiming this on its web site: "JP Morgan is dedicated to developing new products and services that observe and respect Sharia-compliant ethical principles. Our main goal is to provide Islamic banking solutions to clients with increasingly sophisticated financing needs."
How do these banks, you ask, get around the prohibition of interest on loans to their customers? They do so by treating loans more like leases or, if you wish, profit-sharing arrangements.
In this case, an Islamic mortgage looks like a lease-to-own deal. You want a loan, say, to buy a house without incurring interest? Fine, the bank, not you, buys the house. You, the borrower, make installment payments to the bank for a period of x-number of years, at the end of which you get the title to the house.
The bank's profit? It comes from "renting" the house, not "lending" the money."
Giant financial institutions in the US now have their own Sharia advisory boards, made up of well-credentialed Islamic scholars, while Mom-and-Pop banks like Devon Bank in Chicago, with relatively small assets, rely on opinions from the Sharia Advisory Board of America.
It was not always like that in the Euro-centric world of the West, which had traditionally considered Islamic banking law, if not Islam itself, as an impediment to the development of capitalism a truly ironic notion, since it was Islam that had developed an early market economy, or Islamic capitalism, between the 8th and the 12th centuries.
That economy, which widely circulated the gold dinar throughout what was then known as the Islamic Commonwealth of Nations, tied together regions, not to mention peoples and cultures, that had previously been economically independent. It was Islamic capitalism that introduced to the marketplace bills of exchange, capital accumulation (nama Al-mal), promisory notes, trusts (waqf) and other innovative concepts.
Many of these early capitalist concepts were later adopted and further advanced in medieval Europe from the 13th century onward.
The one scholar that has brought all this to light for modern day Europeans was Maxime Rodinson, a renowned French historian and sociologist who taught at the Ecole Practique de Hautes Etudes in Paris in the 1950s. His books on the Middle East and Islamic history are now classics.
But his monumental work ( for indeed monumental it seemed to this columnist when he read it soon after its publication in English in 1973), Islam and Capitalism, has truly changed and edified many a mind in the West.
Still in print, Islam and Capitalism is a meticulously disciplined refutation of the Euro-centric (racist) pontifications that Max Weber and other Orientalist theoreticians espoused, namely that there can be no non-Western banking system, and that Islam and capitalism are incompatible shades of today's gibberish in the public debate about the incompatibility of Islam and democracy.
Muslims in America are becoming a significant demographic force, and with that comes significant votes, which in turn translates into influence wielded in the social world they inhabit. If not all, then certainly a great many of these Muslims meet several times a day in the 2106 mosques in the US, and that includes those black-Americans who had, over the last 70 years, been reconverting to Islam "reconverting" because at least 20 percent of slaves brought to colonial America from Africa were Muslim, and Islam was then rigorously suppressed on plantations.
And if Muslims in America today want to see interest payments prohibited on loans, especially where those payments cross the line into usury, then banks, not just in the US but around the world, must find alternative ways to do business with them.
And, yes, back to that Mom-and Pop Devon Bank in Chicago, whose vice president and legal counsel, David Loundy, put it well: "(Islamic banking) is here to stay. You're talking about one fifth of the planet's population." That's a lot of people living in a lot of countries needing a lot of loans and conducting a lot of financial transactions.
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