Saturday, October 04, 2008

America Must Not Bail Out Sharia Finance (but we will)

Gold Diggersof 1933 ~ We're in the Money
Featuring Ginger Rogers

America Must Not Bail Out Sharia Finance

October 3, 2008
by Jeffrey Imm
Anti-Jihad League of America

On September 17, 2008, the U.S. News and World Report magazine reported on how the "Federal Reserve extended an $85 billion loan to American International Group to be paid back as AIG sells off some business in the biggest government takeover so far in the ongoing credit crisis." What the American public hasn't seen yet is what AIG is going to sell off in terms of its business. According to the September 16, 2008 press release by the Federal Reserve on this bailout, the "U.S. government will receive a 79.9 percent equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders."

But while the U.S. taxpayers are loaning money to AIG and the U.S. holds a nearly 80 percent equity interest in AIG, no one in the government seems concerned that AIG is continuing to expand its Sharia finance business. Less than a week after the government bailout of AIG, Reuters reported on how AIG's unit American International Assurance Co (AIA) was awarded an "international takaful (Islamic insurance) license" by the Malaysian government.

AIG's American International has been selling Sharia-based "Islamic insurance" for at least two years, through its AIG Takaful division, since its October 1, 2006 announcement, with a stated goal to sell such Sharia financial instruments in the United States. AIG SunAmerica, AIG Financial Services Corp, and other divisions of AIG also are dealers in Sharia mutual trusts. The AIG bailout came two days before Congressman Tancredo's introduction of the "Jihad Prevention Act" (H.R. 6975), which "would deny U.S. visas to advocates of 'Sharia" law, and expel Islamists already here."

This House bill has been referred to the House Committee on the Judiciary. Yet as the
AIG bailout shows, the challenge of Sharia is more than an immigration problem, and the U.S. federal government is not yet taking any action on Sharia finance. While we should be concerned about "Islamists" coming to the U.S. to promote Sharia, shouldn't we be really concerned that the U.S. taxpayers own a nearly 80 percent equity interest in a company promoting Sharia finance today? Shouldn't the first assets that AIG should have sold two weeks ago have been their Sharia finance businesses?

The day before the AIG bailout was being announced, the Center for Security Policy's (CSP) Frank Gaffney published his concerns about this growing financial institutional problem of "Shariah-Compliant Finance (SCF)" in an article entitled "Into the Fire." In his article, Mr. Gaffney references David Yerushalmi's study "Shari'ah's Black Box: Civil Liability and Criminal: Exposure Surrounding Shari'ah-Compliant Finance," which details the lack of financial transparency inherent in Sharia finance, and how such lack of transparency could lead to financial institutions being used to support terrorism and reverse money laundering. Moreover, as Mr. Gaffney states, the current financial crisis will allow Islamist nations to buy "up engines of our capital markets for pennies on the dollar," and "[w]orse yet, they are, in the process, putting themselves in a position to promote Shariah-Compliant Finance and the seditious theo-political agenda it serves."

Sharia finance is not just "business." Sharia finance exists to promote an expansionist, supremacist ideology; it is not merely "business," but is "business with an agenda." As I addressed in my November 14, 2007 article "Dow Jones, Wall Street Journal, and Islamist Financing," organizations promoting Sharia finance have employed individuals such as former Dow Jones' advisor Mufti Muhammad Taqi Usmani, who have called for Jihad. As Alex Alexiev has stated, "far from being an innocent venture in free market capitalism, Islamic finance was conceived and is practiced as one of the key instruments of the militant Islamist movement in its struggle against the West." As reported by Alex Alexiev, Alyssa A. Lappen, Lt. Col. Jonathan D. Halevi, and others, Shariah finance zakat can be used to promote Jihad warfare.

As addressed by Allyson Rowen Taylor and others, Sharia finance is anything but simply "business," as has been addressed in multiple articles on this subject. Role of the Emergency Economic Stabilization Act to Protect America's Interests With the passage of the "Emergency Economic Stabilization Act of 2008" by the U.S. Senate and the U.S. House of Representatives (H.R. 1424), a key part of its implementation is described in Section 104 of the legislation, "Financial Stability Oversight Board." The Financial Stability Oversight Board is comprised of the U.S. Treasury Secretary, the Chairman of the Board of Governors of the Federal Reserve System, the Director of the Federal Housing Finance Agency, the Chairman of the Securities Exchange Commission, and the Secretary of Housing and Urban Development.

This oversight board has the responsibility to ensure that policies enacted under this legislation are "in the economic interests of the United States.
As major financial organizations are receiving loans and other U.S. federal government bailouts, there have been no expectations set that they should be divesting their Sharia finance divisions and businesses. Why not? Certainly it is not the responsibility of American taxpayers to fund the efforts of financial organizations to promote Islamic supremacist financial instruments, any more than American taxpayers should be asked to fund any business that supports financial instruments that are geared exclusively to promote an identity-based supremacist ideology.

Under this Emergency Economic Stabilization Act of 2008, will this Financial Stability Oversight Board protect the American taxpayer from funding financial institutions that have or promote Sharia finance divisions? Clearly this did not happen with the September 16, 2008 bailout of AIG, where American taxpayer dollars are being used to fund a company supporting Sharia finance.

Isn't it "in the economic interests of the United States," to ensure that U.S. taxpayer dollars are not being used to support divisions of financial organizations engaging in Sharia finance?
Congress and this Financial Stability Oversight Board should state that there are consequences to American taxpayers' support of such financial institutions, and a key consequence should be the elimination of Sharia finance that is rampantly supported among such financial institutions ranging from AIG's Takaful division to J.P. Morgan's MENA Islamic banking group (see page 6 of MENA brochure).

While dealing with the legitimate challenges of our financial problems and marketplace issues, the U.S. government has the responsibility to also protect America's interests and the tax dollars of the American public to ensure that they are not funding Sharia finance businesses, and not funding an ideology that calls for and funds Jihad (using Sharia finance zakat). The American public must demand that U.S. government withholds financial support to those financial institutions who continue to undermine our national security interests by supporting Sharia finance.

Fear No Evil.

[Postscript - see also Sources documents for additional reading and background information.]


Anonymous said...

I have a somewhat different take. I'm not an expert but it seems to me that "sharia finance" stems entirely from the Muslim (and Christian, in earlier ages) superstition that there is something evil/sinful about collecting interest. Because they still subscribe to this stupid, illiterate superstition - which holds them back hugely - they are not willing/able to engage in normal finance. Hence the need for some elaborate infrastructure/hoops to jump through/etc. in order to engage in financial transactions that people without this superstition take for granted.

In other words, Islamic-dominated peoples seem to have a superstition that makes then willing/insistent upon paying a premium for engaging in loans/credit/interest rates.

I view the Western banks' foray into "Islamic finance" as simply an attempt to siphon off some of that premium. In that sense, I'm all for it. They're willing to pay extra for their silly superstition/taboo? I'm willing to collect.

This of course does not address the issue you raise of money laundering, terror funding etc. but it seems to me those issues will exist whichever financial institutions are serving those societies. And in the case of Western banks with their finger in that till, at least Western governments and regulatory agencies will have some jurisdiction.

Anonymous said...

Another way to look at it: "sharia finance" = the "organic food" of Islamic societies.

As we can see, millions of Americans have a superstition causing them to think there's something magical or super-special about "organic food" that makes them willing to pay anything from 10-100% higher prices for the same (in fact, usually slightly smaller!) freaking apple. This belief/superstition has no real basis in science or rationality. It's basically a deadweight cost to the people who hold it. Thus, unsurprisingly a huge industry has built up around extracting that cost.

I don't think it's a huge coincidence that the founder of Whole Foods is a free-market libertarian.

And for much the same reason, I have little problem with Western banks engaging in "sharia finance" - and walking away with their cut. :-)

Pastorius said...

Sonic Charmer,
I agree with everything you say here. However, the Zakat aspect of Sharia Finance is a real reason for concern in my opinion. Zakat is a required charity donation which is attatched to every Sharia Finance transaction. That's where the money-laundering aspect of Sharia Finance comes in. Zakat is a way of sending money to Islamic Charities which of course, almost inevitably use the money for Jihad.

Anonymous said...

Good point & did not know the specifics of what zakat was. Beyond knowing, of course, that there had to be something along those lines which would involve an extra cost.

I guess my hope would be that the fact that banks are getting involved in this stuff basically means they must be in effect (in some form or another) siphoning a cut off the top of the "zakat", all of which would otherwise go to "Islamic charities". And either way, there is still the possibility that this gives our insitutions farther reach & jurisdiction into what those societies are up to.

Who knows though.

Pastorius said...

I should have mentioned that, from what I understand, Zakat is illegal in the U.S.

However, I don't believe that stops Islamic Banks from making sure it is paid anyway.

As I understand it, these banks employ Sharia finance experts to make sure the finances are handled properly.

BabbaZee said...

All your bank are belong to them