In an effort to appease followers of Islamic Sharia law, Seattle Mayor Ed Murray is searching for ways to help them buy houses. According to Sharia law, muslims are forbidden to pay interest on loans, thus making it impossible for most of them to buy a house. Mayor Murray wants to meet with lenders to solve this “problem”, and possibly put the rest of the public on the hook for the debt.
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One suggestion would help followers of Sharia law buy houses. That’s virtually impossible now because Sharia law prohibits payment of interest on loans. The 28-member committee recommended the city convene lenders and community leaders to explore options for increasing access to Sharia-compliant loan products.
More and more lenders are offering Sharia-compliant financing, according to a USA Today report. The sector has grown to more than $1.6 trillion in assets worldwide over the past three decades, and analysts see potential for continued growth as the number of Muslims in the United States and Europe grows.
It’s unclear how many Muslims in Seattle would benefit from Murray’s plan. The Washington state chapter of the Council on American-Islamic Relations (CAIR) estimates more than 30,000 Muslims live in the greater Seattle area, and Chapter Executive Director Arsalan Bukhari on Tuesday said it’s “fairly common” for some not to seek loans.
The aforementioned USA Today story points out that many of the existing plans involve the public taking on the debt, and it should be no surprise that Goldman Sachs is in on the scheme.
Earlier this month, Luxembourg issued a $254 million, five-year Islamic bond, known as sukuk. Meanwhile, Hong Kong last month completed its first sale of Islamic debt raising $1 billion. That came after Britain in June became the first Western nation to issue sukuk, an Arabic word that roughly translates as “certificates.”
Sukuk act much like traditional bonds, delivering payments to investors until maturity.To comply with Sharia, the bonds have to be tied to some sort of physical asset. Instead of interest, investors are being rewarded with a share of the profit derived from the asset.
Goldman Sachs and HSBC are among western financial service behemoths that have introduced sukuk in recent years. And in the U.S. for the last decade, a number of banks have been arranging for mortgages and auto loans for their Muslim clients that are permissible under Islamic law.