Wednesday, January 28, 2009

Religious law/Financial practice

Like you, perhaps, I’ve been perplexed, even bewildered, by what’s happening to our world’s banking systems. So, a recent article in the SAN FRANCISCO CHRONICLE ("Michigan bank operates by Islamic law,” Wednesday, January 21, 2009, page E4) caught my eye. The authors, Jeff Karoub and Sebastian Abbot, wrote: “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. Its specialty: financial products that comply with Islamic law. That means no collecting interest, no short selling and no contracts that are considered exceedingly risky. It also rules out some of the activity that got Western finance in trouble – sub-prime mortgages, credit default swaps and the like.”

Now I know that many in our nation are wary of anything remotely related to Islamic law or Sharia. But that might just be a result of our ignorance. Most of us know only what our news sources tell us about Sharia, and mostly that’s about women stoned and hands severed, because those events get our attention. However, like other bodies of law, Sharia deals with many topics, including financial matters.

According to Karoub and Abbot, “Islamic law says money cannot grow by itself, the way it does with compounding interest.” Fairly negotiated prices are the basis of trade. Also, “short selling” is not allowed. You have to own it before you can sell it. Now, there’s a concept.

Installment purchases are allowed. In other words, to purchase a home, one might enter into a rent-to-purchase agreement. A part of the monthly rent payment is put toward the purchase price of the property. One would not borrow money from a bank at interest to purchase a home from a third party. In theory, a property owner might be more conservative about selling, if he/she was receiving those payments over a long time.

Other models of Sharia-compliant financing include the following (from BBC News at http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/3548656.stm):

  • Ijara is a leasing agreement whereby the bank buys an item for a customer and then leases it back over a specific period.
  • Ijara-wa-Iqtina is a similar arrangement, except that the customer is able to buy the item at the end of the contract.
  • Mudaraba offers specialist investment by a financial expert in which the bank and the customer shares any profits. Customers risks losing their money if the investment is unsuccessful, although the bank will not charge a handling fee unless it turns a profit.
  • Murabaha is a form of credit which enables customers to make a purchase without having to take out an interest bearing loan. The bank buys an item and then sells it on to the customer on a deferred basis.
  • Musharaka is a investment partnership in which profit sharing terms are agreed in advance, and losses are pegged to the amount invested.

Jews find prohibitions against lending money at interest in the Torah. See, for example, Exodus 22:25 and Deuteronomy 23:20-21. Also, Ezekiel 18 describes a “good man” as one who doesn’t charge interest when lending money.

Christians find even stronger admonitions against loaning money for profit. Read again Jesus’ words about loving your neighbor in Luke 6:34-35, and Matthew 7:12: “Treat others as you want them to treat you. That’s what the Law and the Prophets are all about.” (Holy Bible, Contemporary English Version)

We can learn from the banks which have embraced Sharia-based financing concepts, but it seems that the Prophet may have received instructions (Qur’an 2:275-276) which mirror the laws found in the Torah. No surprise there!

Friday, January 2, 2009

Understanding and Acceptance

I hope you all have enjoyed a wonderful holiday season, with celebrations and parties, time with family and friends, and perhaps presents! “’Tis the season...” as the song goes, for holly and mistletoe, and for peace on earth. I’ve long held that peace on earth might most easily come from our joint efforts at understanding one another – we’re more likely to accept another when we can understand the other’s motivations, desires, and hopes. Moreover, as we become more accepting, we’re also likely to become more tolerant of those whom we understand less, but toward whom we feel more peaceable.

You might guess that I was somewhat surprised when, during a lively family holiday discussion, one well-educated Christian asked another if the Orthodox church isn’t a part of the Catholic church. Hmm.... It’s in another column, for another time, that we might glimpse a bit of church history, but the quick answer is “no.” Christians have organized, split off, reformed, and otherwise changed their affiliations so often during the past two millennia, that it’s easy to misunderstand how one part of Christianity is related to another. Wars have been fought....

But let’s return to understanding, for example, who’s celebrating what holiday and when this month. The organization called Religions for Peace publishes a calendar (http://www.rfpusa.org/resources/jan09.html) which lists some religious holidays. A quick look informs us that Christians don’t even agree on when to celebrate one of the most important dates in their faith. Here in the west, most celebrate Jesus’ birth on December 25th. But the Armenian Orthodox Church celebrates on January 6. Other Orthodox churches and Ethiopian churches do that on January 7.

Consider these:
• While the eastern churches are awaiting Christmas, western churches, (Roman Catholic and most Protestant) will celebrate Jesus’ circumcision and naming on January 1. Born a Jew, Jesus had a briss. (http://www.partyfun411.com/party_planning/events/what-is-a-briss-13.html)
• Catholics in England and Wales will celebrate Epiphany on January 4, while many other Christians celebrate on January 6. “Meaning manifestation, this is the end of the 12 days of Christmas. It also marks the day the Three Kings visited the baby Jesus. (Only Catholics who follow the pre Vatican II calendar celebrate Epiphany on this day.)”
• The feast of Theophany, celebrated in January by Orthodox Christians, commemorates Jesus’ baptism by John the Baptist. However those who follow the Gregorian (western) calendar observe on January 6th, while those who follow the Julian calendar celebrate on the 19th.
• On January 18, Christians begin a week of prayer for unity among all Christians. Interestingly, the same day is celebrated as World Religion Day in the Baha'i faith - a celebration of the unity found in all faiths.

Here in the Bay area, several interfaith events ( http://interfaith-presidio.org/icpnewsevents.cfm) are planned to celebrate the next US President’s inauguration, some together with observances of Martin Luther King Jr. day. Our season brings us ample opportunities to increase our understanding and acceptance of others’ motivations, desires and hopes. And calendars! Now’s an excellent time to act on our prayers for unity. Happy New Year!