Sharia Finance in Michigan!

it appears to me that symantics play a big role in Sharia Finance…. they are not allowed to profit from interest… but they CAN have ‘…fees that are the cost of the loan, some paid up front, and SOME OVER TIME”

Call it what you want…. Interest… fees…. same thing to a consumer… it’s the cost of the loan!

This from The Associated Press on Jan 13, 2008: “Finance the Islamic way at Michigan bank”

DETROIT (AP) — 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 — subprime mortgages, credit default swaps and the like.

“When you look at the economic crisis we’re in, if you were to follow Islamic or Sharia financing, you couldn’t have this crisis,” said John Sickler, corporate director for the bank, University Islamic Financial Corp. in Ann Arbor.

Islamic finance operations aren’t prohibited from making a profit. Far from it. Instead, banks that comply with Islamic law, or Sharia, earn money from fees that are part of the cost of the loan, some paid up front and some over time.

University Islamic Financial has two types of financing, one called a marked-up installment sale and the other a lease-to-purchase sale. Fees in both cases are comparable to interest payments in traditional loans, bank officials say.

Even at University, not everyone is on board. Some customers have closed their accounts when they learned it was engaging in Islamic finance. Some employees who objected to the move quit. The bank also stopped having a Christmas party and no longer serves alcohol at after-hours events.

H/T: Dhimmi Watch