Wednesday, March 11, 2009

A loan oft loses both itself and home

America is again a nation under siege -- this time from Islamo-mortgages. So says National Review's Andy McCarthy, picking up on a theme from Powerline's "Hindrocket". The latter notes a news story that the state of Minnesota is offering Sharia-compliant mortgages. They work by cumulating the future interest payments into a recalculated "price" for the house against which the borrower makes installment payments which are not construed as interest, and therefore, it is said, comply with Sharia. McCarthy sees a threat --

It's far from the most dicey financial transaction anyone's ever heard of — after all, no one's getting hurt and its arm's length ... at least ostensibly. But on that point, what makes the state government think it has to, or should, use taxpayer funds to structure financial transactions that accord with a religious code? (Perhaps — and far be it from me to be a nag here — the ACLU might take a few moments away from worrying about poor Khalid Sheikh Mohammed and the 9/11 terrorists to consider whether state-sponsored shariah is up there with creches at courthouses on the list of outrages against the Constitution to be avoided.)

And, given that shariah is anti-democracy, anti-equality, anti-freedom of conscience, and understood by a sizable number of Muslims to command jihadist attacks on the United States, is it really something we ought to be incorporating into American law?

So there you have it. We're on the slippery slope to incorporating terrorism into American law. But anyway, how much is there to this product? The discussion (admittedly at the mercy of the original article) seems to misunderstand what a mortgage is. It's a loan for the purchase of property where the lender owns the property until the loan is paid off. So in principle, there is no necessary connection between a mortgage and the payment of interest. There could be no-interest mortgages.

But mortgages still raise concerns in Islamic law because of the distribution of risk; as a rule, everyone in a Sharia-compliant transaction should be bearing some ownership risk throughout the life of the contract. And then there are the moral issues with which Islamic law is actually concerned, such as whether the borrower might be homeless if he can't repay the loan.

By contrast, these Minnesota mortgages sound like simply a technical wheeze with the numbers that don't address the deeper questions. Unfortunately, if the above is indicative of how the right is going to react to the slightest broaching of these issues, they'll be in full Rowan Williams outrage mode when the more serious issues get discussed. And don't forget the fact that religious edicts are already embedded in law, such as usury laws, not to mention widespread notions of "fairness" in law that could be traced back to religious roots. Perhaps they get in under the old "Judeo-Christian tradition" loophole.

UPDATE: In a nice synergy given the theme of this post, here's Rowan Williams from a few days ago ruminating, inter alia, on the connection between capitalist notions of risk and Christian ethics.

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