Seattle mayor pushes for Sharia-compliant financing

Mayor says he will work to develop new tools for Muslims who can't use mortgage products due to religious beliefs

Seattle Mayor Ed Murray has pushed to increase home ownership among Muslims by offering financing compliant with Sharia law in an attempt to accommodate diverse religious beliefs. 

"We will work to develop new tools for Muslims who are prevented from using conventional mortgage products due to their religious beliefs," he said during a press conference on July 13.

Read: Creating awareness: The ownership and control of Islamic banks in Pakistan

Sharia law prohibits the payment of interest-- which is the primary way lenders earn-- due to which, Seattle’s 30,000 Muslims are trying to find alternative financing options that are sharia-compliant when trying to buy a house or start a business.

The suggestion to offer sharia-compliant financing to devout Muslims was put forward by a Seattle housing committee and was endorsed by the mayor. Chicago and financial firms and lenders like Bank of America already provide this option to Muslims.

However, not everyone in Seattle is happy about sharia-compliant financial products. Opponents argue that it would open the country’s financial system to terror groups, as it would provide a way for money laundering.

In 2008, conservative lawmakers in Congress wrote a letter to American International Group for offering sharia-compliant insurance programs which they warned could be used by terrorist organisations like Hamas and al Qaeda.

"You may defend your decision to offer sharia products and will probably state that they have no real ties to sharia law, and therefore pose no threat. You are wrong," the lawmakers wrote in the letter.

It added "Like Britain, the way to America's legal code is through its wallet, and if sharia law gains a strong footing in the United States, it will be through sharia finance and sharia products."

Further, those who are against this move argue that adjusting existing regulations to benefit one group causes reverse discrimination.

However, Flip Pidot, CEO at American Civics Exchange, believes that providing alternative financial solutions is "a step in the right direction toward a less fettered financial market."

Rice University professor Mahmoud Amin El-Garnal said in a 2014 Council on Foreign Relations report that a basic building block of sharia-compliant financing is "murabaha," where "two parties agree to trade at a price equal to the cost plus mark-up or profit."

Read: Islamic finance: Conference to be held on April 22-23

A Seattle-based Halal Inc advertises on its website that "instead of starting with a flawed system and trying to 'make a fit,' we took the perfect system ordained by Allah and created a legal framework for it."

The sector has seen an increase of more than $1.6 trillion in assets worldwide over the past three decades. Analysts predict that the sector has the potential to grow even further as the Muslim population in the US grows.

"Global Islamic financial assets have soared from less than $600 billion in 2007 to more than $1.3 trillion in 2012, an expansion rooted in the growing pool of financial assets in Muslim-majority countries driven by consumer demand for products that comply with religious codes," according to the 2014 report by the Council on Foreign Relations.

This article originally appeared on Fox News