Abid Lakhani wanted to buy a home.
Unfortunately, as an observant Muslim, his options were limited. Many Muslims hold that the paying or charging of interest is prohibited, which makes it difficult to purchase a home in the United States.
"The house I was living in, I was living in it for 22 years because I don't believe in getting interest-bearing loans," the 44-year-old insurance salesman and father of four explains. But after years of renting, he was finally able to acquire a home for himself and his family this month through University Islamic Financial, Corp., which structures house payments so as to avoid charging interest. "For a Muslim living in this day and age, it's difficult to practice and stay within the rules of the faith," Lakhani says. "These kinds of options weren't available before."
Sharia-compliant financing is a growing industry, particularly when it comes to mortgages. "Traditional secular, money lending banks are setting up Sharia-compliant products because they make money," says Abed Awad, an attorney who specializes in Islamic law. Companies like Citigroup and Visa have tried their hand at Sharia-compliant products. Usually companies structure the payments in a sort of house-buying layaway plan. "It's a major moneymaker for banks." Shariah compliant mortgages allow observant Muslims like Lakhani to buy homes, where previously they were stuck renting to avoid interest payments.
There's nothing sinister about the growth of Sharia-compliant finance. It is just capitalism at work, an emerging market in which firms are meeting demand for a particular kind of product. But a decision by one 2012 Republican hopeful, Tim Pawlenty, may come back to haunt him in the GOP presidential primary, where any association with Sharia-compliant finance could be toxic.
In 2004, then-Gov. Pawlenty urged the Minnesota Housing Financing Agency to partner with local groups and businesses in an effort to increase minority homeownership in the state. That partnership became the Emerging Markets Homeowners Initiative. At the time, Minnesota's minority homeownership rate of 42 percent was slightly behind the national average, and part of the reason was that Minnesota's relatively large Muslim population was unable to purchase homes. The MHFA decided to partner with a local group, the African Development Center, in "developing culturally sensitive products," that would allow Muslims to enter the market. According to MHFA spokesperson Megan Ryan, the effort fizzled, in part because the ADC wasn't able to find interested homebuyers. "I don't know if it was that point in the economy," Ryan said. "for whatever reason the program never took off."
Pawlenty's effort to increase minority homeownership by encouraging companies to offer Sharia-compliant mortgages was entirely in keeping with his reputation as a "Sam's Club Republican" concerned with helping "regular people." But in the 2012 race, he'll be up against competitors who may try to use it against him.
One of Pawlenty's potential rivals, former Pennsylvania Sen. Rick Santorum, recently said that "Sharia law is incompatible with American jurisprudence and our Constitution." Fellow potential 2012 rival Newt Gingrich called for a federal ban on Sharia law last year. In 2008, the Thomas More Law Center sued the Treasury Department, charging that the bailout of American International Group violated the establishment clause because AIG was offering its customers Sharia-compliant homeowner's insurance. One of the lawyers litigating that case, David Yerushalmi, is associated with Frank Gaffney's Center for Security Policy, which has long warned that Muslims are seeking to replace the Constitution with Sharia law. Gaffney himself has warned that Sharia-compliant finance is a Muslim Brotherhood plot to facilitate the "penetration of Sharia into Western societies by mainlining it into their capitalist bloodstreams." When Justice Elena Kagan was nominated to the Supreme Court, National Review columnist Andrew C. McCarthy accused Kagan of attempting "to promote Shariah compliance in the U.S. financial sector," because she set up a program for studying Islamic finance at Harvard. Pawlenty's efforts could draw similar accusations.
While many conservatives believe Sharia-compliant finance is part of a "stealth jihad" to subvert the Constitution, Islamic finance is no more frightening than Kosher food. "You have a segment of society willing to pay more for products as long as they comply with their religious strictures," Awad says. "We want to grow our businesses and make more money. This is the American way." In 2005, when the MHFA issued its plan for increasing minority homeownership, the idea of the U.S. coming under Taliban-style Islamic law was still a fringe conspiracy theory, if it existed at all.
Pawlenty hasn't shied away from throwing red meat to the conservative base. He's told his share of birther jokes and even argued in favor of reinstating discrimination against gays and lesbians serving in the military. Thus far, he's avoided indulging in growing conservative enmity toward Muslims, but because of his own perfectly defensible efforts to expand homeownership in Minnesota, he may be vulnerable to such attacks from other candidates. Pawlenty's shot at the 2012 nomination may hinge in part on his ability to tamp down conservative paranoia on Islam rather than stoking it.