Sharia Banking Goes Bankrupt

With UM Financial in receivership, Islamists' efforts to build an alternative banking system insulated from the rest of the sector appears to have foundered on old fashioned financial mismanagement. Tarek Fatah reports that hundreds and potentially thousands of homeowners may be seriously out of luck:

UM Financial is in receivership, but that does not mean the end of Sharia banking in Canada. Far from it. There is just too much money to be made at the expense of a vulnerable and naive community for mainstream banks to not pay attention to their Muslim executives who are promoting this business. There are dozens of Western banks that have partnered with Arab Banks in this profitable ventrure where the depositor gets no interest on his or her deposits, yet pays 50 points above the market interest rate on their mortgage, as a supposed act of piety to please Allah, but in fact ends up enriching the banks.

It would seem that sharia finance is in trouble for precisely the same reasons cited by both economists and Occupy Wall Street protesters pointing at the failures of the conventional financial sector: greed and incompetence.