Maybe our banking system is just set up wrong?

[NNN0LHI]

Thanks to JCMach1 for giving me the idea to research this.

http://www.usatoday.com/money/industries/banking/2008-03-26-islamic-finance-sharia_N.htm

Islamic loans turn profit for banks in USA

Updated 3/28/2008 8:52 AM

By Paul Wiseman, USA TODAY

A customer showed up at little Devon Bank on Chicago's North Side, asking for a loan to open a neighborhood shop. But there was a hitch, the would-be borrower explained: "We can't pay any interest. Can you help?"

At the time, seven years ago, the answer was: "Nope," recalls David Loundy, Devon's vice president and legal counsel.

That was then. Since fielding that first request, Devon Bank has transformed itself into a specialist in the kind of no-interest Islamic financing the customer was seeking. Islamic financing now accounts for more than 75% of the bank's mortgage portfolio, and Devon has made mortgages compliant with Islam's sharia law in 36 U.S. states, Loundy says.

Devon Bank, responding to local customers in a neighborhood filled with Pakistani and Middle Eastern immigrants, stumbled onto something big: Islamic finance is booming worldwide, fueled by the windfall from sky-high oil prices and a return to a more strict interpretation of the holy Quran across the Islamic world. Once Devon Bank introduced sharia-compliant mortgages and other loans, "People started coming out of the woodwork," Loundy says.

In a report last month, credit-rating agency Moody's Investors Service said that the global Islamic finance market has grown about 15% in each of the past three years and is now worth about $700 billion worldwide. The heavyweights of global finance have taken notice: Citigroup, HSBC, Deutsche Bank and others have affiliates devoted to Islamic finance.

[Earth_First]

1. Bill-O's head just expolded all over the set at Faux. n/t

[Barack_America]

2. That's interesting. It's like "delayed gratification" for both buyer and lender...

...both have incentive to work together. Seems a much more stable system.

I believe that somebody on DU suggested a similar method for getting out of the foreclosure mess; rather than foreclosing on home owners, convert them to a lease/buy.

Of course the the "rent" under a lease/buy is generally more expensive than just a lease, but it could very well be less than what people are paying in exorbitant interest rates. It could work.