Uncle Shariah

Frank Gaffney details the efforts to keep the Treasury from bailing out AIG because AIG has Shariah compliant policies. Having the government in essence "buying" a share of AIG puts it in the position of endorsing and promoting the islamic religion.

This is a test case of monumental proportions. If the government is allowed to bail out religiously oriented financial organizations, the separation of church and state are breached.

FROMJEWISHWORLDREVIEW.COM:

Uncle Shariah

By Frank J. Gaffney, Jr.

The insurance giant AIG has lately become the poster child for corporate risk-taking, mismanagement and greed. Its unimaginably large losses, rooted in insurance it extended to financial companies engaged in subprime mortgage-backed transactions, have destroyed both AIG's corporate reputation and balance sheet.

Indeed, but for the fact that Treasury Secretary Henry Paulson - who during his days running Goldman Sachs had extensive ties to AIG - deemed the insurance firm "too large to fail," the company would surely have gone under by now. Instead, Mr. Paulson gave AIG well over $40 billion of the slush-fund Congress intended to bailout the financial sector (part of a total $150 billion the U.S. has sunk in AIG to date). As a result, you and I and our fellow taxpayers have been saddled with ownership of nearly 80 percent of this once high-flying and now-floundering global insurance enterprise.

Another result of AIG's nationalization is, if anything, even more worrisome."

It turns out that AIG has a subsidiary specializing in "takaful" - insurance products that are purportedly "Shariah-compliant." I say purportedly because - while they have been cynically deemed "pure" (halal) by Shariah advisers that AIG employed for the purpose of making such certifications - the Islamic code expressly prohibits business transactions that involve risk. Consequently, insurance products designed to hedge against risk are inherently "impure" or haram.
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