"Notably, Islamic financial institutions are able to make ‘loans’, such as for financing home purchase and could, in theory, have been exposed to subprime mortgage problems. However, their inherently conservative risk management limits not only their ability to lend as a percentage of their own assets, but also the granting of excessive interest rates which enabled unqualified borrowers to take out such loans."The essence of the argument made, which I believe is accurate, is that creating home financing products for subprime borrowers could easily be done through financial structuring but one would hope that the Shari'ah screening process would exclude those products that are exploitative or deceptive and also ensure that the level of risk taken on by the Islamic financial institution is not excessive. But I think it is important to recognize that products that replicate the seeds of the current crisis could be synthesized (as short sales already have), but if the industry's review process for Shari'ah-compliance works well, the products would nevertheless not be approved.
Andy Jobst, Heiko Hesse and Juan Solé describe the impact the collapse of the securitization market had on Islamic finance and sukuk in particular as well as the differences in Islamic finance instilled through the Shari'ah review process to mitigate conflicts of interest that were made apparent by the recent crisis.