The refutation of Islamic finance offering anything more than conventional finance with a different structure to avoid prohibited activities including interest is easy. Zaid Ibrahim & Co covered the misconception that Islamic finance is "terrorist financing" in a short book (available online as a PDF). However, the hostility towards Islamic finance in the US that this type of article demonstrates is hurting the US financial industry's ability to compete in Islamic finance with other countries that are being more supportive: the UK, Singapore, Japan, South Korea, Australia, and France.
The US should be attractive to Islamic finance because of its deep capital markets and Islamic finance should be attractive to the US financial markets because it brings a small but rapidly growing source of capital and investment opportunities that can replace revenue sources lost when the shadow banking system collapsed. One of the differences between the US and other countries listed above is that the governments have come out and indicated their support publicly for attracting Islamic finance by leveling the regulatory playing field (usually with a desire to be a Western 'hub' for the industry).
Despite the hostility towards Islamic finance demonstrated in this article, there are many US financial institutions that are involved in Islamic finance, but they are doing so largely outside of the United States. This is disappointing because the world's financial system is becoming more interconnected and the growing links between countries increases the supply of capital that could be used to finance investment in the US. Ignorant articles that do nothing but make the US seem unfriendly to one source of capital, particularly one which is growing in importance globally is incredibly shortsighted.
- Indonesia is considering changing the way it issues sukuk, possibly switching from an auction to a book-building structure because of several failed auctions. The auctions failed primarily because investors asked for yields higher than the government was willing to accept to compensate for the illiquidity of the sukuk.
- A joint venture between Alcoa and the Saudi Arabian Mining Company are raising financing, in part through Islamic debt, to finance an aluminum smelter.
- Bahrain Islamic Bank is raising its capital by 75% following a loss caused by it taking provisions against its investment portfolio.
- A bank in Morocco, Attijariwafa Bank, launched an Islamic banking subsidiary, Dar Assafaa.