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Zeba Khan
Toledo, Ohio

Zeba Khan

Voted out Nov. 23. I am a social media consultant for nonprofits. I have researched women and minority issues in the Muslim World, Islam in America and counterterrorism finance with the U.S. Treasury Department. ALL POSTS

An idea for Detroit

Editor's note: Our five remaining pundit contestants showed off their blogging skills this week. Cast your vote for who should advance to the next round.

Growing up 45 minutes south of Detroit, I've always been a little defensive when people from outside the Midwest trash talk the city. And now that Detroit is ground zero of the financial crisis, with a staggering unemployment rate of 28.9 percent, I find myself outwardly even more protective of its reputation and internally wondering what a potential turnaround for the city might look like.

Much has been said about the economic devastation in the Motor City, and weekly stories abound, letting the rest of us in on just how grim the situation is. But in the midst of economic ruin, there are flickers of hope, with occasional stories of small business owners entering the city and setting up shop. Yesterday, a very big flicker of hope was announced in the form of online mortgage mogul Dan Gilbert, the CEO of Quicken Loans, who wants to help spark a revival by relocating his company's headquarters and its 1,700 employees into the heart of the city. If Gilbert moves his company, it will surely be a step in the right direction. But as Gilbert admits himself, if Detroit is going to become a success story, more people are going to have to follow him in, and it's going to need to make good business sense to do so.

Gilbert intends to recruit innovative companies into the downtown area, envisioning an entrepreneurial center that would be critical for a true transformation. In light of his plans, I want to relay an idea that came up over dinner last week with my friends: Let's turn Detroit into a hub for Islamic finance.

I know it might seem like I'm throwing a curve ball, but hear me out.

A survey released Nov. 5 by The Banker magazine found that the global Islamic finance sector is worth $822 billion and, according to the ratings agency Moody's, has a potential to be worth $4 trillion. So what exactly is Islamic finance?

Simply put, it is a finance system based on Islamic law. Without getting into the minute details (which I don't pretend to be an expert in), some of the highlights of Islamic finance include interest-free banking, the minimization of risk and speculation, a focus on halal (religiously permissible) activities and more generally the quest for justice and other ethical and religious goals. In many ways, it can be likened to ethical finance or green finance, which have social bents to their orientation.

Proponents of Islamic finance, like Habib Ahmed, a policy professor at Durham University in England, say that "the prohibition on interest charging and the selling of debt shielded the sector from exposure to subprime mortgages and some of the complex debt-backed instruments at the center of the financial crisis." These proponents are convinced that if the principles of Islamic finance had been followed, the crisis wouldn't have happened. Others, including the Pope, are encouraging Western financial markets to incorporate Islamic finance principles into their recovery plans, and many are doing just that. Non-Muslims countries such as the U.K., France, Japan and Singapore are encouraging the development of an Islamic financial sector. In fact, already over 50 percent of clients of Islamic financial institutions are non-Muslim worldwide.

But Islamic finance does have its critics. Many of those critics assert that Islamic finance is simply conventional finance dressed up in Islamic garb. Others say that the sector doesn't go far enough to replicate conventional finance, making it inefficient. But here's the thing -- while I think it's true that a lot of Islamic finance today is creative retooling of conventional financial products, the fact is there is a difference. Just compare the assets of Islamic banks versus conventional banks in 2009: Islamic banks saw their assets grow by 28.6 percent while conventional banks grew by 6.8 percent. Clearly, they're doing something right in that sector. My question is, if everyone else is getting in on it, why shouldn't we?

With a sizable Muslim population in and around Detroit, Islamic finance would automatically have a built-in market to tap into as it got off the ground and running. Detroit has a blank economic canvas, and we need to be thinking outside the box for ideas on how best to infuse economic prosperity into the city.

Read more posts from this round. See what the judges had to say. And cast your vote.

By Zeba Khan  |  November 12, 2009; 10:30 AM ET  | Category:  Round Two
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Yes, let's implement the system of some of the most backwards and undeveloped economies of the world to the US economy. It has worked out so well for Muslim countries because as you know when it comes to economic power houses, Yemen, Sudan, and Pakistan are always part of the conversation. If you want to turn Detroit into a nomadic, desert town, then this plan is great. If you want real solutions, you should try looking outside of an economic system that was created 1400 years ago and has thus far failed. This article, while trying to be creative and unique, offers no real solutions and is in reality hollow and without substance.

Posted by: xycd123 | November 23, 2009 2:24 PM
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So what happens if a well-qualified same-sex couple applies for a mortgage to a sharia lending firm? A perfectly legal civil union? Some of the recognized gay marriages?
If they can refuse commercial loans to businesses that sell beer and bacon, can they violate fair housing and other discrimination laws in mortgage lending?

Posted by: parkbench | November 21, 2009 11:46 PM
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ummm. So what happens if one of these Sharia mortgage companies gets an application from a well-qualified same-sex couple? Nice civil union? They've even adopted a child or two?
If they're able to refuse commercial loans to businesses that sell beer and bacon, can they violate fair housing and mortgage lending laws to comply with sharia?

Posted by: parkbench | November 21, 2009 11:39 PM
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Without interest, how can a financing business make any money? That is, what company would want to due structured Islamic financing deals unless it knew that its business would turn a profit?

Posted by: teoandchive | November 16, 2009 2:27 PM
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Zeba your idea is very good. Can you give a more detailed explaination of the Islamic Banking system ,what it is and how it can help the Detroit economic crisis. To me it appears that greed, corruption and short term gains were responsible for the present financial crisis. I do believe though that the Islamic banking system if applied would be an excellent system to benefit the people. Unfortunately none of the Muslim nations have given any evidence of its success story.

Posted by: b2be | November 16, 2009 1:24 AM
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Zeba, this is a solid post and one of my favorites in this round.

Posted by: JennB1 | November 15, 2009 12:28 PM
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Strange. I posted a comment a second ago and now it's not here anymore. Maybe Muslims in Detroit haven't made any moves in that direction because they don't feel safe or trusted enough to do so. Based on some of the comments to Ms. Khan's posts (regardless of topic), it seems her faith/identity/whatever makes her different from the other contestants is unsettling for some commenters. We need to hear from someone like her if we, as a society, are ever to move forward in a positive direction.

Posted by: manray132 | November 15, 2009 12:02 PM
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Maybe Muslims in Detroit haven't made any moves in that direction already because they don't feel safe or trusted enough to do so - despite their American citizenship. It is very apparent from some of the comments I've read on Ms. Khan's posts (regardless of topic) that her faith is unsettling for some commenters. Shouldn't we hear out people like her if we are ever going to move forward in a positive direction?

Posted by: manray132 | November 15, 2009 11:31 AM
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If Muslim finance is such a great idea how come Muslims in Detroit have not made any moves in that direction? Cubans came to Miami and built banks and skyscrapers galore so initiative is key.

Posted by: mascmen7 | November 15, 2009 1:16 AM
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Hi, Zeba. ASA.

A great piece. It brings up a lot of questions, too. Mostly, how does Islamic finance contribute to the the economic growth and stability of Detroit (or any other economically challenged area, for that matter)?

As a small business-owner and a firm believer in Islamic finance, my business has grown, through the recession and bank crises because it has grown "organically." I worked hard, saved a little money, then went full-steam ahead into making that money work for me and my family.

By organically, I mean without the use of retail and commercial financing. Personally, and as a business, we have no financed debt. It is because of my dedication to not taking on long-term, high-interest debt that I have been able to grow and survive in this economy.

It is my personal opinion that it is the banking and finance systems with their usury-based credit (something that has been frowned upon in every major religious movement) that caused all of these problems, nothing else.

When credit-card companies are allowed to raise a persons interest rate to 30%, from 19% or 14%, because of a single missed payment, or because you have a nice meal with your spouse at an expensive restaurant with a bottle of wine (which you've never done before) the public really needs to rise up against these practices.

To rise up or sit down, whichever is the most appropriate here, against usury of this extent is going to take some solid dedication, by a lot of people, to not apply for or accept credit from an interest-based finance system that will rob a person or a business of up to 30% of it's hard-earned dollars, creating mountains of debt and, sometimes, send a struggling business (or family) crashing to the ground.

I would love to see you do a piece on how Islamic financing (by eliminating interest and using fees, instead) can help a business or individual grow and thrive, even in a difficult economic climate. Even better if you can tie that into your passion--how all those savings in finance charges and interest payments can be turned into a charitable contribution to non-profits and help change the lives of those that are served by those organizations. Hmm...people helping people...what a concept!

Posted by: Laila2 | November 14, 2009 7:26 AM
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As one of the largest Muslim populations in the US, how is Detroit not already a hub of Islamic finance?

Posted by: legl | November 14, 2009 5:30 AM
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Another thing, on Detroit: Detroit, like many other US urban centers, has been a place where illegal immigration has been high, if not rampant. So, for Detroit, like other areas, the American Dream(R) started translating out as the American Scream, or nightmare, in which the economy no longer provided enough jobs for people to realize their ambitions of home ownership and so forth. This has been sort of a national phenomenon, with people basically trying to bum-rush the immigration office to get away from the places they were before, overloading public services, such as they were, and overloading the utilities, and and and. When that many people decide to relocate in such a short period of time, what's going to happen? If, for example, say just 20% of the US population moved south to Mexico, over the space of even just 5 years, what would happen there? Their infrastructure just couldn't support it.

We have laws for a reason, and when they get blithely discregarded, deliberately circumnavigated, are not enforced, or are just completely ignored because of things like corrupt mayors, city managers and so forth, well, then you get a Detroit. Or, a Chicago. Eventually, the wheels fall off, and that's the end of the movie.

Posted by: walkerbert | November 14, 2009 2:04 AM
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I have this to say about Detroit, namely that the reason it 'went south' was because of public corruption. Yes, the Big 3 had mismanagement issues, but they also had people hounding them for money, and finally they went under. Detroit was the historic home of the US auto industry, and for many years, they enjoyed a high level of prosperity from that. But, between the dual pressures of higher manufacturing and overall operating costs, and higher and higher taxes, that economic 'vehicle' finally overloaded.

Islamic finance? Um, why? Reading about the middle east, apparently islamic countries are also dealing with the same problem of public corruption, and not very successfully, there's more than one islamic country that barely rates as second-world, so I'm not impressed by news from that quarter. No, if you're going to fix cities like Detroit, that means taking public corruption head-on, and by doing so, you'll deal with some other problems along the way, like rampant crime and drug use that helped flush Detroit down the toilet. The common thread is greed, people trying to obtain large sums of money for themselves, with studied indifference to the impact on others, and I don't think that even a muslim ethic is strong enough to prevail, there. Rather, it's a matter of sharing the relevant facts of the matter with the public, and promoting education on the matter of civics and public participation in government, without which it devolves into a semi-exclusive little club. In other words, by re-invoking democracy, by getting the public involved, by getting the facts on the table, and developing better strategies to deal with problems like poverty, homelessness, joblessness, and just a basic lack of revenue as a result of people stripping every penny they could find out of the area and hitting the road, then you're talking reform and redevelopment. Areas that lack industry lack economy, and the recent obsession with 'the environment' has blinded people to some basic facts, such as the fact that to make an omelet, you have to break some eggs, and that to have industry is to sometimes concede to less-than perfect environmental conditions and so forth, in other words, achieving compromise in the political arena in the interest of the greater good of all, but also working on cleaner manufacturing technologies in the process.

I think Detroit can revive, it may be a leaner, greener Detroit that finally emerges from the ashes, but will also stand on a proud and innovative history that brought us this far. If the citizens of Detroit can generally unite themselves on ideas like reducing crime, improving livability, and seeking to improve their common future through new development, redevelopment, and 'open books' government, then they'll have a bright future. Well, as bright as it can be, in Michigan, in November...kinda cold...

Posted by: walkerbert | November 14, 2009 1:48 AM
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This entry is my favorite from round two. It's original in the ideas laid out in it and it deals with one of the most serious issues now facing my town, D-town - economic devastation. It flows, keeps me reading and holds my interest. I thank you. Thank you for remembering D-troit. And all I gotta say is...You got me, Girl!

Posted by: ralphie4 | November 13, 2009 2:19 AM
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An excellent piece Ms. Khan. I was born and raised in Detroit and have lived in this area all my life. I often think of Toledo where you are as a sister city. In addition to the large Muslim community here, we have the nation's largest Chaldean population(Christian Iraqis)that are making a difference and could be of help. My wife and I remember a prosperous Detroit in the 50's and early 60's, jobs were plentiful. We have two sons that would have liked to have remained here, but their prospects were better elsewhere-Mike is a lawyer in Alexandria, VA. Steve is a radio producer in Grand Rapids. So any more ideas that you have to bring jobs here is greatly appreciated.

Posted by: larry6215 | November 12, 2009 7:11 PM
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Look, the message to any potential business relocating to Detroit is that if you come here, your workforce may unionize, and refuse to give an inch on wage/benefit concessions derived from strikes. Why would I want to relocate to an area with an established history of the workers selfishly clinging to concessions even at the very risk of the demise of the company itself?

As far as financing goes, any kind of credit worthiness check is better than the system encouraged by Barney Frank et al, in which they tried to upstat their minority/low income loans by dropping all rational credit checks on potential recipiants. Yes compared to that horrible system designed to maximize bragging rights of the Democrats for minority/low income housing, even something completely anti-American like religious based lending seems good.

The real question to ask yourself is this- had Barney Frank et al stuck to the original 20% down, 3x annual income requirements for home buying that was the gold standard prior to the meddling of the Democratic party in the lending process, would we have averted the housing crisis? I think the answer is a resounding YES! Then the obligation for you as a columnist is to compare our previous, rational and responsible system to a crackpot religious lending scheme...weigh the pros and cons.

Your generation needs to hold your politicians accountable for relaxing lending practices for political points. Your generation also needs to hold your politicians accountable for spending lots of money on handout programs we can not afford for the sake of votes.

Posted by: Wiggan | November 12, 2009 3:24 PM
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This piece is very compelling. You pulled me in with some personal stuff, addressed a major economic issue, provided insight into a possible solution I had never heard of or even knew existed. Thank you for the quality here. This is what I want from a columnist. New, different, purposeful, meaningful.

Posted by: JennB1 | November 12, 2009 1:59 PM
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Wow, are you the risk taker.

First, good start. Meaty subject, unemployment in Detroit. Big jump of hope from a major investor. Then bam, the twist, Islamic finance.

You then educate the readers, most I assume know little about this subject. The system is know to work, and better yet it has money, something Detroit sorely needs. Love the phrase, "Detroit has a blank economic canvas," which is right on the mark. You convinced me this unconventional idea could be one of the few things that would actually work in Detroit.

Well done Ms. Khan!

Posted by: chucky-el | November 12, 2009 1:46 PM
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This post kept and held my attention. As a metro-Detroit resident, I admire your focus on a compelling possible solution (or part of a solution) to the city's ongoing economic struggles.

One small criticism--I was curious about the details of banking according to Islamic law. I've read about the idea but haven't examined it in-depth. The Amazon link to the expert's book wasn't particularly helpful.

But overall, well done! I look forward to reading more posts like this one!

Posted by: angelomer683 | November 12, 2009 1:32 PM
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Nice concept, but too long and dry for a blog. Zeba seems better suited to be a reporter than a columnist.

Posted by: ChiefRocka1 | November 12, 2009 1:16 PM
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This is a great piece, and to me seems to be exactly what this contest should be aspiring towards. I feel as though the contest risks devolving into 'who can blog in the most cloying, cutesy way' with a lot of ra-ra for Huffman's endless attempts at humor. Sometimes things are serious and should be treated & assessed as such. I worry that WP hasn't fully considered what, exactly, they're looking for in this contest.

I'm not sure why WP isn't given the pundit contest more front-page billing, by the way...where are the frontpage links?

On to Khan's piece: she tries to do exactly what an opinion-shaper/maker should be doing...that is, she provokes, she elevates ideas that almost certainly have not been discussed here, and backs them up with figures and facts.

Readers, especially blog-readers, have grown accustomed to grenade-chucking, to intensely-opinionated treatises, to snarkiness. But this is the Washington Post, and the winner is not going to be a blogger, but a columnist. I want to read pieces like this, pieces that aspire to educate. I don't want to read bloggish fluff on the op-ed page. I can find that on millions of other, less reputable, sites.

Khan shouldn't dumb herself down. She should keep working on her writing, keep searching for her voice, and keep putting out pieces like this.

Posted by: wpreader1010 | November 12, 2009 1:02 PM
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I like the out-of-the-box thinking. Kudos to you for that.

You make the case that interest in Islamic finance is growing worldwide. I'd like to hear more specifics tying this industry to Detroit's economic recovery.
--At a recent auction of nearly 9,000 lots, less than a fifth of the land was sold after 4 days, despite a minimum bid of $500. How would making Detroit an Islamic finance center change that?
--Compared to the auto industry, finance employs relatively few people. How would this idea create jobs beyond the finance sector?
--Detroit's rates of violent and property crime are among the highest in the nation. How would your idea support crime reduction?

The piece presents a compelling vision. Take it a step further and demonstrate more concretely why Detroit should consider it.

Posted by: MsJS | November 12, 2009 12:19 PM
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