Goldman Sachs "Hoist With Its Own Petard"

Goldman Sachs loves self-regulation: it baulks at others, as per the Volcker Rule, imposing rules on its market making and proprietary trading. So it is rather interesting how Goldman has tried to comply with Shariah Law with its "Sukuk" bond derivative. Goldman finds that it can raise the money in Islamic markets but it cannot use those funds for its own business. Oops!

Goldman Sachs caught in a Sharia Catch-22
By Joy Brighton - Washington Examiner

In September 2011, Goldman Sachs announced it would issue a $2 billion Shariah Compliant Islamic Bond derivative known as a "Sukuk" to finance its current business operations.

However, by Feb. 15, 2012, despite Goldman Sachs' many acts of obeisance in the service of capital, Abu Dhabi Islamic Bank's Shariah scholars decided that Goldman Sach's Islamic bond program was "noncompliant with Shariah."

Why? Because Middle East petrodollar funding must be used to strengthen Middle East petrodollar goals.

According to an article in the Arab News, Shariah-committed imams declined to issue its religious approval (fatwa) for the Goldman Bond derivative because the "use of proceeds" to fund Goldman's non-Islamic business is forbidden, according to Shariah finance laws.

Goldman Sachs is the victim of a Catch-22 business deal -- it can legally raise $2 billion in the Shariah-based Islamic market, but it cannot legally apply these funds to its business operations.

Stringent requirements placed on Western banks wanting to engage in Shariah banking were created to pull Western and American dollars out of free capital markets and divert into imam-controlled financial markets.

Read the whole article here