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Understanding the nature of law requires legal reasoning
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Introduction
Understanding the nature of law requires legal reasoning, understanding of the legal institutions of a given region or country and digging deeper to understand the legal systems; the civil law, common law and religious laws. Civil law conceptually formulates the general principles by distinguishing substantive rules from the procedural rules; proceeds from abstractions and that are subordinate to the highest rank of a region or a country, and shaped by history it thus incorporates individual variations (Orucu, 6). Sharia law, as a moral code and religious law for Muslims; addresses various perspectives of human activities such as economics, crimes and politics, as addressed by secular laws, and it seeks to differentiate intentions, interactions and decisions between those that are good and those that are bad (MacEoin and Green, 2). Just like the secular laws, Sharia code of ethics touch on various interactions of the human race giving the prospects and punitive aspects whenever the codes are breached, though from the secular observation of Sharia being a religious law, it has provisions that make the laws holistic in guiding and governing human interactions making it fall under and satisfy individual legal systems. Economically, just like Christian finance, Sharia economics presents the economic systems that conform to the Islamic scriptures and traditions; behavioral norms and foundations, Zakat tax as the basis of Islamic fiscal policy and other economic provisions that holistically covers the economic and finance sector (Bonner, 397). Though close and similar to the secular and other traditional laws, in countries that there is no Islamic Legal System, disputes related to Islamic Financial Transactions can lead to outcomes that contradict Sharia Principles.
Sharia principles like the secular laws have provisions that govern the Islamic Investment Funds; where investors pool their surplus money for the purpose of its investments to earn profits, Halal, but governed and in strict conformity with Sharia laws, and the subscribers receive certification entitling their pro- rated profits accrued from the fund. The Islamic banking phenomenon is based on sector of profitable for investor that represents growth for positive reputation and responsible management, and by fueling growth that is necessitated by increasing demand stimulated by rising number of Muslims in common law and civil law countries (Imady, Omar and Hans, pp.4-6). The conflict is bound to occur especially on the business ethics provided for by Sharia laws in relation to these countries’ provisions whereby the Islamic economic systems are neither socialists nor capitalist, conflicting interests of natives and the economic outlook of these countries. For instance, Sharia provides for Zakat; a practice of charitable giving by Muslims based on the accumulated wealth, and obligatory to all that are able to do so, contravenes with capitalists economies where in most cases taxation is mandatory to all irrespective of economic background and/ or social class. This would further lead to conflicts especially if certain sections of Sharia have to be incorporated in these countries’ laws such as contractual agreements and financial transactions due to different expectations from both sides and the conflict to the national interests.
Capitalist societies/ economies rely on creation of value which can be tangible, for physical goods and/ or intangible for services; which involves transactions that mutually benefit the parties, the consumer gets the added value to the product/ service, and the retailer or the producer gets the entrepreneurial profits and royalties which may include interest on shares. To the contrary, the Sharia provisions for legal entity or a business that is Halal as a company that does not borrow money on interest and/or keeps their surplus in interest bearing accounts; and that one being a shareholder of such a company becomes a Sharik, agent for the partners in the matters of the joint business (Karim, pp.12-13). This provision will contravene with majority of capitalistic societies whereby economic hardships and inequalities are inevitable; necessitated by the national interests based on these economic ambitions of capitalism for competition and effective resource mobilization, and the personal responsibility of poverty eradication at individual level may not apply. For instance, majority of companies in socialist and capitalists’ societies are financed on basis of interest irrespective of the partnership and veto powers of the partners (Mishkin and Apostolos, 8), considered a major sin for the Islamic Legal System, and contravenes with the principles of equity fund as provided for by the system which classifies business entities that have grown based on interests as impure and they do not recommend their followers to invest in them.
Islamic transactions that involve interests at a larger scope have conditions that do not move along with the customary laws and ethics of businesses such as growth, expansion and limits and/or autonomy of charity. For instance, for companies that are in Halal business and they include interest account to their income statements, according to the Islamic Financial transactions 5% of the dividends should be channeled to charity (Krichene, pp.118-120), a contravention of the customary business ethics whereby the shareholders should receive their dividends in full and share their income in the channel of their choice. In addition, the complexities of Islamic law in utilization of commercial disputes make it susceptible to inter- state conflicts whereby for example, in commodity and Injarah funds, the ownership of certificate, Sukuk; shows the ownership of the tangible aspect of the fund and not the liquid or the debt aspects of the commodity, making the ownership and commercial aspects fully negotiable and opens the window for purchasing or selling in the secondary market (Askari, pp.2-3). Countries without Islamic Legal System may not incorporate all the clauses of these transactions and ownership in that whenever the Muslims in these countries want to practice this kind of exchange and the commercialization aspects, they will be barred by the institutional policies that are pegged on socialism and capitalistic goals.
Majority of these countries appreciate the importance of trade, just like the Islamic law, but the perspective and goals vary in that Islam encourages trade to reduce the gap between the poor and the rich whereas these economies may be involved in trade for individual financial gains. Islamic financial transactions prohibit Usury, practice of making unethical loans based on the interest rates factor; majority of the transactions are intended for trade but not for taxation, selfish interests on the business arena such as grabbing, and hoarding of wealth or food substances for the speculative purpose is prohibited (Malkawi, pp.11-13). Policies in majority of these countries will directly contravene with the Islamic Financial Transactions more so on the taxation aspects of trade for the development of the economy, loaning facilities for institutional growth and exploitation of natural resources (Tripp, 9), and implementation of these policies contradicts with majority of Sharia Principles.
Conclusion
Countries are governed by their own constitutions; designed to incorporate the needs and aspirations of the citizens irrespective of the gender, religion or race, and by incorporating Islamic Legal Systems in their constitutions or governance patterns will enhance holistic development of the society putting into account that the variations by Islamic law are significant in the short run but benefits are overwhelming in the long run for individuals and economy at large.
Works Cited
Krichene, Noureddine. Islamic Capital Markets: Theory and Practice. New York: Wiley, 2012. Internet resource.
MacEoin, Denis, and Green, David. Sharia Law or ‘one Law for All?’. London: Civitas, 2009. Print.
Karim, Shafiel A. The Islamic Moral Economy: A Study of Islamic Money and Financial Instruments. Boca Raton, Fla: Brown Walker Press, 2010. Print.
Örücü, E. Mixed Legal Systems at New Frontiers. London: Wildy, Simmonds & Hill, 2010. Print
Bonner, Michael. “Poverty and Economics in the Qur’an.” Journal of Interdisciplinary History. 35.3 (2005): 391-406. Print.
Imady, Omar, and Hans D. Seibel. Principles and Products of Islamic Finance. Halle (Saale: Universitäts- und Landesbibliothek Sachsen-Anhalt, 2009. Internet resource.
Tripp, Charles. Islam and the Moral Economy: The Challenge of Capitalism. Cambridge: Cambridge University Press, 2006. Print.
Malkawi, Mohammad. Fall of Capitalism: And Rise of Islam. Bloomington, IN: Xlibris, 2010. Print
Mishkin, Frederic and Apostolos Serletis. The Economics of Money, Banking and Financial Markets. Toronto: Pearson Addison Wesley, 2011. Print.
Askari, Hossein. The Stability of Islamic Finance: Creating a Resilient Financial Environment for a Secure Future. Singapore: Wiley, 2010. Internet resource
Understanding the Economic Impact prior to Wells Fargo Foreclosures
Understanding the Economic Impact prior to Wells Fargo Foreclosures
Introduction
In 2007, United States was hit by financial crisis which emanated from a crisis in the subprime real estate loans (commonly called subprime crisis). According to Rezaee, (2011), the crisis resulted from defaults on United States subprime mortgages, many of which were packaged and sold to buyers in the United States and around the world. Many Mortgage lenders and even other companies not directly involved in the business suffered huge losses and some collapsed. One of the financial institutions involved in mortgage lending that stood the crisis is Wells Fago & company, although its rating dropped since 2007, in the light of the financial crisis. In response to the crisis, Wells Fago & company and other companies increased foreclosure filings by 2008 to the highest record in historical. This paper provides an overview of the subprime lending industry and state the economy in Wisconsin just prior to subprime crisis and the Wells Fargo Foreclosures.
Discussion
Prior to 1980s, people in Wisconsin, US, had only two choices for obtaining a mortgage. According to Knapp, (2010), one could obtain a home loan insured by either the Department of Veteran affairs or by the Federal Housing administration. Borrowers with good credits histories would typically obtain new loans from a bank, saving and loan or any other financial institution. Knapp, (2010) noted that obtaining mortgage loans became even much easier with the deregulation of the lending industry in the beginning of 1980. For instance, the monetary control act and the deregulation of the Depository institutions in 1980 removed the restrictions that imposed a ceiling on the interest rates charged on mortgage loans.
One remarkable impact of the deregulation is that it led to the introduction of new mortgage loans which included ‘adjustable rate mortgages which were particularly favorable to mortgage borrowers who had their credit profiles impaired. However, according to Knapp, (2010), these events did not lead to an explosive growth in the mortgage industry until the securitization of mortgage loans in the late 1990s. The securitization option encouraged the majority of the existing mortgage lenders to adopt a new business model which Knapp (2010) refers to as “originate to distribute” business model. This new model required that the credit risk posed by the mortgages loans was not exclusively to be absorbed by the lending institutions. Rather, it was to be shared with other investors in the world who purchased the Mortgage-backed securities.
According to Knapp (2010), by 2006, approximately one-fourth of the all new mortgage loans in United States were made to subprime borrowers while the other ratio was securitized and sold to investors in the United States and around the world. The increased demand for high-yield mortgage-backed securities among investors, including institutions such as hedge funds institutions and large banks, led the lenders to ratchet up their marketing efforts. They then came up with new products which were designed specifically for that sector of the mortgage market in order to persuade individuals who were deemed as high credit risks to obtain, mortgage loans. Among the most popular of these products were the stated-income” and the “interest-only” mortgages.
The stated-income loan required an applicant to simply report his or her annual income during the application process of the loan (Knapp, 2010). The lender depended on the applicant’s self reported income in the determination of the size o loan that one could afford. According to Knapp (2010), many applicants for the Stated-income loans grossly overstated their annual income so that they could purchase a larger home than was economically feasible given their actual incomes. An individual who obtained the Interest-only mortgage loan was required to pay interests on his or her loan for a fixed period of the mortgage term. The loans could then be extended over either the first five to 30 years of the mortgage term. Most of them were extended to 30 years, similar to other mortgage loans.
Housing prices in the regions where subprime lending was prevalent rose rapidly during the late 1990s and afterwards. Many subprime borrowers purchased homes with intentions of achieving short-term gains. For instance, according to Knapp (2010), an individual who obtained a 100% loan to purchase a $2 million home could be able to realize more than $ 400,000 profit in a period of two years if the house prices rose by 10% each year. Generally, this increased the demand for the mortgage loan and as a result, the housing prices reached peak in the United States in 2006, though had started to decline in some parts of the country a few months before.
By 2007, the prices had declined by around 10% from their peak levels in most regional housing markets. By mid 2008, the fall in prices had reached 20% from the peak. According to Knapp (2010), many mortgage borrowers started defaulting on their monthly mortgage payments, as a result of the falling prices. In fact according to Knapp (2010), most of them “became upside down in their homes” as the unpaid values of their mortgages grew beyond the market values of their homes. An estimated 9 million of the U.S. house owners had negative equity in their homes by early 2008. This sharp downturn in the housing market had a huge and drastic impact on mortgage lenders, especially subprime mortgage lenders (Gordon, 2011).
The financial problems facing the mortgage industry spread to other sectors of the economy because of the securitization of subprime mortgage loans. Many high profile companies in the financial services industry that had no direct connection with the subprime mortgage lenders suffered huge losses as the market value for mortgage-based securities plunged. Some of these institutions collapsed while others merged to stabilize amidst the crisis. For instance, in October, 2008, Wells Fago agreed to buy Wachovia Corporation, a bank holding company that owned a number of non-bank broker-dealer entities such as Wachovia capital markets L.C.C and Wachovia Securities L.C.C, (Gordon, 2011). As the prices of the Mortgage-backed securities continued to fall, Wells Fago, among other banks increased foreclosure fillings. In fact according to McKernan (2010), foreclosure record in Wisconsin rose to a record of 30,000 properties in august 2008. Generally the above factors fueled and uncovered rampant mortgage fraud that left the participants, the country and the world economically desperate.
Conclusion
In conclusion, Wisconsin was hit by great economic crisis prior to the Wells Fargo Foreclosures. This was cased by a financial crisis and recession that rattled the banking world. The crisis in the mortgage lending industry stemmed from defaults on U.S. subprime mortgages, many of which were packaged and sold to buyers in the United States and around the world. As a result of the crisis, many institutions, including those that are not directly involved in lending collapsed while others merged to stabilize amidst the crisis. Further, the mortgage lending institutions increased foreclosure fillings, the prices of the Mortgage-backed securities continued to fall. The resultant crisis severely affected the participants, the US and even the world.
References
Gordon, G. L., (2011), Stabilizing economies through diversification, Reinventing Local and
Regional Economies, N.Y: CRC Press
Knapp, M. C., (2010), New century financial corporation, Contemporary Auditing: Real Issues
and Cases, Mason: Cengage Learning
McKernan, p., (2010), Understand the fundamentals of the US foreclosures, Fire Sale: How to
Buy US Foreclosures, California: John Wiley & Sons
Rezaee, Z., (2011), Core deposits as a special type of intangible asset valuation, Financial
Services Firms: Governance, Regulations, Valuations, Mergers, and Acquisitions, New Jersey: John Wiley & Sons,
Understanding the Bible (The Word of God)
Understanding the Bible (The Word of God)
Student’s Name
Institution Affiliation
Introduction
The interest of this section of the paper us to share views of what the bible holds in terms of authority. The topic to be discussed is, does the bible have authority? The first stance in explaining the meaning of the word authority. Authority means the power needed to determine, solve, settle or evaluate disputes or problems in the society. Authority can also be expressed as the supremacy to command, control or determine issues. This authority can come from a teacher, principal, pastor, or anyone else who can command or control something or someone (Lamoureux, 2010).
According to the bible, authority is the moral or legal right to exercise power that is rightly or deliberately possessed. The bible is noted to be one of the most important or significant books in the history of civilization. Based on the Jewish history, the bible impacts on religion, history, and politics is without comparison. Hand on hand with the covenant legitimacy of the church of Christ, the bible’s political impact is indicated through prophetic politics and power of kings and the impacts of political authority. Biblical archaeologist have noted that biblical structures support historical validity of the Bible.
The Bible’s impact on politics and religion have shaped the world that human beings live in the contemporary society. The fact that the bible has been on the world for a substantial extent of time and has not been destroyed, despite the fact that there have been various attempts made to destroy it, this is an enduring power of the Holy Word of God (McKee, 2010). Many people have lost their lives while preserving and protecting this collection of books. This offers evidence that the Bible is not only a sign of Godly actions, but also a sign of authority.
When the bible is referred to as inspired doctrine, it means that God divinely influence the authors of the Scriptures in a way that what the writing were truly the Words of God. In a spiritual context, the word inspiration means Godly divined. Thus, inspiration means that the Bible is the Word of God. Hence, this attributes that the Bible will remain as an exceptional book in past and contemporary history.
Although there are diverse views to the degree to which the Bible is said to be inspired, there is no question or doubt that each word written in the Bible come from God (Corinthians 2:12-13). This part of the scripture is known as oral full inspiration; means that the inspiration extends to the words themselves not ideas or concepts and that the value of inspiration covers all the parts of the Scriptures. Most people consider that only some parts of the Bible are inspired, but these views fall short of the claims offered by the Bible. Another example that shows that the Bible is inspired can be seen in 2 Timothy 3:16; the Bible is God-breathed and is an important tool for correcting, teaching, and training. This means that God inspired all the Scriptures.
My definition of inerrancy is that the Bible is one of the perfect Words that God has shown mankind, and human difference to this definition mean that human beings do not understand or comprehend the Words of God. According to Proverbs 30:5, every word of God is unique and pure. Elwell books four arguments of inerrancy. First, the Bible defines its exceptional inerrancy via 2 Timothy 3:16. Secondly, God offers a way that his Word can be differentiated from those of false prophets or gods Deuteronomy 13:1-5. Thirdly, the Bible (the word of God) has his authority; John 10: 34-35 and fourth, the Scripture is presented in a way to the support inerrancy (Mohler, 2010). The Epistemological Argument is considered to be the strongest since it not only say that one mistake in the Bible means that the whole Bible is wrong, but it also challenge the bible if one of the parts is noted to be false (Elwell, 157-159).
The affiliation between inspiration and inerrancy is that the inspiration is noted to support the inerrancy. Human beings believe that the undertaking of God is perfect. Christians also believe that the Bible is God-breathed. God is an exceptional person, and the Bible is a result of this perfectness (Plummer, 2010).
Conclusion
The implications of my views on inerrancy, inspiration and authority of Gods and his Words is that it has enhanced my understanding the scripture better. I will inform other Christians about the worthiness of his Word.
Reference
Elwell, W. A. (Ed.). (1993). Handbook of Evangelical Theologians (Vol. 6). Baker Publishing Group (MI).
Lamoureux, D. O. (2010). The Erosion of Biblical Inerrancy, or Toward a More Biblical View of the Inerrant Word of God?. Perspectives on Science and Christian Faith, 62, 133-138.
McKee, E. (2010). Calvin’s doctrine of Biblical authority. Wipf and Stock Publishers.
Mohler, R. A. (2010). The inerrancy of Scripture: the fifty years’ war… and counting.
Plummer, R. L. (2010). 40 Questions about Interpreting the Bible. Kregel Academic.