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Establishment Clause Challenge to AIG Bailout Cites Shariah-Compliant Products

By Howard M. Friedman

A press release from the Thomas More Law Center announced the filing yesterday of an Establishment Clause challenge to the federal bailout of the giant AIG insurance company (American International Group, Inc.). At issue is the $40 billion in federal taxpayer funds given to AIG in exchange for preferred stock. The funds were part of the Troubled Asset Relief Program authorized by Congress. The lawsuit (brought on behalf of a Catholic Marine veteran who served in Iraq and Kuwait) centers on the fact that one of AIG's subsidiaries offers Shariah-compliant financial products and business plans, such as Takaful Insurance. The complaint in Murray v. Paulson, (ED MI, filed 12/15/08) (full text) argues that by reason of the large federal ownership interest in AIG, the federal government is a joint participant in all the business activities of the company. The complaint goes on to allege:

The Takaful Insurance business of AIG is pervasively sectarian. Its secular purposes and its Shariah-based Islamic religious mission are inextricably intertwined. Consequently, federal aid in the form of taxpayer funds is flowing directly to a pervasively sectarian entity.

Business Week, reporting on the case, quotes University of Louisville law professor Sam Marcosson who characterized the Establishment Clause claim as "preposterous."

Full post as published by Religion Clause on December 16, 2008 (boomark / email).