Last week's news on the judicial front was dominated by the California supreme court's ruling on gay marriage and President Obama's nomination of Judge Sonia Sotomayor to the Supreme Court. Largely unremarked was another potentially seismic decision, one made in federal court regarding Islamic law, which is called sharia.

Eastern District of Michigan judge Lawrence P. Zatkoff handed down the decision, in a case involving an alleged violation of the constitutional separation of church and state. The issue is whether a government-owned company, AIG, can market sharia-compliant insurance products. (To be sharia-compliant, an investment vehicle must be created and structured in ways that do not violate Islamic law.) In a well-reasoned and cogently argued opinion, Judge Zatkoff refused to dismiss the case prior to factual discovery.

Kevin Murray, an Iraq War combat veteran, Catholic, and American taxpayer, brought the lawsuit, Murray v. Treasury Secretary Geitner and Federal Reserve Board. Mr. Murray's taxpayer status affords him "standing" to bring the claim against the government, which has acquired nearly 80 percent ownership and total control over AIG through an $80 billion cash infusion orchestrated by the Fed last fall. Shortly thereafter, Congress created the TARP Fund, which allocated billions more to bail out "distressed," too-big-to-fail institutions. AIG was first at the trough, getting another $40 billion. The giant insurance concern has returned to that trough several times since, for a total taxpayer exposure to date of more than $150 billion.

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