In the always-torrid blogospheric news cycle the announcement on Feb. 15 that Mohammad Yunus' Grameen Bank is lending money to groups of immigrant women in Jackson Heights, New York, is already ancient. But I can't resist, given How the World Works' longstanding interest in microfinance. It's one thing to hear Yunus expound his philosophy on Oprah, or in Nobel Peace Prize acceptance speeches, but it's quite another to actually see him in action, in the borough of Queens.
That's a long way from Bangladesh, no? Or is it? Poverty is poverty, whether in Dhaka or New York City. In the U.S. , reports the Financial Times, some 28 million people have no bank accounts. And as Yunus pointed out in a lengthy interview with the Financial Times, "Now is a good time because of .... the subprime crisis and that highlights the issue that the financial system is not perfect."
But I confess, I immediately wondered: is access to credit really a problem in the U.S.? If you can't find some financial institution willing to bombard you with credit card applications, there's always your local payday loan franchise. If you've been watching television lately, you may well have seen one of the slick new payday loan advertisements being broadcast recently, showing hardworking Americans who just need a little temporary help with car repairs or the groceries. If you want cash in this country, you can generally get it.
But there's a difference with Grameen. Grameen loans money that you're supposed to invest in your own entrepreneurial future, not in buying a TV or making the rent. Which raises an obvious question:
FT: How can you make sure the people don't just use the money for, for extra spending...
MY: That's what the whole system is, how to ensure that the purpose for which you took the money is actually used for that. That's why we have the group system, frequent visits by the bank staff to go and talk to you. That's why all our business is done at your doorstep, so that I know you and your children, and you are not an impersonal entity as a borrower, coming and sitting behind a desk. I don't even look at you, I say, give me your ID. Everything is about ID, not you. I'm not lifting my face to look at you. That's not how we work. It's a very personal relations … We know you, we know your children, husband, neighbors, so these are the ways to make sure, as best as you can, so that the things that you promise that you'll do, you're doing exactly that.
It's easy to summon up irony at the thought of an anti-poverty strategy concocted in Bangladesh, one of the poorest countries in the world, applied in the United States, one of the very richest. But the idea of actually cultivating a personal relationship between banker and borrower should know no border. No matter how slick the payday loan industry's advertisements get, we all know that they are there to serve one purpose: to profit off of high interest rates. No one involved in that business cares a whit what the money is spent on.
Yunus does care. Jackson Heights is lucky to see him in the neighborhood.