Yunus calls for financial system to combat poverty
August 13, 2009 | By Mark Schoeff Jr. | firstname.lastname@example.org
When reforming the global financial system to avoid a collapse like the one that fostered the current recession, world leaders should look not to Wall Street and London but rather to Bangladesh and Jackson Heights in New York City, where small, low-interest loans are helping poor people establish an economic foothold, according to the founder of an institution that specializes in such lending.
Muhammad Yunus, the 2006 Nobel Peace Prize winner for his efforts to battle poverty, said that the Grameen Bank, which he established in Bangladesh in 1983, has not suffered during the worldwide economic downturn.
“We are recession proof,” Yunus said at an Aug. 12 Newsmaker, prior to visiting the White House to receive the Presidential Medal of Freedom. “We have insulated ourselves from the financial crisis.”
He attributes his bank’s performance to its structure. It provides collateral-free microcredit to 7.5 million borrowers in 38 countries. Focusing on loans as small as $100 or $200--mostly to indigent women to help them start small businesses--keeps the bank grounded in economic reality and protected from chaos that can engulf financial centers, according to Yunus.
“It’s tied to the real economy,” he said.
Unlike banks in New York and London that have been bailed out by their governments, Grameen focuses on people, not profits, Yunus said. That approach turns on its head the theory that individuals act strictly in their own economic interests.
“We have ignored one basic part of our human being--being selfless,” Yunus said.
Grameen follows a different principle, according to Yunus. “It’s all for others, nothing for me,“ he said.
The bank reaches beyond the developing world. It is operating in the shadow of Wall Street in Jackson Heights, Queens, in New York City. Grameen America was launched in January 2008 and has lent more than $2.1 million in micro-loans.
On Aug. 12, Grameen America announced that it had reached the 1000 borrower mark. It recently opened a branch in Omaha, Nebraska.
Yunus hopes that the Grameen’s success--and the luster from his presidential honor--will build momentum for his ideas to lift people out of economic despair.
“We can create a world in which not a single person has to suffer the misery and indignity of being a poor person,” Yunus said. “Poverty does not represent real human life. It’s subhuman life--almost like animal life. We can build a new kind of social system.”
But he stresses that Grameen is not a socialistic enterprise. The loans produce a profit, which is recycled into more loans.
“It’s not a charity,” Yunus said. “We are talking about options for individuals. That’s very much in the spirit of capitalism, the free market.”