The Upside Down Banker: Banks Like Goldman Sachs in the US Are Listening to Muhammad Yunus

Recently I wrote about the French banks and companies which have been supporting Muhammad Yunus' microcredit and Social Business ideas with concrete projects and real investments...now a few words about some of the US financial institutions which have taking steps towards including these new models, and thus becoming more visionary about economic growth.

What is most interesting about this is that the cultural/social differences between France and the US, and the banking industries in both, as well as how the state does or does not support certain sectors, vary greatly. Banks in France, especially ones which began as "village banks" like Yunus' own Grameen, have mutualist roots to begin with and are deeply linked to their communities well-being. Banks such as Credit Agricole, which recently created a foundation to support Grameen microcredit replications around the world, are in line with the overall philosophy of the bank. Credit Agricole in France began, like Grameen, loaning small amounts to the rural poor who were trapped by the system of money-lenders.

This system of loaning to the poor, those without collateral, is exactly the opposite approach that banks take when extending credit. As Prof. Yunus has stated repeatedly, credit should be considered a human right. He created his Grameen Bank by turning the tenets of what we know as banking upside down. As banks tend to loan more to men, Yunus and Grameen loan to women, and as those with no guarantees had no access to loans, Yunus stepped in and decided that this new kind of bank would loan only to those who had their self-respect and the trust that they had been given as "collateral". Yunus has worked around the globe to help change unfair banking laws, in order to benefit those who need it most.

At the other extreme is a bank such a Goldman Sachs, a US-based investment bank, which recently began to pay more attention to the benefits of microcredit in emerging markets. Goldman Sachs is by no means a "village bank". But they are learning about how, at the micro-level, these economies function. They, like Grameen, are entering this arena via the women with their "10,000 Women" program, described as "to provide business and management education to women in emerging markets". This is a fund of $100 million, and it is betting on women in places like Bangladesh to become the emerging market versions of successful entrepreneurs in the West.

This kind of far-thinking economic approach and empowerment of women is also helping to revolutionize these countries politically and socially. When women control more of their own and their families' destinies, send their children to school, keep family sizes down and focus on the overall improvement in the health of their communities, it can only lead to good things.

One assumes that Goldman Sachs also hopes to benefit from these companies at some point in the future. As do other funds that have, for some time now, focused on these emerging markets and the returns they provide financially. The real problem now is that the United States needs this kind of help. We might be well on our way to a two tiered society in which the billionaires are at one end, and our own "developing world" economy" is at the other. Remember the images in New Orleans after Katrina. Think of all of those who are losing their jobs and homes. Maybe it is time for the Goldman Sachs of the world to also look towards their own country to support women entrepreneurs.

So as these Western investment banks move forward into the double digit returns that the emerging markets offer, and get their toehold inside the system which is surely going to be the greatest competitor to the United States for many years to come, I hope they also choose to turn inward and "provide business and management education to women" in low income areas of the United States. Perhaps if someone had really sat down and explained all those subprime loans to poor people, they would be in better shape right now. Perhaps if those ARMs had been calculated for, or better yet, eliminated, people would not be without a home. If, instead of write downs, investment banks (and Goldman Sachs has come out ahead of almost all of them) did what their name implies and "invest" in people and the economy here at home instead of simply repackaging and speculating, the United States would be in a different place right now.

But most of all, we need to bring back the trust to the banking industry. And we need to trust in the entrepreneurial spirit of the American people as well. It is no surprise that Grameen is now replicating itself in the US, by opening Grameen America's first branch in Queens, NY. But wouldn't it be nice if our own banks here at home did the same. How ironic that we need this "technology transfer" from Bangladesh, one of the poorest countries in the world, to help our own people who are suffering in what is supposedly the wealthiest country in the world.

But the present administration has bankrupted our country and lead us down a dangerous path. The rich have become wealthier than anyone could have imagined and are taxed less. Jobs are moving overseas. When Prof. Yunus started the Grameen Bank in Bangladesh some 35 years ago, it was after returning to his country from receiving a PhD and teaching Economics in the US. His country had just won a deadly war of Independence from Pakistan, and was being rebuilt, or rather built up, while suffering from famine and extreme poverty. He dedicated his life to helping make his country a better place and has done so on many levels. The United States needs our own Muhammad Yunus...and soon!!!

Comments

[Aaror]

Here is the problem.
At one time, we had something called cooperatives, Mutual of Omaha was a "mutual," insurance company. Likewise, a lot of banks were credit unions.
Big corperations saw this and said "Hey, this is unfair, how can we gouge people for money if they can just form a company to provide their needs. We would have to compete against our customers." So they did the only logical thing, they went to congress and got laws passed. Mutual of Omaha had to issue stock, and stop being member owned. Most of the credit unions survived, but they are required to restrict membership. Don't believe me, go to your nearest credit union and ask to join. They will ask if you are part of their membership class, and if you are not you will be unable to join.
Now if we asked our congresspeople to end those laws, we would all have the right to join a credit union. Imagine a bank that you own, that answers to you...
Could you trust that bank?

[ndem]

Solution based approaches are the answer and what is positive is that the banks are listening to people such as Yunus and taking him very very seriously. The Nobel Peace Prize winner travels constantly, speaking to central bankers, on the same level as the impoverished future borrowers...he KNOWS hi s clients...he gets into the world of the poor and understands very deeply their needs. To be trusted should be a human right. To extend credit means to trust. If banks do not trust one another and do not trust their borrowers, then the whole thing trumbles down...because there is no there there without the trust.

Bring back trust on all levels of human interaction, and you begin to build a society, and economy and a community which we can be proud to live in and leave for our children.

[joebhed]

¦."But most of all, we need to bring back the trust to the banking industry. And we need to trust in the entrepreneurial spirit of the American people as well."
Now, here"s the thing.
Who, exactly are "we"?
There is no way that the "we" that I think we are can bring trust to the banking industry.
I am sorry.
We did trust the banking industry.
And the banking industry sold us, and the poor of the world, down the old greedy-hole.
Maybe there's another interpretation here.
One that I believe in.
We need a banking system that we can trust.
To achieve that, we need a change in the way a bank functions in the community.
The real economic needs of the community must be the highest priority of the banks.
As oppposed the highest return for its corporators.
Should we fund the local start-up, small-business entrepeneur, or should we invest in some of those high-yielding hedge funds? You know, the legal ones.
If you can swing concern for the community out of our modern-day, mega, centralized, financial services corporatocracy, then maybe we can work something out.
The issue is access to capital.
Whose decision is it?
Whose decision should it be?
The basis for the bank's lending portfolio is the deposits of their customers.
Would the customers support meeting the needs of local entrepreneurs or speculation on some land holdings a few counties away?
Priority use of the money supply..

[Parkstepp]

This another example of approaching people with a different mind set ,other than the current ,old world thinking ways.........Create solutions ,that have a selfless motive and are design to truly help people..to understand the cards they have been dealt ...and to offer them "ace's" ,so they can have a better hand to play the game.....All of the economic problems facing this country are the result of actions that have a bad motive...and in these days.....bad motives are exposed and fail...

[stlswest]

As long as western banks can rely on government bailouts, innovation will be excrutiatingly slow and these banks will ultimately be on the losing end of competition with banks like Grameen Bank. Which is fine, just because you try to avoid playing by the rules of capitalism, doesn't mean capitalism will avoid playing you. By the way, I think capitalism is a good thing if it is accompanied by appropriate values, such as the values that have led to the rise of Grameen Bank.

[jeff.mowatt]

Ah, but you did have your own Yunus and lost him. I found him fasting for economic and social rights in North Carolina 5 years ago. He was a little ahead of the curve in social business, smart power and a Marshall Plan against poverty but he's still available:

It began in Russia, where conventional capitalism had delivered a disaster:

http://www.p-ced.com/Projects/Russia/IntroductiontoTomsk/tabid/295/Default.aspx