02/20/2008 09:19 pm ET Updated Nov 17, 2011

Grassroots Banking with Microcredit: Grameen and Credit Agricole

The front page of Saturday, February 16th's Financial Times announced that a Bangladeshi microcredit bank, Grameen, was coming to the aid of impoverished people in the United States. One of the poorest countries in the world has set up shop in Queens, New York to help extremely disadvantaged women and men climb out of the cycle of welfare and debt via microloans. Two days later, the funder of this bank, Nobel Peace laureate Professor Muhammad Yunus, the father of microcredit, signed a historic deal with the French mutual bank, Credit Agricole, to the tune of 50 million Euros as a guarantee to help spread microlending around the world. He then hopped on a plane to visit women in microlending programs in Benin. The man is frankly amazing. I have heard him speak many times, and he never stops astonishing me with the conviction in his message and his ability to invite people to take action.

The roots of Credit Agricole's banking structure is both rural and mutual in nature. Like Grameen, it had its start as a result of poor farmers and people in rural areas, i.e. those in need, becoming prey to loan sharks. The result was a local mutual bank owned by its depositors and borrowers who were loaned small amounts of money to free themselves from what was basically slavery. As I watched the two hundred or so French bankers listen to Muhammad Yunus speak about microlending and social business, I could not help but think that these men (and handful of women) were being brought back to the very core of why banks existed in the first place. These people were listening with rapt attention to a man from one of the poorest nations in the world, explain to them how they could be part of the process of changing the world economy into one which is more human and more productive. The credit provided is based on production, not consummation. And therein lies all the difference.

When asked why Prof. Yunus chose Credit Agricole to make this first historic banking partnership with, he replied very matter of factly, "Because they were the only ones who asked." And that is what is frankly astonishing, because microlending is one of the few economic arenas where things are going well in today's banking world. Microloans are base don the hyper-local economy and not part of the repackaged system of bubble creating "worthless" items being sold and resold and leveraged around the world. When a woman pays back her loan in this system, it is concrete. The service or product provided or created is real, tangible and astonishingly nowadays, of more value than all of the false monetary products created out of thin air.

In other words, the banker to the poor has his feet on solid ground financially. I think we can all appreciate that during these times. And to all of you "first world" bankers, listen to what the banker from Bangladesh has to of France's biggest banks did...and who knows, you might actually learn something.