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

Banks in France, especially ones which began as "village banks" like Muhammed Yunus' own Grameen, have mutualist roots to begin with and are deeply linked to their communities well-being.
04/19/2008 02:52 pm ET Updated May 25, 2011

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!!!