'Banker to the Poor' seeks US credit union license

by Priyo Australia | February 10, 2009 4:12 pm

WASHINGTON (AFP) – Microfinance pioneer Muhammad Yunus, who won the Nobel Peace Prize for his work in alleviating poverty, said he wants to open credit unions in the recession-gripped United States.

Yunus, who opened Grameen America bank in New York a year ago in the bank’s first implant in the developed world, said he was seeking a US credit union license to “work in any state.”

The global financial crisis is an “exciting, great opportunity … to redo our life, our institutions, our policies,” the Bangladeshi economist, nicknamed “Banker to the Poor,” told a forum in Washington to promote his latest book, “Creating a World Without Poverty.”

Yunus said he had met earlier in the day with Federal Reserve chairman Ben Bernanke and they had discussed microfinance, which extends small amounts of credit to the poor so they can start businesses, and the US government’s bailout plan aimed at averting a meltdown of the world’s biggest economy.

Yunus said he had told Bernanke the US bailout “should have some section left for the people at the bottom.”

“The real victim of the financial crisis is not the rich people,” but “the people at the bottom, globally, three billion people,” he said in a speech at International Monetary Fund headquarters.

Yunus recalled meeting Bernanke once before, in October 2007, and the Fed chief had been “very supportive” of Grameen Bank, the microfinance bank he started in Bangladesh in 1983. Yunus and Grameen Bank shared the Nobel Peace Prize in 2006.

With the global economy in a slump and the financial system in tatters, Yunus said the crisis casts the question of “who is creditworthy?” in a new light and argued that policymakers should use the opportunity to establish “a new normal point.”

He said reform of the financial system should “make it an inclusive financial system,” and not a club for the rich. “Poverty is created by the system that is built,” he warned.

The goal of reform should be that “anyone can open a bank account,” unlike current banking that leaves out almost two-thirds of the world’s population, he said.

Such a “social business” concept is based on the principle of selflessness, but that did not rule out profitability, he insisted, noting the Grameen Bank has been “always profitable.”

Yunus said his latest book focuses on the concept of business. The notion that “business means business to make money” interprets human beings too narrowly, he said. Humans are “not money-making robots.”

Yunus opened Grameen America, whose slogan is “Banking for the Unbanked,” in New York city in January 2008.

He said it has some 500 clients, all women, who on average have borrowed 2,200 dollars, without providing collateral or a guarantee. Nearly all — 99.6 percent — make their weekly repayments.

The economist said that Grameen America operates under the same model as Grameen Bank in Bangladesh.

According to its website, Grameen America wants to open branches in five US states: Arkansas, California, Florida, Louisiana and Nebraska.

Grameen America said its principal source of revenue is the interest paid by borrowers on their loans and that eventually it wanted to establish itself as a bank or credit union “with the ability to accept savings and banking deposits.”

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