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Recession-proof banking?

"Recession-proof banking?" Continued...

Issue: "Is Christianity in the U.S. doomed?," June 20, 2009

In 1986 with then-Gov. Bill Clinton, Yunus helped begin an Arkansas program, which morphed away from the Grameen model over the years but is still in existence as the Southern Good Faith Fund. That taught Yunus the difference between the banking environment in Asia and America: One woman told him she wanted a loan to raise puppies and sell them, a business idea that was entirely foreign to him.

Some entrepreneurs are taking loans to help their communities. With a Grameen loan, Daphne Williams of Harlem has started her own publishing company, Drinking Gourd, after the constellation that "slaves followed to freedom," she explained. Beyond publishing children's literature, her business will teach children from Harlem how to write and make films. Williams just celebrated getting Drinking Gourd's new business license. "It'll be all over New York," she said. She keeps the paper ledger documenting her loans and her payments tucked in her shirt.

Though Grameen America has thrived, globally microcredit is stagnating, with some markets drying up. Five Talents' Cole described one woman in Peru who lost clients for her embroidery in Germany and France as Europeans tightened their spending. Despite the hard times, he thinks microcredit is one of the central avenues out of poverty. "Business is the best way to create jobs," he said. "Not through government. To me, free market job creation is what gets people out of poverty."

Unsurprisingly, Yunus thinks microcredit is the solution to the recession, too. He thinks the whole credit system should be rebuilt to run on some of the rules that govern microfinance: "We have to learn from all this." According to the U.S. Federal Reserve, 28 million people in the United States do not have bank accounts, and the alternatives are often check-to-cash services, the costs of which can be exorbitant.

President Barack Obama announced a $100 million microfinance fund in April, which Yunus said was a pittance, but a "first step." USAID already provides some funds for microfinance operations in the developing world, averaging about $100 million a year. Now Congress has a bill under consideration to provide low-income Americans with financial assets through individual development accounts (IDAs), another microfinance tool.

"Today's financial system excludes many people," Yunus said. His hope is that "people will be let into the system."

Emily Belz
Emily Belz

Emily, who has covered everything from political infighting to pet salons for The Indianapolis Star, The Hill, and the New York Daily News, reports for WORLD from New York City. Follow Emily on Twitter @emzleb.

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