Banking on the poor : Plenty of demand in the United States for 'social businesses' that help the poor

Banking on the poor
	Jan 16, 2008	Houston Chronicle
	Plenty of demand in the United States for 'social businesses' that help the poor The tale has barely faded over time: 42 Bangladeshi villagers freed from loan sharks and starvation with loans totaling just $27. That's how the Grameen Bank began in 1976, followed by the continuing feat of helping 7.5 million more of the poorest around the world. But Grameen's founder, economist and Nobel Peace Prize-winner Muhammad Yunus, proposed a new narrative -- this one for Americans -- at the World Affairs Council this week. Americans, he rightly pointed out, also need "social businesses" in the spirit of Grameen to alleviate our own forms of poverty. Soldiers are among those most in need. Despite a democratically elected government, abundant food and seemingly endless credit, millions here are frozen out of crucial segments of the economy and social safety net. Why not help them through "social businesses"? These are more sustainable than charities and nonprofits, and more focused than for-profit businesses. Charity, which Yunus defined as dollars that only get used once, is rarely the ideal way to lift people from poverty. Charitable dollars undermine pride and are at best a finite resource. Yet businesses and governments often have competing agendas that also undermine the job of helping people help themselves. "Social businesses," incorporating the Grameen spirit, aim to be self-sustaining, self-perpetuating and, above all, effective. They eventually recoup the investment but are not devised for making a profit. Their purpose is strictly for easing poverty. Providing health insurance is one of the most fertile fields a well-run social business could enter. But providing banking access might be even more so. Once available to almost anyone inclined to save, bank accounts are now an unattainable privilege for millions in this country. According to the Federal Reserve Bank, 9.2 percent of American households don't have bank accounts. Many of these 10 million families cannot afford them: Either they can't achieve required minimum balances, or they are quickly overwhelmed by the avalanche of fees and penalties banks charge to compensate for no-fee checking accounts. U.S. soldiers, Yunus pointed out, are among those who suffer from this economic trap: With no bank account, they have no institutional relationship that can lead to a loan, no earnings from interest, no safety for their small but honorably earned incomes. Tour any town around a military base, and the welter of check-cashing businesses for the "unbanked" gives a snapshot of this homegrown form of poverty. The spread of the Grameen Bank's fame, its many parable-like success stories and, most recently, Yunus' Nobel have prompted a minor but trendy backlash against microfinance. Tiny loans, some argue, don't have permanent benefits; they don't get used as they're meant to; or (the least impressive argument) they simply allow borrowers to "get by." Both critics and skeptics agree there's not enough data to analyze microcredit fully. But the critique is healthy. The more data there is on Grameen and its many imitators, the better the world will understand how different forms of poverty respond to small investments and intangibles such as peer pressure and pride. What's already certain is that these questions are neither academic nor exotic for this country. Uninsured, unable to safeguard or increase their earnings, millions of Americans are ready and eager to help themselves if a sound "social business" can offer a hand.