Honoring Mavericks and Their Non-Standard Ideas
Principles: Ram Dass, Spiritual Leader, Author; Ben Cohen, Chairman, Ben & Jerry's; Rupert Sheldrake, Biologist, Author; Muhammad Yunus, Managing Director, Grameen Bank

Despite the long list of topics covered by these notable speakers, it was a soft-spoken man from Bangladesh, introduced as "the first social inventor of a new era," who most captivated the participants with his first-person account of how he pioneered a new way of banking in his home country.

Muhammad Yunus invited us into the predicament he faced in attempting to alleviate the plight of the poor in Bangladesh.  Trained as an economist, the now-celebrated maverick banker told the audience how he became frustrated with teaching economics.  In observing the harsh economic realities faced by villagers, Yunus realized that what he'd learned in academia was not based on the lives of the people around me.  "I felt I wasn't telling students what they needed to be told," he said.

Yunus began to go out among the people and listen to their stories. He told of a woman he met who worked making bamboo stools for the equivalent of 2 cents a day.  Because bamboo sold for 25 to 35 cents, Yunus said, economic self-sufficiency was beyond her reach. Relying on a trader to supply the raw materials, she was bound to accept his meager pay for the finished product.

When he tried to help such women help themselves by obtaining loans, Yunus found that banks would not lend small amounts of money to the poor -- bankers were only interested in taking deposits, reasoning that loans to the poor would not be repaid.  Even after the economics professor guaranteed the loans himself and showed bankers that the poor did in fact repay the money owed, the banks still refused to adopt the practice.

Rather than persisting with his complaints and attempting to strong-arm banks through legislation, as some would describe the American style of advocacy, Yunas instead quit his job teaching and opened his own bank.  "I went to the government to get permission," Yunus told Forum participants. "It took me two years to persuade the government officials."When he finally did manage to jump through all the government's legal hurdles, Yunus set about building a rather unconventional institution.  "I looked at the conventional banks, then I did exactly the opposite," he said, drawing chuckles.  His Grameen bank started with $27 and a staff of 42.  It did not operate out of a fancy office.  Instead, Yunus and his fellow entrepreneurs -- this was a for-profit enterprise -- brought banking to people's doorsteps. 

Operating on the principle that credit is a basic human right, they developed a unique model of banking.  Would-be borrowers from Grameen are asked to find four friends who also need money.  These groups of five then take responsibility for each other's loans.  One or two members of the group are loaned money first, repaying the loans in weekly installments.  If repayments are being made on schedule after six weeks, then the next members receive loans, and so on.

The average loan is $300 -- not a lot of money by developed world standards, but about $50 more than the median annual income in Bangladesh.  Yunus said other bankers told him he was crazy to make loans without requiring any paperwork or taking any legal action against defaulters.  But the humble former professor had the last laugh.  Grameen now operates in 36,000 villages and has 2.1 million borrowers, 94% of whom are women -- traditionally on the bottom rungs of Bangladeshi society.

After 17 years, it loaned its first billion, and its innovative "micro loans" are being emulated around the world in places as far away as Norway.  "The word credit means trust," Yunus explained.  "But banking operates on distrust." 

Muhammad Yunus' example shows that you don't have to distrust others to run a profitable business.  In the process, he is providing assistance to poor women in his country in the form of community-based help that international aid organizations like the World Bank are still struggling to understand. Grameen Bank is doing for the people of Bangladesh what the Bangladeshi government would not or could not.  

When asked how one could overcome legal obstacles to start such a grass-roots capitalist enterprise in the regulatory-heavy United States, Yunus advised not calling the undertaking a bank.  "Call it a credit program," he says matter-of-factly.  "It's not alarming to people that way."  In the United States, once the land of freedom, people apparently believe that banks must be regulated by the government with an iron fist.  And just as in Bangladesh, it is the poor who suffer most from this failure to allow free markets to work.

--Starchild
26 year old Student, San Francisco State