Muhammad Yunus: How Banking Should Change
Business WeekÂ
Posted by Steve Hamm
 Noble Peace Prize winner Muhammad Yunus was his level-headed, provocative self this morning when my colleague, Jay Greene, and I met him at the Sheraton Hotel around the corner from our office. We asked him: How can the advocates for the poor capitalize on the downturn? His answer was that the financial system should be reformed in ways to make it more inclusive. “If the institutions have failed, let’s not go back to the same thing. Let’s fix it. Let’s build the bank as an inclusive institution. Let’s extend their services to people who don’t have them now.†He says government regulators and policy makers should make some of their help to banks contingent on their willingness to extend services to the poor, so they don’t have to relay on the loan sharks who operate pay-day loan operations and pawn shops. “The government should say, “If you expand, we’ll help you. If you don’t, we won’t,†Yunus says.
Unfortunately, most of the help that the US government is going to give banks has already been doled out, so the opportunity to do something constructive may be lost. And, also, unfortunately, banks making sub-prime loans to people who shouldn’t haven gotten them was one of the things that got us in this big mess. But, still, Yunus is right that now is the time for the government and the banks to consider new approaches that would extend banking services to the poor without causing unmanageable risk to the banking system.
I don’t hear anybody else talking about that. It’s a shame about wise men. They’re often honored but not heeded.
