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NO ASSETS? NO PROBLEM! VILLAGE BANK LENDS HOPE

The American dream is alive and well - in south Asia.

A village bank in Bangladesh pulls people out of poverty by lending them money even though they have no assets.And it makes a profit.

"That is very exciting when you consider that one billion of our fellow human beings scrape by on only a dollar a day," said Scott A. Leckman, a Salt Lake general surgeon who recently visited the country with RESULTS, a citizens lobby whose purpose is to create the political will to end hunger.

"It proved that we can end poverty on the planet," and it promises to be the answer to welfare reform and poverty in the United States, he said.

Many villages in Bangladesh are without electricity, latrines or adequate shelter; many residents are skilled but illiterate and often make as little as 2 cents a day income, Leckman said.

But that is changing. Economist Mohammed Yunus developed the Gra-meen (village) Bank, a "microlending" system for the poorest of villagers, in 1976.

"Money lenders (exist) to keep people dependent, and the poor are exploited," Leckman said. "However, Yunus believes that society has created poverty and it is society's job to end it."

Yunus' system inverts the Western concept of banking; for example, one must prove he or she has no assets in order to get a loan.

"When they get the loan, they are so scared," he said. "Nothing good has ever come to these people. They are suspicious of everything."

However, they shed their apprehensiveness quickly. With the money, they purchase the materials they need to continue their occupation without the fixed prices of wealthy traders. One woman, Leckman said, was able to raise her income from 2 cents to $1.25 a day when she bought her materials direct.

Loans average about $70, which is "a lot for those people," Leckman said. Ninety percent are given to women, and the repayment rate on a one-year loan at 20 percent interest is 97 percent.

Since its inception, Yunus' bank has loaned $1 billion in Bangladesh and turned a profit.

Americans are slowly catching on. Chicago's South Shore Bank and Arkansas' Good Faith Fund are patterned after Yunus' system and designed to help people on welfare.

Utah has a similar bank, the Utah Micro Enterprise Loan Fund, that lends up to $10,000 to entrepreneurs who have been turned down by traditional lenders. Nevertheless, this bank also could help people on welfare, Leckman said.

"People want to be self-sufficient. People want to take care of themselves. It is now up to us to figure out what works in our culture."

Or how to make it work.

To receive welfare a person must have no more than $1,000 in assets, which discourages many who need assistance but are saving money for job training or for a child's education, Leckman said.

Politics also stand in the way. "Currently, the United States wants to save money to decrease the deficit," he said. "But (no one is) talking about what the poor need to become self-sufficient," which would increase national productivity, he said.

Because they are relatively new, "it is hard to come to any great conclusion" about the success of the three U.S. banks; however, among Bangladesh's long-term borrowers, of about 10 years, 75 percent are out of or nearly out of poverty, and many are considered middle-class citizens.

The American banks have, however, "disproved the notion that the poor won't pay back what they borrow," Leckman said.

Although banks are apprehensive about lending to the poor, "once they're into it, they're surprised at how well they're doing (in making payments). What banks thought would be a (tax deduction) has become a profit," he said.

But it is the poor who truly profit, he said. They become self-sufficient, gain confidence, pride and dignity.