Little Rock    There was a long, hopeful report on the supposed growth of microcredit among lower income families in the United States in the New York Times, but no matter how much slipping and falling we might have endured around invisible statistics, there was no way to avoid the bottom line conclusion that microcredit was basically a “buy a subsistence loan with debt” program, plain and simple.

            Grameen America, modeled on the Grameen lending model in Bangladesh, the article said has five branches in New York City and additional outposts in Charlotte, Omaha, and Los Angeles.  They claim 18000 borrowers of small loans and say they have loaned out $100 million over the years. I can remember their time well 35 years or more ago in Eastern Arkansas where they are nevermore.   They say the loans are at 15% interest which is less than the over 20% interest figure claimed, but widely disputed, in Bangladesh, and they are made and paid in a group setting where peer pressures and benefits can help increase the loan pool.  There is no doubt there in the credit desert of low-and-moderate income communities, anything is better than nothing in the same way that a seeing soul can rule in the kingdom of the blind.

            The stories though were small scale “buy a job” stories about barely subsistent jobs in  informal operations like making empanadas, buying clothes to be shipped to the Dominican Republic to be sold by family members on the street, simply paying the loans back to establish credit, and so forth.   One woman featured with her small party store in Queens had used the loan to pay the rent and be able to handle two parties simultaneously, but her husband and she worked constantly to make $500 a week, $25000 a year, and, when asked if she would go the route of small business again, adamantly answered, “No.”  These were not happy stories, despite the claims of executives that they added jobs and might add income of up to $2500 per year on average, as they also apologized that there were no statistics to back up the claims.

            I would argue that this might be better than nothing and undoubtedly there are heartwarming tales of success, but as we have argued in ACORN International reports, this is absolutely NOT a poverty reduction strategy any more than paying an employment agency a couple of hundred to find you a job would be or for that matter running up your own credit cards, if you had them, to float your business or keep your job. These are desperation strategies for families that are drowning, not surfing over the tops of the waves.   When the spokespeople for Grameen are left defending their model in comparison to payday lending outlets and 400% interest, there’s really no question that we’re grasping at straws here to pretend this is path out for the poor.