low interest rates, to help them build a business and earn their way out of poverty. i went into it with a naive and gradually as the years went on, i truth is little bit more

complicated than that. >> let's get down to the -- [inaudible] learn of the lay of the land. can you describe what is the microfinance industry, and who are the -- [inaudible] your book keeps referring to and exploding? >> we're familiar with the traditional image of the usually to a woman who buys a goat or sewing machine. it is channeled to them through the small local banks, sometimes large local banks. people in the united states and europe who fund the banks go through -- [inaudible] they give their money to institutions such as [inaudible] a famous one you have city bank. the traditional wall street players, you have dedicated microfinance funds such as blue

0 charred is the biggest one in the world. in d.c. we have two examples. but there are two host of these institutions. so what happens is you give your money to one of the intermediaries within they apparently, invest in the your best interest and the best interest of the poor to channel the small money to the banks in developing countries that do ethical microfinance. that's the idea. >> it's been promoted and my understanding is that members of church congregations, people are flocking to the opportunity. tell us a little bit about some of the people who are providing the money. >> yeah, i mean, it's now become you know what most people say a huge bubble. it was overhyped as a miracle cure. and it managed to attract money

from unbelievable sources, and in vast sums. currently the private microfinance capital investor is 90. -- $70 billion. it's growing at least a billion to $2 billion a month now. it's a huge industry, and the problem that the people don't really think about is for the good will of these individuals, philanthropist, churches, organizations, people such as u.s.a. id and international various equivalence noraded in norway. invest sums of taxpayer money on the microfinance on the basis of the belief. what they don't take when you have a $80 billion sector you have the order of $30 billion a year being paid in interest.

it's money taken out of the poor communities. and this is the sort of hidden side of microfinance. we try not to talk about too much. we talk about all the positive impacts. we don't talk about the negative impacts. >> we've talked about how advertised. let's get down to reality. what is the hidden agenda of the microfinance industry and can you describe consequences? >> yeah, i mean, it's difficult to brand the entire industry with one brush. there are really good institutions out there that are good funds, good lending platforms. it's not fair to say the entire sector has been high jacked yet, it's getting there. the main agenda, it started off as development tool and gradually shoofted to becoming a profit motivating tool. we were told that profit was required to make those

institutions self-sufficient and have enough must be to be able to grow and cover the their cost and expand outreach that what was behind this we need them to be profitable. and the way to make profit out of lending money to poor people is to charge them high interest rates and when they don't repay, to come down on them hard to make sure they do repay. so you need to -- as the seeked into the sector, it causes two problems, which was one, very aggressive techniques in recovering defaulting loans with, and the other was to increase the interest rates in the profitability of the institutions as much as possible. without actually idealout without pushing people into outright default. finding the fine line which is charging enough interest rates that the people can just afford to repay even it it remains they have to finance with other institutions or sell their pots and pans. you have to find the optimum

level. profit has become the driving force behind the sector. >> what are we talking about in terms of interest rates here? >> well, everyone talk abouts, for example, the famous bangladesh bank that won the nobel prize. they charge interest raters 25 percent. it's extremely reasonable in microfinance terms. people here probably, you know, burst into tears of that costs thatch. that much. most interest rates are -- it's for rare to be under 30 percent. it's very rare to be under 50%. if you look at many countries in africa, when all the cost are considered it's often well over 100%. the worst case i've come across so far which is detected eye the center of economic development here in d.c., he analyze the the interest rates of the bank in

mexico, which was charging a total cost to the poor of 195%. you can see how it quickly become fairly profitable. that's the highest i've come across. but about three years ago, i began refewing to work with any institution that charged more than 100%, and that probably reduced my potential client base by half and ruled out most of africa and large parts of african america. >> interest rates of 100% or hire. -- higher. is it making their lives better? >> no, i mean, when you're paying these sort of interest rating, it becomes difficult to generate the net profit. it's difficult enough to pay the interest, so the idea of actually getting out of pouf sei is slightly out of the window when you're looking a the rates. which is why we see if you look at the academic search on

microfinance, the proponents of microfinance will cite very carefully funded research pairs. when they funded themselves. it's about to be eradicated. it you look at citing david his conclusion after whatever it was ten years of research in the sector, the overall impact has been zero. some people win, some people lose. but overall there's no credible impact on. if you look at the famous report funded by the u.k. government, it was led by an economist and she and her team analyzed 2,840 academic papers spanning 35 years on research and microfinance and concluded it had been zero but been a terrible wasted opportunity. we put it into microfinance.

these are rigorous independent academics looking at the evidence and just saying, ielings. you can show me a few isolated cases on the website with the woman with the goats that apparently did well. it country stack up. there's 200 million people that are currently receiving microfinance loans. the microfinance sector -- it's aiming frptd billion dollar. we have to give credit cards to 8 billion people. this is the goal. and the reality today is that on the first 200 million it's been -- expectations by a wide margin. >> is the money going start small businessings it's just the interest rates are too high. what is it being used for? >> this is another aspect of the microfinance myth. the female entrepreneur to get the goats and sewing machine. it's used in practice, it's not

quite as clear it's actually being used for any entrepreneur activity whatsoever. john hatch who is the founder of a large microfinance networking, he estimated in the business review that up to 90 percent of microfinance capital is used for consumption. it's used for buying a tv. buying clothes. very little actually gets to any sort of entrepreneur. i was shocked. i would have guessed from my sort of nonacademic gut feel it was probably close to three quarters, but really this is one of the main destinations. the other problem is if you look at the main crisis of facing the seblg tour, every year there's a report called the -- [inaudible] what is really undermining microfinance each year and it, you know, it changes every year. [inaudible]

we don't have enough microfinance. it's that the poor are so over indebted. and what the microfinance sector doesn't like to discuss openly is the amount of microfinance which is just simply used to pay off the loan at the another microfinance institution. if you look at the 2008 collapse of nicaragua, in one year the amount of microfinance frel $4 20 million to 10*7d million. my favorite case there was a one woman who did the automation, there was one woman who manufactured kites. she had managed to obtain a loan from all 19 institutions simultaneously. there are only 19 banks in the country. and she had loans from all of them. there was one individual who had managed to rack up total microfinance loans of $600,000. so it's slightly ridiculous. what was happening was people were taking a loan from bank a to pay bank b and c to pay b.

and they recycled the loans. for as long as the music keeps playing as we saw with bernie madoff, the music can play a long time. when the music stops, had the entire thing collapse. we had chriss in boss knee yew, -- this is the normal crisis. huge overindebtness. while the music is playing all the banks can say we're growing on portfolio each year. we have 100% repayment rates. everything is fine. keep giving us your money. before you know it it will be eradicated. this is what they tell us. what do you see? nicaragua. which one is nest? probably the sensible moment on the peru and mexico are probably going to be next. it's a standard cycle that these countries going through.

>> the academics that we currently in wash in terms of the economic impact, but your book gives some gut wrenching descriptions of the dark side for the people who have been hurt by the microfinance industry talk about prostitution, child labor, [inaudible] can you describe some of the consequences for us? >> yeah. i mean, the real scandal, the latest scandal which was in the region of india, the "the wall street journal" had actually reported some article -- reported in an article there was evidence of clients facing such pressure, they were being driven to south side. this was, of course, ignored. there was attacks again the wall street journal for daring to criticize the micialg -- miracle

cure. what happened is the rumors circulated and the indian government stepped in and published a report that is available online. it documented 54 cases of woman committing suicide at the hands of extremely aggressive loan officers. in actual fact, if you look at the report, it was 53 south side and one murder. there was a disagreement between a husband and wife over whether she repaid the loan or not he killed her. 53 suicide and one medical record. there was cases of forced prostitution. they were forced as way of earning enough money to become prostitutes and in the india express, one particular low point was a case of woman unable to repay the loan, she had to give up the child, her teen child who worked as a a prostitute in order to repay the

mother's loan. and shortly after the daughter when she was released committed south side. it was the darkest moment so far in microfinance history. these are isolated cases. it's unfair to say it happens across the world. these are the worst cases. it's also important to stress that so far the report has on uncovered cases in one region of one country. so it remains an open question whether there are other parts of india where it has happened or other countries where it has happened. >> you also give some grounds for hope. one that not all victims are passive. some are fighting back such as nicaragua. can you tell us about how people are standing up for themselves? >> yeah. ing in roughing with a, --ing in roughing with a was an interesting case. they didn't make it to the media. they were there -- generally

boil down to leftist and politically motivated crument governments that allowed it to happen. it was mainly blamed on the government. the reality what happened was two banks attempted to imprison 30 nonrepaying clients in the north offing in roughing with a. they managed to get them in prison and their families rebelled and picketed and told their friends. and eventually it lead to a little revolution. and eventuale attention of the next couple towns. it became a movement which that meant i won't pay. they burned down a couple of microfinance branches. they kidnapped some staff of microfinance branch. it was not good.

they blocked the highway. the movement spread nationwide. eventually the government stepped in and realized that actually they had a big problem on the their hands. they millions of people saying they're not going it repay the loan. unfortunately the loans themselves were not entirely legal because the banks were po supposed to obey interest rates cap. they weren't allowed to charge 24%. but typical in the 20s. they were openly charging multiples of this. you can go on the to website and they would say we have a 50% on portfolio. if you're charged 24% a year. how can you possibly make 50% on the port follow owe. there was not much attempt to hide what they were doing. who had repealed and refused

they had fallen ban of back on this. how can we explain to americans and europeans with rehelping the world out of poverty and the poor are grateful to these for the bargain loans when in fact they're rebelling by the million. they hush it up. no coverage in america, no coverage in europe and the entire thing was blamed on the leftist government of nicaragua. this says sub line -- [inaudible] the sound of ofessional suicide, and you didn't -- you blew the whistle on microfinance conferences. you blew the whistle with every employer you worked for internally. how has the industry reacted. >> yeah. i'm not particularly employable right now. [laughter] at the end of the trip, i will sign on the -- [inaudible]

yet, no. there are a few good institutions. good ethical institutions that i'm working with. it one has actually said they are explicitly not going to -- two are waiting to see what happens with the book. they are going to make a decision shortly. i don't know what's going to happen. a good example was one way to blow the whistle is by shares in the campaign and go to the agm and stand up and ask embarrassing asks. we did it with agm in holland, i invested $1,000 in the slightly ridiculous bank. and stood up and said, could you explain actually -- i didn't could you explain why you are helping some people out of poverty if you're charges interest rates 126% which is being confirmed by the official interest rate calculators. you can imagine there was a

stunned the audience was stunned. the board went -- they didn't know what to do. they announced an emergency coffee break. [laughter] i then escaped from the agm as quickly as possible before i was lynched and what was interesting was the bank, i think it was two months later, published in a news letter a detailed article about how interest rates are generally between 25 and 30%. to calm's nerves, this was just another radical person sneaking into the agm asking a question. if any of their investered had bothered to read it. that the interest rates i think we said they were 120*, according to the washington, d.c., based ratings agency it was actually 126. of course, it was detailed, the investors will never find out. they're never actually going any

due dill sense. photos of premom >> i don't want to underestimate the debt last year, your book describes how you have been sued and threatened with violence. share a little bit with the audience. >> yeah. first of all, in fact another washington based company, they were the first to find me when i point the out that taking client savings from the poorest women in the world, in mo disam beak and use them to cover operating questions raised ethical questions. they fired me. when i was working for the dutch microfinance funds, triple digits l jumped, we had invested in a particularly questionable institution which was we wasted our own money. but what we then did was take

money from the covert foundation a d.c.-based microfinance fund. nap raises money, there are probably people who are probably familiar with it. we were taking the money without completely explaining exactly what we were doing, we put it into the same questionable institution in jeer ya, it was good for us. it protected our own investment. we gave them a nice report and said, you know, it's a nice institution. so i consider this to be crossing over some sort of red line. we were taking other people's money. they entrusted us with the money and lending it in something which we knew full well, i had been to nigeria on two trips. we knew what they were doing. and yet we decided to cover it up. so i confronted the management and i was told to leave

immediately. they subsequently tried to -- i don't want to say the word bribe, you can see on the website the actually letter they sent me. they offered me a nice pay rise to become a consult assistant to the company on the condition i would sign three additional confidencialty clauses. including one which was to never speak about anything i had done in the constitution and never speak badly about -- obviously i didn't sign this. oars oars they would take me to a court. i went to an employment letter. go court. you're going win. it's impossible. you don't need to go into details what they did. go to court and this is a total breach of dutch employment law. so i went to court, they made 53 accusations against me. i made two accusations against them. and i won the case, we got a nice payment, and this was, i

think, one of the first time a microfinance firm had been held accountable for their actions. >> what is the institution behind world relief? >> world relief. >> what social constitutions are there any? >> they get their money mainly from churches. it's the world associates of even jell call or something. i'm not sure. the institution in question mo disam beak before it went bankrupted is fund of community credit it went bankrupt shortly after. >> move to questions now. >> okay. we have a microphone here in the middle. [applause] [applause] >> i was a moderator for the

first round of conferences conducted by the world bank in the '70s. this was before they coined the phrase "microfinance," and at the time, they were exploring what they call "indigenous credit systems," and that's the reason why i was a moderator there. and at the time, i don't think anybody at the conference ever envisioned something like what you're describing now.

is there anything to prevent him from being hijacked. >> i think that's a key point is that if we look what mohamed said, he said "let's provide affordable credit to entrepreneurs to build their own businesses and grow out of poverty." and is an excellent idea. the people who practice that to this day are vs a position impact on poverty. the problem is the vast managety of microfinance doesn't do that. if we did what he said. , we wouldn't be in the mess we're in right now. if you have a look at -- when you mention the origin of america finance. if you look at the originals of the financial systems of north america and northern europe, when they were trying to extend financial services to the poor, it was with the savings and credit cards. some of which exist to the day. huge savings and credit card from the model in germany, to

you could argue am koa in indonesia, which is the biggest microfinance institution in the world. they started from non-profit savings and credit cards. now what we have done now, despite the success of this, despite the fact these growed into mature financial sectors, hundred of years later, what we have done now is throne out the idea of not for profit. we basically fallen for the mantra which we had time and time again. the only way you can make anything work in the world is shareholders and wall street and self-motivated profit max myization. this is afraternitily the only way out. that's not what we did. that's not what the danes did, the germanes, the dutch, the canadians, look at the origin of the -- exist to the day. active not -- it didn't have

this total pure free market capitalism. now we're taught if you don't have shareholders and wall street involved. won't take off. i question that. >> thank you. [inaudible] i did a fair amount of research on microfins about a decade ago. we warned in part due to the policy issues that the world bank was pushing on the microfinance industry, namely not specifically target women, not have a ceiling on interest rates, this was basically a crisis that was going to emerge, and of course, we were shouted down and -- pushing the model of which they startedded my understanding under the ulttive

group to assist the poor which was their first foray into microlending, and they essentially pushed this as a condition of structure adjustment loans around the world. so they are -- implicated in this well. everybody talking about mohamed, but [inaudible] self-employed women's association of india proceeded mohamed. she had a different model that was more focused on health care, child care, and labor organizing in addition to microfinance. it was not microfinance without all of the other elements. and i think people give mohamed too much credit, i think, she deserves more credit than she gets. >> to be honest, i have a policy which started on my first ever project in microfinance, which

was in mexico. to never ever ever work with the guys for as long as i lived. i have nothing do with them. with you mention the consultive group to assist the poor. this the world bank spin organization for promoting microfinance. it's interesting what they did. they started the consult i have group to assist the poorist. microcredit. that didn't work, you know. so they changed name. it's now the -- it changed to the consultive group to assist the poor. and it doesn't have to only be microfinance. it can be microsavings. whatever. and that didn't work either so they came up with the new idea called financial inclusion. the classic case of shafting the goal post. when they realized the microfinancing wasn't having any impact on poverty, it became difficult for them to justify it. then they said why don't we say that the problem is people right-hand turn included because then all we need do is include

them, charge them a nice interest rate at the same time and we can say we met the goal. our goal wasn't to alleviate poverty. our goal was to give them a credit card. it's a classic case they make a claim, they fail to reach it, they change the goal and the next one -- who knows what will come into the minds next. but with regard to the mohamed thing, i agree with you totally. the idea of offering credit in conjunction with the service it's referred to microfinance plus with education, health care, whatever. there are a few institutions practices this. it's expensive. and if it's expensive it's not profitable. if it's not profitable, you can't get the investors on board and you can't ipo it and package it into some security and sell it on wall street. it's kind of out of favor at the moment. that's one of the problems. but with regard to mohamed receiving too much credit, i

mean, personally i think his initial goal was very woat, ebb i wish we actually went back to what he said. if you look at his preachings on the subject of interest rates, for example, he is a venn venom -- which is a terrible confession from such a worthy person. but it doesn't explain the fact that if you look at, for example, foundation u.s.a. based here in washington, they are the main investors in an organization i discuss in the book. found most recently to be charge 144 percent interest rates. we have to be careful when we listen to what he's preaching and compare it to what is being practice and are they practicing

it in his name. there is substantial evidence of that. the poverty organization was mentioned on the front page of the "new york times." a number of investors pulled out. there was a lot of scrutiny. it was yet another microfinance scandal. a few months later they were awarded the nigeria institution was awarded a price for, i think it was social entrepreneur of the year or something by the foundation the economic forum folk who sits on the board of the foundation? mohamed. so we have to ask some difficult questions to mohamed about what dispactly is his stance on extortion interest rates. it's not as clear as it looks. >> maybe you could show through your experiences with the inter-american development in mexico that sparked your boycott of the banks. >> yeah.

when i first came across the development bank, which is a multilateral -- we originally had a mission statement that the institution i was working at which was to help the poor indigenous women in the high land. to use microloans to build business and alleviate the poverty situation. it it was a standard mission statement. they came down and offering money. they had questions with the mission statement. and they went along the lines of why limit yourself to women. why don't you do people in general. okay. fair enough. why the highlands? well, that is where the poor people are. >> in are people across that are poor. okay. we'll crap the words highlands. now this microloans, i mean, just very microloans. what about loans in general. why limit yourself to small loans. okay. , you know, debt.

we'll give them debt. okay. and microentrepreneurs only people with small small businesses? there is a lot of other needs. what about if someone needs to buy something, for example. you know, why don't you do just loans in general? and if you want to do all these -- if you want to take the small modification to your mission statement, we would be interesting in investing. what happens in the ceo says, yep, cool, scrap the whole thing about women, highlands, entrepreneurs, everything we're going become a small consumer credit organization based and thanks for the money. that was the last -- the fist and last time i worked with the inter-american bank. >> let's go to the next question. >> thanks. my name is ken wattson. i have looked as an evaluator at a number of microcredit

operations over the years as an economist, firstly, i don't find anything with small credit organizations expanding the poor. access to credit seems fine to me. there's a complex subject. i really stood up to make a couple of contribute a couple of points. one was the way you portray things as if these companies are making piles of money by charging too much interest. well, maybe they are charging too much interest. by an large are not making piles of money. in fact, the opposite. the only way most of the organizations i found, i have seen survive is by constant influxes of grant money to the extend of about 20% of the capital of the year to keep them

afloat. because they don't make profits. now maybe there's problematic or maybe it's not terrible if you're trying to reach the poor, that kind of sub subsidize is necessary. the point is the picture that said it's an industry that is making piles of profits with taliban not right. it's not right. the second point i thought it was worth contributing is that the core idea of funding small entrepreneurs is very important idea. part of impractice camty -- impracticality of some microcredit operations has been the loans have been too small to fund viable businesses, and secondly, they are dealing with people who do not have business

skills. there are some small operations, for example, as a canadian program that tries to address these two problems. dries "issue" -- to mention the, you know, 19th century 20th century cooperatives, tries to bring some of the cooperative idea to developing skills and making loans at the scale that can actually fund viable distabses. all those loans. i think those two points -- it's no not say -- a lot of problems but i think it's complex and i think there are the other aspects to report. >> i'm going pick up one point. i am quite clear, what i said in the book is that i is urge them to not throw the baby out with the bath water. there are good substitutions.

i don't want to say that everyone is charging huge interest rates and causing suicide. to down play the market is dangerous. if we take, for example, the first ipo was a bank in mexico with the 195% interest rates. if we look who are the investors and the beneficiary. we are the friends the ifc. they invested $200,000 of their own money in to equity of axon. when they made $270 million which by industry standards is a decent return. it is isolated cases, these are the cases which everyone is looking for. what is the next thing. we had the case of the next one in india.

it was tout as a the second best microfinance in the world apparently by the market that, you know, supposedly good source of information on such matters. it was 14 times over sub described and it was five times oversub described. it was a monster ipo. the ce ceo was the highest paid banker. his total i have interration was $60 million. he took $30 million in cash. he kept the rest in equity. it is not very valuable anymore because the share price subsequently fell 95 more than when it became public knowledge that it was one of the worst businesses in the debt collection method and listed frequently in conjunction with the 54 south suicide. the regulators clamped down the operations in india. as a result of regulations, the

share price complained. what was interesting, it fell 95%. it was down at 60 a few days ago. then there was an interesting article which said skf share price goes up 0% in single day as government relaxes regulation. there is an inverse relation. if you want to control microfinance, you want to regulate it, it's bad for share prices. yeah. so this is the thing. the institutions these are light holy grail of the investment community. what is the next sks. nigera within the sector we people would say is if the africa. and that makes people salivate. that's the problem. and these are only the ipo. these are the only the one that make it large and actually launch to the stock market. but before going the ipo, they pass through intermediary stage,

they convert from an ngo to a for-profit company with shareholders. so the idea that we're an ngo, we don't make any profit, how can we be evil. it is flawed. it's the standard law many microfinance. you start as an ngo. you get soft owner money in. lots of donations. grants, all these. you pump the money in and build up -- you can't call it equity. equity is a for-profit concept. you build up reserves. you can can extremely profitable as an ngo. you can't distribute the profit to shareholders. there's nothing stopping you converts to a for-profit share holding company at the later date. it's called transformation. this is the big holy grail. what is the first of the lesser of the two holy grails. build up the institution with soft, nice donor money.

convert it to a for-profit institution. all the shares are distributed to the management and the people some of the people who provided the original capital. build it up more, now it's for-profit. the only problem being you're regulated. it's a bit annoying to be regulated. they might complain about your activities. you can survive that a few years. you go the stock market. you make the big bucks. so it's a schain of events. it's the standard chain of events which all the institutions go through. >> okay. we just got time for the three people in line. >> good evening. my name is tommy lee. if many years, i contributed from my annual workplace campaign to a non-profit objection known as talk about international in chicago. and what i'm hearing this evening, if you have any opinions about the particular organization. and also any guidelines for

those who are annual charitable drive see how can we best assays which organizations are worthy of doimg the microfinance to assist folks in poverty to be lifted out of that state. thank you. >> okay. i'm not going to get too many opportunity. i don't know them directly. i have worked in countries that they have been competitor. what i will say is there certainly one of the better institutions. i'm hard pressed to think of any scandals they've been involved in. [laughter] i haven't had a they are row look. [laughter] definitely one of the better institutions. i think you touch on a fundamental topic. citizens of the united states want to do something useful. they have the -- they feel that maybe entrepreneurs are there. they feel powerless in d.c. or california. they don't know what do. they frust their money to an institution.

the problem is when you're sitting here in america, you have to way of disi think if wishing between the good and bad guys. even i, you know, after ten years in the sector living in the countries, you know, i still get tricked by the constitution. i'm learning the new method that are developing to pull the wool over our eyes. it's really difficult. what i try do in the book is not sort of say, i mean, i do pinpoint a few individual which are the ones i work with and i have the evidence and it's up on the website. anybody can verify it. what i dry is make a road map you know which questions need to ask, which answers are just not credible, yeah, who you need to be asking, what sort of statistics you need to be demanding, what sort of sources of information are viable, and which ones are fragly completely useless. do not underestimate the danger of investment microfinance. you know. it is entirely, it's almost

entirely unregulated in practice. whefn they say it's regulated. yeah. neive the u.s. when nay say, for example, calvin foundation is regulated by the fcc. may be. but they give the money to another institution who gives the money to another institution, who make a bunch of loans in the nigeria. that ain't regulated. you have to be careful of, you know, really who is looking over your shoulder. when you make an investment in microfinance, assume and 98% of cases you're correct. assume there is no one looking after your interests, there is no one regulating this, it doesn't matter if it's a bank in wall street or ngo in d.c. it will all a lending platform in california. it makes no difference. the reality that no one is regulating them here in the united states. and no one is regulating everring them in the country. it's investor beware.

>> could you please comment on this. what you have described sounds like the typical money lender in india. do you know how it's impacted the money lending industry in india. i mean, this is an old tradition. the interest rates and the methods of collection have been done forever. there's nothing new. they have the schemings in india which are really a coo open type of option knob wants to use that. what's going on? >> yeah. there's a myth apparently that all the money, all the evil money lenders are unemployed. [laughter] it's ridiculous. actually the money lending business is doing as well as it ever has done. it's difficult to get information on it. it is, you know, generally illegal and hidden under the counter. but, you know, when you're in a microfinance institution, when you have a loan from a

microfinance bank and you can't repay your loan at the end of the month. it's very streent go the money lender and get a short term interest rate. give me the money for a few days. and there's actually a bit of misnomer about this. you lot of people say it's cheaper than the money lenders. there's a -- the microfinance sector doesn't go into too much detail about which is if you have a microfinance institution charge you 150% a year, enand you have a money lender who is charging you 300% per year. which one is better in you need money for a year and you can meet the repayment schedule, the microfinance bank is better. when you need the emergency money for a short period of time of time. one week, a few days until you sell your crop, actually, the money lender at the higher annual rate of in a short term loan to help you get over a little hurnld is more preferable

and less paper work than the mirk finance institutions. also david did some breasting research on the money lenders. the apr tend to be high. there are flexible. if you get a loan from the money lender and you miss a payment and you say don't worry, pay me next week. whatever. there's a surprising degree of flexible. when you analyze the actual cash flows of money lender transaction, off the apr with you take the actual timing of the cash flows, there are surprisely cheap. in plays and situations your best bet may be to a money lender than a microfinance. we don't see queues of money lenders applying for jobs. [laughter] yeah. >> okay. last question. >> yeah. i'm from the caribbean, and i

have always been quite -- i must say highly skeptical about the entire microfinance business. it's -- [inaudible] and different places. having some effect. but you ask whey thought was a foundation -- i didn't think you give an answer to it. i'm going try to give the and then i have another thing that we need to thought about. you were asked why are they -- why does microfinance came about in essence. i think it's not difficult figure out in the larger scheme. it was an attempt to fundamentally monitorrize social relationships. right? and break down nonmonetaryize solidarity people that existed before that were going replace the money with the catastrophic consequences. i grew up -- i knew [inaudible]

i [inaudible] i knew when people were build houses, right. [inaudible] people would each other put on roofs. you had a house, i would build by you. you help me. et. cetera. you want a roof built. you have to be able to pay for the roof. you better be able to do. there's no roof. you can careless. the relationship -- i don't care ability you you don't care about me. the another issue that i deal with and i think this is the biggest problem. i'm not fan of -- the bank in -- [inaudible] it might be some interest for a small sliver of talented business people in the poor community across the world it can be a helpful thing. for the majority of people, it's

going a big problem. when you break down the relationships and the solidarity that evolve over time. again, those things themselves are changing. so, you know, you need to change and be dynamic with them. if you are going to change in that way. it seems to me the best way is work within the community figure how do solidarity are changes over time and adapting to the changing conditions and build in the type of microfinancing you want to build on those evolving foundation as basically what we have here is a tremendous directive force walking the third world at the huge cost to 3 billion people. i want to hear what you think about that. >> i completely agree with erg the gentleman said. if you look at another aspect of the microphenomena hype is, you know, the famous group lending about how the women guarantee each other and, you know,

everyone doesn't repay. this has terrible consequences for destroying friendship in small communities, you know, because it's one thing to say i'm going help you if you have a problem and this stuff. but when you actually monitorrize the relationship. one person can't repay. it creates huge resentment. it breaks up families, communities, it has untold damage. the only good thing i can say in favor of this, it's being faced out now. they're going individual lending. every more and year and more individual lending. the group not really working in denver i think it's good at least we can retain the friendship amornings the women in the groups which is it's sad when that what our sup side is. with regard to the idea of, you know, the monetaryization of people and relationship and the

new liberal agenda, andlet not forget, i mean, we talk on the -- and what we did was there was these billion people who don't have bank accounts. because we can make profit out of it and bring them in to the financial sector. yeah. but remember, not critic is just the first too many. what we're actually doing is not we're not providing financial services. we're bricking these people into the mainstream commercial sector. this is a channel. we pump credit through the channel. savings and insurance. the favorite example was in northwest argue teen that. a loan officer release the i'm seeing these people. why don't i start up a dvd rental business.

he was going there and say, look grow to give me terminator three. i'm be back next week. knots just monitoryization. it's bringing these people into mainstream capital society. it's time to bring the other billion into the capitalist society. this is, you know, possibly part of the agenda, maybe. [applause] [applause] >> is there a non-fiction authority or book you'd like to see featured on booktv. send us an e-mail ab booktv at c pan.org or tweet us at twitter.com/booktv. what are you reading this summer?

booktv wants to know. >> do any work have gone over to my personal reading so i'm reading a number of weaks about islam terrorism. american response 9/11 and what we're doing as far as afghanistan and iraq. main book i read was -- by jose rodriguez. it was head of the team that put together the interrogation method. it was effective and did a job. the art of intelligence by hank. he's cia but he was actually organize straiting managing director the war in afghanistan after 9/11 and -- [inaudible] this go to the obama administration policy as far as what they're doing in iraq and afghanistan, how they're policies are being pursuit and

show a side of the president which indicates that his policies are not that different in many cases from president bushes. also peter the "hunt for bin laden" i'm starting that now. it details the ten-year manhunt for bin laden. which of course, ended very successfully last may when he was killed. and then has been witness for the committee. another book is -- [inaudible] it's berlin 1961 by frederick. i was in college at that time and described all of it to behind the scenes constructing

the berlin with a wall. kennedy encounter it's impress interesting to compare the times with what happened today. "a complicated man" a biography, a history of bill clinton. i was mentioned -- i was interviewed for the book, so i guess i'm going to be reading it. i'm in the book. again, i was first served under bill clinton. it's interesting to read that. also for the basic senate book. islamist terrorism, and foreign policy and a biography book of clinton. for more information on this and other summary reading list, visit booktv.org. hoovers a look at books being published this week. in the party'ser versus the people how to turn democrat and republicans in to americans. he and resist former georgia

state directer of rural development for the u.s. democrat of agricultural recounts her forced resignation following the release of an exerted clip she delivered. ..