What Killed Bear, Lehman Is What the World Needs

Subprime loans bring relief to millions worldwide
By Wesley Oliver,  Newser Staff
Posted Sep 21, 2008 12:44 PM CDT
Subprime loans provide working capital to budding entrepreneurs, usually women, given them small amounts of cash to buy items like sewing machines or livestock.   (AP Photo)
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(Newser) – Sure, subprime loans toppled two pillars of American investment banking, gutted the world’s largest insurer, and plunged the entire US financial system into a tailspin. But they are exactly what the world needs today, Daniel Gross argues in Slate. “Far from the madding, depressed crowds of Wall Street, billions of people are starving for credit,” the columnist writes.

Small loans help fight worldwide poverty, but the trick is figuring out what borrowers can afford to pay back. “We need loan officers with a banker's head, a social worker's heart, and the stamina of a distance runner,” said one microlender. With new technologies that boost access to credit, nations only need to foster an entrepreneurial system—if America's hasn't scared them off yet.