Liveblogging Microfinance USA: Profits, Morality, and How-Tos

 For a full, even-more-real-time briefing, check out New America in California’s Twitter feed. A lot of our tweets are ending up on the conference’s feed as well. Today’s conference packs in three tracks, for nine total panels.

Currently up is Scaling Global Microfinance: Funder Perspectives. Maya Chorengel, Stephanie Kohn, Deepak Kamra, and Elizabeth Funk are talking about the importance of technology, the morality of profiting from lending to the poor, and regulations.

2:20 p.m. Deepak Kamra- “In India, commercial banks have to provide funding for microlending. It’s the law. Some banks see microlending as unfair competition, and politicians usually go with whoever provides the most money and the most votes. They see lower interest rates as a threat.” This reminds me of Martin Eakes’ admonition this morning: When helping the poor, if you have no enemies, you’re not helping them enough.

2:25 p.m. Stephanie Kohn- “A hybrid model has emerged- seasoned bankers have entered microfinance from the traditional banking system. How do we get them to not heed the ‘siren song’ of Wall Street, where people were earning way too much money?” How indeed.

In the Forum at the Yerba Buena Center for the Arts, the panel Where Does All That Loan Capital Come From Anyway is under way. Elizabeth Makee and Jonathan Brereton of ACCION, Presidential Management Fellow Jessica Falk, and representatives of Bank of America and OneCalifornia Bank discuss returns, risk, and the security that lies in fearing failure. Oh, and CDFIs. Lots of those.

3: 40 p.m. Dan Letendre of Bank of America says, “I do think overall that we will see credit availability increase. I think that in 2009, it was the worst time for CDFIs- they were looking at their own survival. So the decisions to lend to them took longer. One year later, institutions are proving there’s a great deal more capital to lend to CDFIs.”

3:42 p.m. Jonathan Brereton ACCION Chicago – “If we fail, it could be ten years before anyone else is able to do what we do in Chicago.” Dan to Jonathan: You do what you do naked.” Jonathan: “It feels like that sometimes!”

3:50 p.m. An audience member asks where the hedge funds are, as far as lending to CDFIs, calling attention to the fact that most lenders are banks and foundations. And the answer is predictable, hearkening back to Profits. (There aren’t any.)

The final panel of the day: The Rise of P2P Lending. This kind of direct, person-to-person lending is definitely the star of the microfinance world. Microplace, Kiva, Lending Club, and Upstart Ventures represent on the panel (and online) as the trendsetters.

Presenters focus on the (admittedly diminished) monetary returns of lending money through their sites. The emotional and karmic returns remain high.

4:30 p.m. Rob Garcia of Lending Club ends his presentation by giving the audience a code to use through the end of the month, worth $50 in loans. Our lips are sealed.

4:46 p.m. Giovanna Masci of Kiva- “There are things that make loans fund faster. Smaller loans are more popular, because people feel like the borrower is poorer. High risk areas fund faster- Afghanistan, Palestine, Africa… People want to do social good. There was controversy when Kiva started lending in the U.S., because people said we’re not as poor here. But there’s a lot of interest, and some people want to fund in their own back yard.”

5:00 p.m. Given these economic times, all the presenters’ charts showed arrows pointing up. What do they attribute this to? Giovanna Masci says, “It’s lending not donations. And people see their return, $50 instead of the original $25, and they’re more likely to re-lend instead of take that return out. 90% re-lend.”

Rob Garcia adds that one of the current strengths of P2P lending is its transparency. Since the economic downturn, people want to know exactly where their money is going, and what’s being done with it. And with this model, the customer has that. They have a name, a face, photographs of the entrepreneur – and that’s a powerful reason why people choose to invest their savings in sites like these. All kinds of people lend, based on interests, geography, ethnicity- they form communities, while seeing returns.