Banker to the Poor is a readable, engaging first-person memoir by Muhammad Yunus, the founder of the Grameen Bank of Bangladesh. It's a great way to get more details on Yunus's approach to microcredit and his critique of traditional ways of addressing poverty. But equally fascinating is the insight it offers into the attitude that led to the creation of Grameen.

Early in the book, Yunus writes this about one of his professors: “He also taught me that things are never as complicated as they seem. It is only our arrogance that prompts us to find unnecessarily complicated answers to simple problems.”

Fighting poverty is fairly simple, Yunus argues. Financial and political experts have failed not because the problem is too complicated but because of arrogance: because they were too attached to their sophisticated theories and their status as experts.

For example, foreign aid officials have assumed that poverty will end when a country becomes more prosperous, and that countries will become more prosperous when their infrastructure improves. Therefore large sums have been invested in roads, bridges, and dams.

They have assumed that poverty will end when people have jobs with salaries. Therefore they have invested in companies rather than the self-employed, in the hope that they will hire more staff.

They have assumed that people are poor because they lack skills. Therefore they have spent heavily on training programs run by well-paid Western experts.

Yunus, on the other hand, starts from the assumption that poor people are creative and resourceful. Given small amounts of capital, they can figure out the best way to use it on their own. An emphasis on self-employment means that the money can do directly to the poorest people, rather than those who are already prosperous enough to be able to hire others. And by eliminating unnecessary “training,” Yunus not only avoids delay and expense but reinforces the poor person's sense of self-reliance.

Yunus points out — more mildly than it is done in books like Lords of Poverty — that foreign aid usually does very little for the poor. Much of it stays in the donor country, paid to the companies that provide surplus grain, the aid officials who write the reports, and the expatriates who manage the projects. Much of what's left goes to government officials and other elites in the recipient country. And, though Yunus doesn't say so, much of it is also intended to exert political leverage over the country that receives it, as described in Confessions of an Economic Hit Man.

Banker to the Poor sheds light on Yunus's resistance to the movement to turn microfinance into a more traditional investment vehicle, a movement that was described in detail in The New Yorker. The Grameen Bank's microlending is focused on the poorest of the poor — not just because they need help the most, but because their interests would suffer in any program that includes others.

“Wherever a poverty alleviation program allowed the nonpoor to be co-passengers,” he writes, “ the poor would soon be elbowed out of the program by those who were better off. In the world of development, if one mixes the poor and the nonpoor in a program, the nonpoor will always drive out the poor, and the less poor will drive out the more poor, unless protective measures are instituted right at the beginning.”

Those who would like microfinance to be more profitable would naturally prefer to include the more prosperous. But as Yunus says in The New Yorker, relating a conversation with Pierre Omidyar of eBay, “He says people should make money. I said, Let them make money — but why do you want to make money off the poor people? You make money somewhere else. Here, you come to help them. When they have enough flesh and blood in their bodies, go and suck them, no problem. But, until then, don't do that. Whatever money you are taking away, keep it with them instead, so they can come out more quickly from poverty.”

Banker to the Poor also makes clear that although microfinance may be simple, it is not easy. The very high repayment rates claimed by Yunus are due in part to the tough screening that Grameen applies both to borrowers and to its own potential hires.

Borrowers, usually organized in groups of five, “have to present themselves to the bank, undergo at least seven days of training on our policies, and demonstrate their understanding of those policies in an oral examination administered by a senior bank official.”

Potential bank managers at Grameen must be under 28, with a master's degree and at least a B average in all final examinations. Only one in ten is accepted, and after a two-day briefing they receive six months of “simple, but tough and rigorous” training. “There are no reading materials to go through or computer programs to learn. We find that the villages of Bangladesh teach young people more about life than the pages of any book ever could.”