How is it legal to run a bank that lends only to women?

I was chatting with an executive from Grameen America, the U.S. division of Grameen Bank, winner of the Nobel Peace Prize. I learned that, out of the rainbow of 74 gender IDs recognized by Science, Grameen American will lend to those who identify with just one gender: “women” (at an 18 percent interest rate).

Everything financial in the U.S. seems to be tightly regulated, so I’m wondering how this is legal. If a bank seems not to be lending with alacrity to Black and Latinx borrowers, the federal government is right there to sue them (recent example). How is it legal for Grameen to say “No men need apply”?

Note the “Meet more of our incredible women entrepreneurs” at the bottom. Why is “incredible women” a common phrase (3.3 million Google results) while “incredible men” is only about 1/8th as frequently used and “incredible nonbinary” occurs just 1,020 times on the Web? Are women 8X more incredible (“less credible”?) than men and vastly more incredible than the nonbinary?

11 thoughts on “How is it legal to run a bank that lends only to women?

  1. How is it legal for Grameen to say “No men need apply”? Clicking on your link it looks like the bank was founded in Bangladesh. Perhaps laws are different out there?

    • TS: The US branch of this bank is “a registered 501(c)(3) charity”. They file a Form 990, pay their CEO and CFO about $500,000 per year each. They make a profit of $18-30 million per year (not taxed because it is a “non-profit”). Based on the Form 990 and the New York Secretary of State’s web site, it looks like they are a New York C corporation officially named “Grameen America, Inc.” but they also have some Delaware entities.

    • It’s “legal” only until it reaches the Supreme Court. Maybe some “men” could start a lawsuit for the right to pay 18% interest?

  2. If the bank does business in the US it is subject to US law regardless of where it is incorporated or whatever. Would be interesting to know the bank’s source of capital — the Wikipedia entry is unclear and seems to say that the bank raises capital by issuing debt, which is backed by the Government of Bangladesh. Seems odd that the impoverished country of Bangladesh would be subsidizing loans to these outstanding American women. Would be interesting to know the business ideas these outstanding woman have that enable them to borrow at 18% — at that rate, why not just use credit card debt? — and make a profit. Grameen originally was in microfinance, e.g. lending to impoverished farmers to buy fertilizer ahead of planting to be repaid at harvest time. Wonder how they got into lending to exceptional US women?

  3. You raise a good question. From DOJ’s website:

    The Equal Credit Opportunity Act [ECOA], 15 U.S.C. 1691 et seq. prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, because an applicant receives income from a public assistance program, or because an applicant has in good faith exercised any right under the Consumer Credit Protection Act.

    The Department of Justice may file a lawsuit under ECOA where there is a pattern or practice of discrimination. In cases involving discrimination in home mortgage loans or home improvement loans, the Department may file suit under both the Fair Housing Act and ECOA. Individuals who believe that they have been the victims of any unfair credit transaction involving residential property may file a complaint with the Department of Housing and Urban Development [HUD] or may file their own lawsuit.

  4. Grameen America’s FAQ page claims that it’s a “special purpose credit program,” for which Federal Reserve Regulation B, 12 CFR § 202.8(b)(2), allows that “all program participants may be required to share one or more common characteristics (for example, race, national origin, or sex),” if the program meets certain requirements.

    I’m not sure this regulation, at least as to race, would survive a challenge on equal protection grounds today.

  5. Wait, why does a bank solicit donations? Does it plan to lose money on its lending portfolio?

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