Two Microlending Articles

What's better? For profit or non-profit?

This article was in the Wall Street Journal Wednesday:
Portals: Silicon Valley moguls eschew U.S. microlenders. It's about a non-profit microlending operation (the Lenders for Community Development) in San Jose, right under the noses of the Silicon Valley moguls. It is being ignored because it's a non-profit. It's hard to microlend profitably in the US, not because of high default rates (his are 15% for the smaller loans and almost zero for the large ones), but because of interest rate caps and the costs of marketing and servicing the loans. Overseas, lenders can charge double and even triple-digit interest, less than the local loan shark, but still be profitable.

Meanwhile, this article was in the New Republic on Thursday:
Why Nobel laureate Mohammed Yunus will doom microfinance. (free registration required)

Grameen is not profitable, but is instead a charity. It's labor-intensive to verify the creditworthiness of borrowers. To make a profit on these small loans, the microlending institutions must charge interest rates ranging from 21% in Bolivia to 30% in India to almost 90% in Mexico. Grameen only charges 10 to 20% interest on its loans. Can for-profit microlending operations compete with charities like Grameen? And which better serves the poor?