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Bangladesh asked to find a compromise to end bank crisis

From Farid Ahmed, For CNN
The Bangladeshi government removed Nobel laureate Muhammad Yunus from the bank he founded nearly 30 years ago.
The Bangladeshi government removed Nobel laureate Muhammad Yunus from the bank he founded nearly 30 years ago.
  • State Department official says U.S. is "deeply troubled" by the situation
  • Yunus and nine Grameen Bank directors have petitions pending before appeals court
  • Nobel Peace Laureate Muhammad Yunus was removed as head of bank he founded

Dhaka, Bangladesh (CNN) -- The Bangladeshi government has been asked to find a compromise to bring an end to the Grameen Bank crisis created by removing its founder, microcredit pioneer Muhammad Yunus.

"We remain hopeful that a compromise solution can be reached to the satisfaction of all parties," said Robert O. Blake, U.S. assistant secretary of state for South and Central Asian affairs, as he was wrapping up his four-day Bangladesh visit on Tuesday.

Yunus "has brought great honor to Bangladesh, and we in the United States have been deeply troubled by the difficulties he is currently facing," Blake said at a press conference at American Club in Dhaka.

Blake said failure to achieve a compromise would have some effect on bilateral relations between the two countries.

"As a friend and partner of Bangladesh, we are concerned about the dampening effect this will have on civil society in general and on the integrity and effectiveness of Grameen Bank in particular," he said.

"We see it is a distraction and an unnecessary departure from all great work being done in Bangladesh," he said.

Blake, who arrived in Dhaka on Saturday, met with Prime Minister Sheikh Hasina; Khaleda Zia, leader of the opposition in Parliament; Finance Minister AMA Muhith; senior government officials, Yunus and civil society members.

Earlier this month, the 70-year-old Yunus was removed from Grameen Bank, which he founded three decades ago. The Central Bank of Bangladesh, the regulatory authority in the South Asian nation, cited his age in explaining his removal as managing director.

The government, which has a 25% stake in Grameen, said the bank's rules required Yunus to end his service when he turned 60.

Yunus challenged the order and filed a petition with the High Court, which finally upheld the government order.

Yunus and nine directors of his Grameen Bank again filed two petitions with the Appellate Division of the Supreme Court seeking a stay of the High Court order. The petitions are now pending with the Appellate Division, and the case is expected to come up for hearing by the end of March.

Grameen's work cast a global spotlight on microcredit, a then-novel idea of making small loans to poor people who would not qualify for standard bank loans. For their efforts, Yunus and Grameen Bank won the Nobel Peace Prize in 2006. He also was awarded the American Presidential Medal of Freedom and a Congressional Gold Medal.

Blake said of Yunus: "His work over the past decades to lift millions of women out of poverty is internationally recognized."

As Blake met Hasina, also present was former World Bank President James D. Wolfensohn, one of the founders of Friends of Grameen, an international forum supporting Yunus and his Grameen Bank. He was in Dhaka on a private visit.

Earlier, U.S. Senator John Kerry, D-Massachusetts, said in a statement that he was "deeply concerned" about the efforts to remove Yunus as managing director of the bank.

"The international community will watch this situation closely, and I hope that both sides can reach a compromise that maintains Grameen Bank's autonomy and effectiveness," said Kerry, who is chairman of the Senate Foreign Relations Committee.

"Institutions like the Grameen Bank make a significant contribution to Bangladesh's development and democracy, and Professor Yunus' lifelong work to reduce poverty and empower women through microloans has deservedly received worldwide attention and respect," Kerry said.

Yunus' supporters have said the government's effort to remove him has little to do with age and much to do with opposition to microcredit and Grameen's execution of it. Critics of microcredit have charged that lenders were making big money from small loans.

Others have suggested that the actions against Yunus are politically motivated, a claim denied by the government. Yunus' supporters say he has been under fire for criticizing politicians and trying to form his own political party four years ago during an interim, unelected, military-backed government. That party was later abandoned.