Lining Up the Loan Angels; Critics put trendy poverty lenders to the test, and find they're neither a real business nor a real help.

Byline: MAC MARGOLIS (With Silvia Spring in London, Joe Cochrane in Jakarta and Melinda Liu in Beijing)

Fighting poverty has along and divisive history, but nothing's shaken up the pundits, wonks and windbags like microfinance. The United Nations declared 2005 the year of microcredit--small loans for the penniless--and last year's Nobel Peace Prize went to Muhammad Yunus, founder of the Grameen Bank, which pioneered such lending. Governments from Brazil to Bosnia have launched massive microloan programs, and commercial banks like ABN AMRO, HSBC and Citicorp are rushing down-market. Some 500 million poor worldwide have reportedly benefited from some $6 billion in microloans, which aficionados want to ramp up to $300 billion. "One day," Yunus predicted, "our grandchildren will go to museums to see what poverty was like."

That was then. Now a backlash is growing. Critics on the left charge that micro-finance privatizes social safety networks, ...