NEW YORK ( TheStreet) -- Citigroup ( C), Morgan Stanley ( MS), JPMorgan Chase ( JPM), TIAA-CREF and other U.S. financial companies with ties to the microfinance industry are treading carefully in the wake of recent scandals, but early evidence suggests the industry will survive in one form or another.

Microfinance refers to the provision of tiny loans to poor people in third world countries. Though interest rates can climb beyond 100% in certain cases, some studies have shown repayment rates are often far better than has been seen with more traditional loans.

European institutions involved in microfinance include Barclays ( BCS), Deutsche Bank ( DB) and Standard Chartered.

None of the those institutions, however, nor the four U.S. companies mentioned earlier, are especially eager to discuss microfinance. Calls to several banks were unreturned or spokespeople said they were unavailable.

Morgan Stanley, which did a pioneering microfinance collateralized loan obligation in 2007 the Financial Times named "sustainable deal of the year," was the only firm contacted by TheStreet that would comment for the record. 

"We remain committed to the microfinance sector and its potential to produce positive social impact," said a spokeswoman.

Milford Bateman, a fellow at the Overseas Development Institute in London, and one of the more outspoken critics of microfinance, believes Wall Street won't talk because of recent high-profile scandals.

"There are too many things going on at the moment. Its a very sensitive time," he says.

"Microfinance has a real feel good quality about it, or at least it did until recently, so they were keen on it from that point of view. But what really came out in the last five or six years is how superprofitable microfinance can be," Bateman says.

That led to market saturation, in Bateman's view. He says crises unfolding in microfinance in certain ways mirror the subprime lending crisis in the U.S.

"They basically all piled in together," Bateman says of the financiers, "without any recognition that there isn't really anywhere a problem of the unbanked. That's part of a fiction that the World Bank has come up to justify this huge run to the cliff side so that they could make so much money out of this."

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