Native Americans are taking a stand on behalf of tribal lenders amid an attack by special interest organizations attempting to bankrupt local businesses serving an often overlooked community. A Native American advocacy group says opponents of tribal loans are promoting a “false and often racist narrative.”
For years, the National Consumer Law Center, a self-proclaimed watchdog organization without legal authority, has waged a public relations war against tribal lenders, accusing them of engaging in unethical and demanding “payday loans”. that they operate under tribal rules.
“None of my tribes engage in payday loans,” said Robert Rosette, an attorney who exclusively represents Indian tribes. “They are always upset by this kind of negative connotation.”
And it seems the courts are on their side.
The state of Connecticut tried to fine the president of the Otoe-Missouria tribe, John R. Shotton, and their tribal lenders for violating state rules on short loan interest rates term. The NCLC supported the effort. They failed.
“We took this to the Connecticut Supreme Court, where we prevailed,” Rosette said. “We also had an important victory two years ago in the 4th Circuit, so we now have two important wins in federal courts and the Connecticut Supreme Court.”
According to Rosette, it is a question of sovereignty. So, for example, there are federal laws, state laws, and tribal laws. The laws that tribal lenders follow are federal laws. This is because of the supremacy clause, which means that federal law takes precedence over other laws.
“If you look at every federal loan law, every tribal loan law, and every tribal lending code, the tribes comply with all of those federal and tribal laws that apply on loans,” Rosette said. “It’s not that tribes don’t follow state law, it’s that those laws don’t apply to tribes.”
Meanwhile, the NCLC is lobbying against these rulings, using its widely read online digital library to promote legal theories contrary to these recent rulings. Their website is full of references to “bogus tribal loans” and legally questionable claims that tribal sovereign immunity is at issue in these cases.
The Native American Financial Services Association attributes this to a lack of education on these issues.
“We are keenly aware of the lack of education that exists in much of mainstream America with respect to tribal financial services,” the Native American Financial Services Association wrote in a statement. “As such, we continue to work to better educate the public, consumer groups, politicians and lawmakers to counter the bogus and often racist narrative and stigma that unfairly plagues tribal financial services and fintechs.
“Above all, NAFSA remains steadfast in its advocacy for tribes and their inherent rights as sovereign nations to determine what is best for themselves and for future generations of indigenous peoples,” said they stated.
Fintech refers to computer programs and other technologies used to support or activate banking and financial services.
Tribal lenders offer short term installment loans with higher interest rates which reflect higher risk, but they are not tied to a person’s salary.
“It’s an entirely different business that we don’t agree with and my clients ban this type of activity,” Rosette said. “These are installment loans with amortization periods, and borrowers have the right and the ability to prepay them much like a credit card, and I think most of our customers pay them off within a period of time. one to three months, so, I just made it clear that none of my tribal clients engage in payday loans. “
Rosette says it is “demoralizing for tribes to be beaten up by the mainstream media.”
“No one takes the time to examine how hard the tribes work in these businesses, how well they treat their customers and, most importantly, what the tribes do with the income they make from these businesses,” said Rosette. “The tribes use this much needed income to provide essential government services to their constituents, such as buying dialysis machines to treat diabetes or buying police cars or perhaps using part money to send their children to college. “
Chris Woodward writes on industry and technology for InsideSources.