NAFSA to Banks Being Intimidated by DOJ and FDIC: Do Not Be Complicit in Discrimination against Tribes
-Executive Director of Native American Financial Services Association (NAFSA) Urges Banks to Stand with Tribes Operating Legal Lending Enterprises -
WASHINGTON, Aug. 14, 2013 /PRNewswire-USNewswire/ -- Continuing to fight back against last week's efforts by the State of New York to shut down legal, tribal government-owned lending businesses, the Native American Financial Services Association (NAFSA) today communicated the organization's position to financial institutions, requested a dialogue to ensure banks act legally and without discrimination, and asked for consideration in financial institutions' dealings with tribal businesses.
In a letter sent to more than 100 banks, Barry Brandon, Executive Director of NAFSA, made clear that the New York Department of Financial Services' attempts to shutter tribal businesses would be viewed as blatant discrimination and an attack on tribal sovereignty. The businesses under scrutiny by the New York DFS are legal enterprises, regulated by tribal bodies and operating in accordance with federal law.
The full text of Mr. Brandon's letter is below:
Dear Financial Institution:
I understand you have received a letter from the New York Division of Financial Services (DFS) directing you to stop processing payments for a number of businesses owned and operated by sovereign Native American tribal nations. We strongly disagree with DFS's characterization of these payments as illegal. To the contrary, our businesses are legal and licensed and owned and operated by American Indian tribal governments across the United States. Tribal Nations, with the support and encouragement of the federal government, have engaged in significant economic development efforts, including operating online lending entities now targeted by DFS. We want you to be aware that we view these actions as a direct threat to tribal sovereignty and our efforts to develop economic self-sufficiency. Tribal nations are considering the next legal steps to take regarding DFS's actions.
Native American tribal nations possess inherent sovereign powers that persist as a legal matter from before the creation of the United States itself, and are not powers granted or delegated by the United States to tribes. Three Supreme Court cases authored by this nation's first Supreme Court Chief Justice, John Marshall, recognized and outlined the character of tribal sovereignty, classifying tribes as "domestic dependent nations" which are bound uniquely to the United States government, to the exclusion of state regulatory authority, by an historic trustee relationship. In Worcester v. Georgia, the Court found that the Cherokee Nation was "a distinct community occupying its own territory … in which the laws of Georgia can have no force" and whose sovereign power could only be diminished by the tribe itself or by the intentional and explicit action of Congress. The authority of tribal nations to regulate, supervise, and operate online lending businesses can only be limited by an explicit act of Congress. During the lengthy debate over the Dodd-Frank Act, Congress specifically considered the issues of how to treat Indian tribes and nonbank short-term credit products. The sovereign power of Indian tribes was not limited, and Congress chose not to outlaw nonbank loan products. To the contrary, Congress explicitly identified federally recognized Indian tribes within the definition of "State" recognizing their distinct role as entities capable of regulating financial products.
Again, online lending, when offered by federally-recognized tribal governments, is legal. Tribal governments export tribal law over the Internet and consumers seeking our online lending services agree to abide by it. The State of New York is doing an end-run against our legal business by threatening banks like yours and the third-party providers who partner with our tribally-owned enterprises. In addition to state actions, our tribally-owned online lending enterprises, along with the payment processors and banks who support them, are being aggressively and unfairly targeted by the FDIC and DOJ in their unwarranted attempts to disintermediate these legal tribal businesses from access to the US payment system. Indeed, a DOJ official admitted the Department's intent of, "choking them off from the very air they need to survive."
As Executive Director of the Native American Financial Services Association (NAFSA) and a citizen of the Muscogee (Creek) Nation, our elected tribal leaders are united against any actions hostile to our tribal government economic development efforts and urge you to carefully consider whether you wish to be complicit in these discriminatory actions.
Internet commerce has been a critical lifeline for geographically isolated tribes across the United States. Tribal governments that offer online lending suffer from staggering unemployment rates, limited opportunities and geographic isolation. New York's scrutiny of your banking activities is a back door tactic for attacking our legal lending business and will exact a heavy cost on our people since the revenues generated by our online lending business account, in some instances, for more than 25% of our tribal budgets.
We encourage your institution to demonstrate restraint and careful consideration in your dealings with our tribally-owned online lending businesses. We look forward to on-going direct communication with you in order to clarify our unique position within the financial services industry.
Native American Financial Services Association
The Native American Financial Services Association (NAFSA) formed in 2012 to advocate for Native American sovereign rights and enable tribes to offer responsible online lending products. Through the protection of consumer rights and sovereign immunity, NAFSA provides vital services to tribally operated lenders serving the under-banked with better short term financial services, furthering economic development opportunities in Indian Country.
SOURCE Native American Financial Services Association