The conveniently missed truth is that there are differences between the various types of short term lenders – tribally owned online, non-tribal online and storefront. These are critical distinctions that the blog fails to explain. The blog also fails to acknowledge that there exist legitimate short term lenders who provide important and valuable financial products to a niche market.
• NAFSA member tribes are federally recognized governments that have inherent sovereignty derived from their status as pre-constitutional and extra-constitutional governments recognized in the US Constitution and centuries of case law.
• NAFSA member tribes create their lending businesses by enacting laws that authorize the creation, operation and regulation of their businesses. These laws are pursuant to their sovereign status as self-governing entities. Western Sky was formed pursuant to South Dakota state law (not the tribe or tribal government).
• NAFSA member tribes own 100 percent of their lending businesses and all revenue generated goes directly to the tribal government to fund basic essential services for all tribal members. For some of our members, revenues from their lending operations exceed 50 percent of the tribe’s overall budget. Western Sky is a private business, owned by a single tribal member who profits accordingly.
• NAFSA member tribes conduct their business pursuant to tribal laws, comply with all applicable federal laws and adhere to NAFSA’s “best practices.” Western Sky was sued for failing to adhere to applicable state and federal laws.
• NAFSA member tribes establish their own regulatory authorities to oversee and regulate the tribal business. Furthermore, the Dodd-Frank Act of 2010 provides that tribes enjoy the same legal standing as States to act as co-regulators with the federal government. Western Sky, owned by an individual under state law, can claim no such distinction.
These factors clearly demonstrate huge differences in the authority to create, operate, and regulate online lending businesses – a fact wholly missed by the author of the original piece. Nor did the author explain that the revenues from these businesses provide a significant portion of a tribe’s governmental budget, fueling essential services like education, elder care, nutrition assistance, and many others that are so often taken for granted.
The inaccurate, misleading, and biased attacks presented have created strong negative reactions. Their outcomes on our tribes will only harm us. It’s incumbent on everyone to understand the nuances of this debate and get it right.
Brandon is executive director of the Native American Financial Services Association.