The Tunica Biloxi Tribe of Louisiana is starting what may be a first-of-its-kind regulatory commission to oversee tribal consumer lending.
The move is in response to the controversy over payday lending at tribes. Tribes have asserted their right as sovereign nations to be involved in this kind of lending, while critics have asserted it is predatory lending in some cases. Regulating lending to ensure it is not predatory may become common among tribes, just as they regulate gaming.
The tribe announced the commission at the National Center for Indian Economic Development’s recent meeting in Las Vegas. It also announced the high-powered initial commissioners: Terry Goddard, a former Mayor of Phoenix and Attorney General of Arizona; Brendan V. Johnson, former U.S. Attorney for the District of South Dakota; and Tracie L. Stevens, Tulalip, former chairwoman of the National Indian Gaming Commission.
ICTMN recently spoke with Charles W. Galbraith, Navajo, an attorney with Kilpatrick, Townsend in Washington, D.C., who advised the tribe on the development of the commission.
How did the Regulatory Commission come about?
How it came about was because the tribe saw a need to ensure that its businesses were well regulated.
Do you know of other tribes that have such a commission?
Indian country is pretty new to the lending business. I’m not aware of any tribes that have done this yet. Tribes certainly have a lot of expertise in regulating, from the gaming industry. We saw that as a model.
This is something the tribe decided to do unilaterally, no pressure from the federal government?
Certainly the federal government has taken the role in lending through the Consumer Financial Protection Bureau (CFPB), and that’s kind of a model the tribe looked at. Certainly nobody came to the tribe and told them they needed to do this. The tribe saw that as a responsible governmental entity they needed to be regulating their lending business.
This is for lending enterprises of the tribe, it doesn’t refer to tribal members getting loans from outside institutions?
This is to regulate the tribe’s businesses. The tribal lending code that created the commission is pretty clear in its role, and that’s as a regulator, not an enforcement body.
What kind of lending enterprises does the tribe have?
Right now the tribe owns a business called Mobile Loans, which has a short-term installment loan product available online. But the tribe sees this as a growth industry. It’s constantly looking for new business opportunities to grow in this space. E-commerce is a big opportunity for tribes across the board. Other tribes have been negatively impacted by geographic isolation. The Internet offers all sorts of opportunities for tribes to be in industries they have traditionally been excluded from.
Is Mobile Loans a payday lender?
A lot of people would call it a payday lender. It’s different from a traditional brick and mortar payday lender. It doesn’t operate on an APR (Annual Percentage Rate), it’s a fee-based lender.
There’s been controversy over the issue of a sovereign tribe having the right to do what it wants, versus some people alleging that there’s predatory lending going on. Is that the reason to establish the commission, to show this is a legitimate operation and not predatory lending?
Absolutely. This is the tribal government recognizing that debate and that discussion and wanting to ensure the lending products they provide are in compliance with all tribal and federal laws and wanting to be good actors in this industry.
The members of the commission, how were they selected?
They were selected for having experience working in Indian country, and to bring a diversity of previous experience at the federal, state and tribal regulatory level. The three commissioners are Terry Goddard, former Attorney General of Arizona and a former Mayor of Phoenix. He has a great record of consumer protection work in his time as Attorney General. Brendan Johnson is the former U.S. District Attorney for South Dakota and was a lead advisor for the Attorney General of the United States on tribal issues. Tracie Stevens has been a tribal regulator of the gaming side for her tribe, the Tulalip Tribes in Washington, and most recently she was the director of the National Indian Gaming Commission, responsible for regulating all tribal gaming in Indian country. We couldn’t have hoped for any better commissioners.
Would you say the NIGC is also a model for your commission, as well as the CFPB?
Certainly. The CFPB was created by statute. There is no statute requiring tribes to create commissions, but the tribe and tribal council saw by its nature, lending was always going to need to be regulated, it’s always going to draw attention. They hope that other tribes will follow suit.
Would you see this commission, once it gets operating at your tribe, as developing commissions for other tribes?
Certainly. They want to see other tribes in the lending industry doing similar things and to the extent our commission can be helpful with facilitating that they’d be open to helping other tribes as well.
How big a lender is Mobile Loans? What volume of business does it do?
I don’t know the numbers offhand. I’m the legal and the policy guy. I’m not the numbers guy.
Any other lending units at the tribe? In house mortgage lenders, for instance, or is this the one entity?
Right now it’s the one entity the tribe is exploring opportunities to grow in this area.
Is the commission now active?
The commission still has a lot of work to do to get up and running, but we’ll be up and running in a matter of months.