Can Banks Lend in Indian Country? Yes - but Making Loans to Native Americans on Reservations Often Takes Flexibility and Patience, and - Sometimes - Diplomacy

By Cocheo, Steve | ABA Banking Journal, May 1994 | Go to article overview

Can Banks Lend in Indian Country? Yes - but Making Loans to Native Americans on Reservations Often Takes Flexibility and Patience, and - Sometimes - Diplomacy


Cocheo, Steve, ABA Banking Journal


Speak the words "Indian reservation" to the typical non-Indian and the image he will conjure will resemble something out of a John Ford western--desert and towering red rocks, like the scene from the Navajo Reservation above.

Sure, there's lots of reservation land like that out West, but there are reservations all over this country. You could just as easily find yourself on one and be wading in Pacific Coast surf, strolling through Midwestern farmland, or losing your shirt at a huge Indian-owned casino in Connecticut.

Speak the words "Indian reservation" to some bankers and what might come to their minds is "trouble."

Sure, there's some of that. In many ways doing credit business on a reservation can seem like lending to or in a foreign country. Yet some bankers find this market can be served-- even profitably.

Others should consider themselves on notice that more attention will be paid to their efforts to serve the country's nearly 2 million Native Americans (the term includes Eskimos and Aleuts too) and the reservations many of them live on.

Comptroller of the Currency Eugene Ludwig visited the Navajo reservation at the end of March at the invitation of tribal President Peterson Zah. Zah and other Navajo officials have testified to Congress and to regulators regarding the need for more bank credit and services on Indian homelands. Last fall the Justice Department filed suit against $18 million-assets Blackpipe State Bank and obtained a detailed settlement that included commitment of $125,000 to compensate Indians for alleged bias. (Under terms of the settlement, detailed in our March issue, the bank admitted no guilt.) Aggressive lobbying by the Navajo and others resulted in inclusion of several specific mentions of Indian issues in pending community development financial institution legislation.

Bank-Indian business dealings play at several levels. Banking services are needed by tribal governments as well as tribally owned and operated businesses, housing authorities, and such. Individual Indians want both business loans and consumer loans. And the intricate issue of mortgages granted on Indian land could fill a book.

With respect to sovereignty

Many years ago, the Saginaw Chippewa Indian Tribe of Michigan received a huge cash settlement from the federal government in reparation for past wrongs to the tribe. The tribe, whose reservation is near Mount Pleasant, deposited this sum--$7 million--into a large Michigan bank.

Not long afterward, the tribe wanted to obtain a small loan from that bank. The bank was willing to lend the money, but only if the tribe would waive its "sovereign immunity," so it could be sued, in the event of default.

The tribe didn't care to do that, and called Mount Pleasant's Isabella Bank & Trust. Would Isabella Bank, the tribe asked, insist on a waiver to obtain credit?

Not at all, the bank responded. The next day, quite unexpectedly, the tribe wired the $7 million into the bank.

"We have never asked the tribe to waive its sovereignty, and subject themselves to federal and state courts," says Brian Maes, commercial loan officer at the $237 million-assets bank.

Since that contact, the relationship between bank and tribe has blossomed. In the intervening years, Isabella has made personal, business, and tribal loans on the reservation and recently began leasing automated teller machines to the tribe.

At one time much of the tribe's economy resolved around arts and crafts items and manufacture of wooden shipping pallets. Now that the tribe's foray into casino gaming is paying off, it asks for investment and cash management advice as well.

Needed: Very small loans

When most people look at a firecracker, they may see a noisy annoyance or perhaps a reminder of their youth. To some customers of First Heritage Bank, Snohomish, Wash., fireworks represent a way to help make ends meet. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Can Banks Lend in Indian Country? Yes - but Making Loans to Native Americans on Reservations Often Takes Flexibility and Patience, and - Sometimes - Diplomacy
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.