By Carter Dougherty
U.S. regulators and Congress are scrutinizing partnerships between Native Americans and outside investors in online payday lending businesses accused of exploiting tribal sovereignty to evade state consumer-protection laws.
The push has divided Native American groups, with critics of payday lending opposing tribal involvement in the businesses, which charge interest rates as high as 521 percent for short-term loans. Other Indian groups, formed to represent the nascent industry in Washington, are pushing back against the regulators.
Charles Moncooyea, vice chairman of the Otoe-Missouria Tribe, called the interest of the Consumer Financial Protection Bureau “a declaration of war” and vowed to fight federal intervention into the new businesses.
“The fact is our tribe – and tribes nationwide – benefit from the positive economic impact from these and other businesses activities, with revenues directed towards such critical needs as medical care, education and many other basic necessities,” Moncooyea said in a written statement.
The partnerships have drawn the attention of federal regulators largely because of sovereign immunity, the legal doctrine that restricts state interference in tribal affairs.
“It’s a model that could go into any kind of area where the states regulate,” said Colorado Attorney General John Suthers.
