In one of the rather delicious ironies that occasionally pop up in our otherwise mundane lives, a spokesman for a Native American tribe has declared that a state of war exists between the tribe and the Consumer Financial Protection Bureau. Breathless reporters want to know where iconic Cherokee Princess, Liz Warren, stands. Will she go on the warpath in support of her peeps, or will she side with the Rosemary's Baby she birthed as it rolls up the Gatling Guns and seeks to mow down a free people's right to payday lend until the Sun no longer rises in the East?
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.
According to Bloomberg Businessweek reporter Carter Daugherty, at least ten tribes are involved in alliances with payday lenders. Private equity is backing some of the lenders, and it appears that the sovereign immunity afforded the tribal nations will allow the tribes to tell the states that are attempting to stop payday lenders from violating their laws, to take their payday lending restrictions, stick it in their respective pipes, and inhale deeply.
“We think this is a big growth market and will be here for a long time,’ Ken Rees, chief executive of Think Finance, said in an interview. ‘‘The legitimacy of a tribal entity to provide loans is very clear. The demand for products is clearly more than ever before.’’
This is why pervasive government control never works where there's a demand for a product that's sufficient to generate substantial profits, and where a sizable portion of the public has no strong feeling to prohibit or severely restrict it. You can bust Willie Nelson for smoking dope, but you can rest assured that the Red-Headed Stranger will be firing up a fat boy on the tour bus before it hits the next rest stop. It's human nature. Not that the facts of life ever stopped do-gooders and ideologues from pursuing utopia here on Earth, but it's always nice to see reality continue to rear its inconvenient noggin no matter how many hammer blows true believers deliver.
Speaking of true believers, Recess Richie Cordray dropped thinly veiled threats that he's going to make like Nelson Miles and launch a strike against the tribes, sovereign immunity be damned.
Consumer bureau director Richard Cordray, also speaking to the group on March 6, said that his new agency is ‘‘zoning in” on tribal payday business.
In a March 21 interview, Cordray, a former Ohio attorney general, said he did not want to suggest he is focusing just on the tribal industry. Instead, he has a wider interest in online lending, though the agency has not announced any investigations.
That's right, you heard him: he's not going to stop with a few tribes. Once he curbs their enthusiasm for this tainted loan product, he's taking on the Mother of All Evils: The Al Gore-invented "Internets."
Cordray's staff quickly backed-and-filled.
After he spoke on March 6, consumer bureau staff met with the National Congress of American Indians, a Washington-based group with a broad membership of tribes, according to two people briefed on the meetings. The staff assured the group that the bureau is not starting a campaign directed at Native American lenders, and does not want to attack tribal sovereign immunity.
Yeah, and Custer only intended to distribute Gideon Bibles. Hear me now and believe me later, my brothers: The CFPB speaks with a forked tongue. The nations are not exempt from Dodd-Frank's "unfair, deceptive, and abusive" war-club and there's a reason Mrs. Codray has heard her hubby singing a variation of "If I Ruled The World" every morning in the shower.
If I ruled the world, every loan would be abusive as hell.
Every lender's knee would bend at my bell.
Every tribe would surely flee pell-mell.
And watch out behind you for the champions of the oppressed and the proponents of diversity. It should come as no surprise, but they haven't "got your back." Instead, they're trying to stick a knife in it.
Senator Jeff Merkley, an Oregon Democrat, will introduce legislation on tribal lending in the next few weeks, Courtney Warner Crowell, his spokeswoman, said in an interview. The legislation would allow states to petition the consumer bureau, a federal agency, to stop lending by tribes in states where payday loans are illegal. That way, states would not directly litigate against tribes, thus preserving sovereign immunity, Crowell said.
I'm sure the tribes will get a fair hearing before the CFPB on that issue, don't you think? Introducing such legislation in an election year might be risky, but apparently Merkley's district doesn't include any independent or right-leaning Native Americans.
To be fair, some of tribes think payday lending is bad business and oppose other tribes who are entering into these arrangements.
Charles Trimble, a member of the Oglala Lakota Nation in South Dakota and a former executive director of the congress, denounced tribal payday lending as an abuse of sovereign immunity.
“It’s like having a pimp in the family,” Trimble wrote in an online column published on March 14, 2011. “He shames everyone but you can’t disown him because he is family.”
So, unlike my family, which has disowned me because I write this blog, Native American tradition would forbid the disowning of a pimp in the family? I suppose even that leniency wouldn't extend to having a lawyer in the family, but I might give it a go, "Pull a Lizzie," and induce Ancestry.com to pluck an Iroquois warrior named "Near-Sighted-Big-Talker" from my ancient family tree.
Naturally, the CFPB predicts that, unless this preemption revolution is nipped in the bud, the world as we know it will end, and not with a whimper but with a hideous bang.
Jean Ann Fox, the director of financial services for the Consumer Federation of America, said the expansion of Internet- based payday lending under the shield of sovereign immunity sets a dangerous precedent.
"Now we have payday lending," Fox said in an interview. "How about insurance?"
How about it? The horror of a business that interfaces with consumers and that is not micromanaged by state-based Nanny-Staters might nauseate Ms. Fox, but it sounds like a breath of fresh air to others. The fact that people who've been treated as shabbily as Native Americans are, from the relatively small pockets of land to which they've been confined by the dominant culture that surrounds them, mining gold from that dominant culture, in ways (including gambling, in case you've been living in a cave) that, according to critics, threaten to undermine the social fabric of the surrounding culture (the Native American culture already having been undermined for the last couple of hundred years), seems, no matter what part of the political spectrum you inhabit, to be a bit of ironic justice.