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Native American tribes' viewpoint on the New York situation

Aug 25, 2013 Quinn Thomas

Native American tribes' viewpoint on the New York situation

Sometimes, the actions of various Native American tribes come under fire by some groups, because they only have to answer to the federal government, not state leaders. This can call certain legalities and ordinances into question regarding whether or not Native Americans have to abide by them.

A number of Native American leaders and short term lenders have come out in heavy opposition to the current industry situation in New York. Governor Andrew Cuomo and the Department of Financial Services Superintendent Benjamin Lawsky have taken measures to try to ban online lenders from issuing loans to New Yorkers. However, there is a question of whether or not Native American companies would be counted among these businesses that are as a result in flux. As such, a number of lenders operating within tribes are speaking out against the measures and considering taking legal action.

The situation in New York


For short term lenders, the current landscape in New York is dire. According to The New York Times Dealbook, New York law dictates that companies operating within the state cannot extend loans that have an interest rate that exceeds 25 percent. Many times, however, these companies need to attach higher interest rates or risk not making enough money to cover their employees and overhead charges. Plus, considering the very nature of short term loans, a higher percentage over the course of just a few weeks doesn't often require massive payments.

Nonetheless, Lawsky sent out cease and desist letters to 35 online lenders, the news source detailed, despite the fact that they weren't based in New York and were therefore not expressly breaking the law.

Tribal governments take issue
According to The Wall Street Journal (WSJ), many of these online lenders that Lawsky is trying to stop operate on Native American land, and as such they are refusing to comply because New York state laws don't apply to them and they're doing everything by the book.

The news source said that many of these business leaders are planning on challenging Lawsky's authority in either tribal or federal courts in September. This might be because Lawsky's words have the potential to turn consumers who would benefit greatly from having increased access to credit away from the industry. The WSJ reported that Lawsky is urging banks and sector oversight organizations to "cut off access to those lenders."

The Native American Financial Services Association sent a letter to Lawsky, the news provider explained, expressing that his actions are insulting and are ignoring two centuries of case law.