Tribe protection allows Indian reservation to make short term loans
Jan 03, 2012 Philip Burgess
Last year, Montana voters passed a ballot initiative that capped short-term, high-interest loans at a 36 percent annualized interest rate, The Huffington Post reports. The move led to a nearly 83 percent drop in "deferred deposit lenders," commonly known as short term lenders. However, the Chippewa Cree tribe of the Rocky Boy reservation continues to provide an alternative method for quick cash in the state, having dispersed more than 121,000 loans at interest rates as high as 360 percent. The reason is twofold. Tribal immunity allows the tribe to avoid interest rate caps set by the majority of states, while its new online venture, Plain Green Loans, lets it offer loans to potential borrowers outside of Montana without breaking any laws. According to Neal Rosette, Plain Green CEO, online lending helps those who make credit decisions not to borrow from banks, and provides the tribe with revenue at a time when unemployment on its reservation is almost at 40 percent. IWeek reports that an estimated 30 online short term lenders claim they aren't required to adhere to state laws because they're associated with Indian tribes.