Native American Bank To Serve Indian Country’s Economic Needs
WASHINGTON, April 24–When Calvin Tafoya, a Native American businessman of the Santa Clara Pueblo in New Mexico, embarked upon his banking career more than 25 years ago, he discovered that a lack of cultural communication discouraged tribes in his state from interacting with many conventional banks.
“I found that out of a tribe that has a population of about 2,000 you may have about four individuals that had a bank account,” said Tafoya, who is now the CEO and president of the Santa Clara Development Corp., which focuses on diversifying the Pueblo’s business and economic activities.
Though those numbers have increased, Tafoya said, both Native Americans and traditional banks still need to accommodate each other’s procedural and cultural differences as tribes continue to gain better access to capital, especially because the state is home to 19 pueblos, 2 Apache tribes and 1 Navajo tribe.
“We have to learn from the tribal side what the business arena is about and businesses have to understand what our culture is all about — a culture that has existed for thousands of years,” Tafoya said. The way commercial business is handled in most of the U.S. is quite different from the Pueblos “relaxed, slow-paced” approach to the world, said Tafoya.
The Native American Bank, National Association (NABNA), which was launched last October, may help resolve the problems the Mohegans and many other tribes face in obtaining credit and loans from financial institutions. The new cross-tribally owned bank, headquartered in Denver, offers individuals and Native American business entrepreneurs lending opportunities to help them either leverage existing federal funds or establish credit histories for themselves.
“Part of what needs to happenáis increased involvement of Indians in their own economy with the view toward the creation of jobs and a more self-sufficient economy,” said John Beirise, president and CEO of NABNA.
Twelve founding tribes, including the Navajo Nation, and Alaska Native corporations each pledged around $1 million to establish the bank. They hired Beirise, whose experience in the banking industry spans more than three decades, to run the bank and make sure their $12.5 million investment is a success for the larger Native American community.
The Navajo Nation, the largest Native American tribe in the Southwest, supported the bank’s creation by making the $1 million capital commitment to the Native American Bancorporation, the bank’s holding company. The contribution made the Arizona-based investor, which includes a tribe in New Mexico’s northwestern corner, a major shareholder in the NABNA and a member of its board of directors.
“It is my understanding that the concept of the NAB is to establisháa partnership of tribes to align capital that would benefit reservation economies,” said the Navaho Nation’s president, Kelsey A. Begaye, in a State of the Navajo Nation Address in January.
Jacqueline L. Johnson, the executive director of the National Congress of American Indians (NCAI) in Washington, said the formation of a national bank serving Indian Country has been a longtime agenda item for many tribal leaders, including those of the Navajo Nation, before NABNA launched on Oct. 29.
“Many times Native Americans thought that the standard banking process was horrendous, and quite frankly it was,” said Johnson, who is also a board member of Sealaska Corp., one of the initial investors, which represents more than 16,000 Alaska Native shareholders.
To circumvent the discrimination some Native Americans say they have experienced within the traditional banking system, Sen. Daniel K. Inouye, D-Hawaii, the Senate Indian Affairs Committee chairman, challenged tribal leaders to come together in 1997 to address the array of economic needs of Indian Country, which is typically plagued by poverty and unemployment.
“If you look at any statistical sampleá, Native American communities end up at the bottom of any demographically identifiable group,” Beirise said, although unemployment rates vary for each reservation.
Between 1997 and 2000, American Indians and Alaska Natives were the nation’s poorest ethnic community, with 25.9 percent of its people classed as poor (blacks were the second-poorest community, with a 23.9 percent poverty rate), according to the U.S. Department of Commerce’s analysis of the 2000 Census.
The Native American Bancorporation received regulatory approval in early October from the Federal Reserve Board to acquire the Blackfeet Nation’s existing bank in Browning, Mont., the first tribally-owned bank in the U.S.. The $18 million Blackfeet National Bank branch is the only depository site serving NABNA customers so far although there are plans for expansion to other sites around the country.
Now that the bank has been chartered its mission is to focus on helping tribes overcome historic economic, cultural and institutional hurdles.
One of the major economic barriers is the difficulty Native Americans living on federal trust land still face in trying to finance home purchases and borrow money for businesses. That’s because the U.S. government holds the legal titles to most Indian lands, according to the. Treasury Department’s Native American Lending Study published in November.
A tribe may occasionally receive authorization for a mortgage lien on a trust land from the Interior Secretary or the state, but, according to Johnson, this approach may cause additional problems.
Johnson said that despite the government’s approval, many Native Americans encountered inflexible bank lending rules and regulations, which do not always address the differences between the federal government and tribal council governments, which can differ from tribe to tribe.
“Many tribes have their own judicial systems, so if you want to foreclose on a property, you need to go through the tribal government,” Johnson said, adding that unawareness of such cultural differences erects “perceived and real barriers” between Native American tribes and traditional banks.
“When corporate America was trying to penetrate Japan, it had to learn the culture before being accepted into the business world,” Tafoya noted. “It may not be as intense, but it’s along the same lines” with Native Americans and standard banks.
Beirise said he believes many reservations are operating “basic businesses” such as grocery and hardware stores that bring in lots of revenue but are not necessarily Indian-owned; that, he said, may also contribute to the lack of income and the high unemployment rates that hamper Native Americans’ attempts to build good credit histories.
“A number that is used in Indian Country that seems to be accurate, but I couldn’t tell you the genesis of, is that there is an 85 percent leakage of the dollar,” Beirise said. “That is, for every dollar that comes onto a reservation only 15 cents stays.”
Though 11 of New Mexico’s 22 federally recognized tribes generate most of their capital from Indian gaming casinos, American Indian and Alaska Native owners as a whole accounted for only 0.3 percent of the nation’s total non-farm businesses, employing only 298,661 people.
The Treasury Department’s November study also identified a “historical absence of trust between tribes and banks” as a primary cause for failed loan negotiations and the reluctance of some banks to underwrite loans. Geography was also listed as a major barrier to capital access because some tribes are situated in remote areas where the closest ATM or bank branch may be hours away.
“The challenge of this [Indian] bank is to build brick and mortar sites on the reservations, especially on the first 12 contributing to its start,” said Joely De La Torre, an assistant professor of American Indian studies at San Francisco State University. De La Torre is also the author of the forthcoming book, American Indian Political Power in the New Millennium (its working title), which discusses how tribal gaming can help increase a tribe’s economic and political clout.
Beirise said the NABNA plans to build additional branches, like the one in Browning, to handle more-commercial banking transactions. But the bank must first move beyond its startup phase as well as begin reviewing more than its current handful of loan applications before making decisions on specific branch locations.
“There is a combination of markets we are pursuing,” he said, adding that the bank must determine whether any of the investing tribes even want to establish a branch near their reservations.
The Mashantucket Pequots of Connecticut, for example, invested mainly to benefit the economic power of the larger Native American community, according to James Wherry, who is the executive assistant of the tribe’s bank representative, Kenneth Reels.
The tribe may not need a nearby branch because it owns one of the state’s two Indian gaming casinos that, according to the Connecticut, Division of Special Revenue, generated a combined $965.3 million in slot machine revenues alone from July 2001 to Feb. 2002.
Unlike the Connecticut tribe, the Navajo Nation wants to work toward establishing at least one bank branch near its government’s headquarters in Arizona because it represents 225,000 tribal members in 13 counties throughout the state as well as in Utah and New Mexico, said Edward Richards, who is the executive director of the tribal government’s economic development division.
The tribe may eventually ask the bank to also build a branch in New Mexico, Richards added, because certain parts on the reservation are in remote areas, and some individuals may prefer to continue working on grazing lands rather than participate in casino employment if the state approves the reservation’s current gaming proposal.
A New Mexico branch located so far from Albuquerque, where the majority of the state’s tribes are concentrated, may seem counterintuitive, but people out West do not mind traveling long distances to a final destination, according to Tafoya.
“I can go from my [Santa Clara] pueblo to Albuquerque, which is about 100 miles away, and not think too much about the hour and a half commute that it’s going to take me,” he said.
A Native American’s decision to use a branch will most likely be based on how flexible the NABNA is when considering the needs of its customer base, De La Torre said.
Beirise said other tribes are more reluctant to make investments in the bank because it reminds them of an unsuccessful attempt in the early 1970s to launch the American Indian National Bank, the first bank created by a group of tribes.
Yet nine more tribes have placed their trust in NABNA by pledging to make future investments of less than $1 million each.
“What you have to do is draw the contrast between our approach and the approach of that bank,” Beirise said. “We are actually located in Indian communities as opposed to Washington, D.C., [and] we have more than $8.5 million in capital as compared to one that had less than $4 million.”
Beyond the bank’s intention to stimulate Indian Country’s economy through loans, Beirise said, its holding company founded the Native American Community Development Corp., a nonprofit subsidiary that will provide funds for financial literacy programs and small businesses.
Native Americans are also currently engaged in finding ways outside of the banking and gaming industries that might help stabilize their community’s finances.
The Pueblo of Santa Ana, in New Mexico, for example, partnered with Georgia Institute of Technology and Southwest Indian Polytechnic Institute to improve the tribe’s digital communication by creating a broadband wireless project that will link the Internet to every home, business and government department on the pueblo, possibly within the next two years.
LaDonna Harris, the founder and president of Americans for Indian Opportunity, a nonprofit multi-tribal organization, said her group has been dedicated to educating each presidential administration since Richard M. Nixon’s on Native Americans’ economic opportunities and resources, such as coal and buffalo, because she believes economic power equals political power.
“Why are we the poorest people in the country when we have all of these resources?” asked Harris, who is of the Comanche tribe in Oklahoma and the wife of former U.S. Sen. Fred R. Harris, D-Okla. “It’s because we were poorly managed by the federal government under the Department of Interior.”
For example, the Interior Department’s Bureau of Indian Affairs has a reputation among Native Americans for prolonging applications for tribal recognition as well as other Indian-related requests.
Harris’s organization, which is based in New Mexico, recently expanded its efforts overseas with its American Indians Ambassador Program, which draws on the technical approaches international indigenous leadership uses to survive in the face of economic globalization.
Even with those various efforts, Tafoya said, “it becomes a matter of tribes wanting and learning not only how to choose banks, but how to invest as well. It’s a whole new world for us. We are learning a lot by just being involved.”
Written for the MediaNews Group.
