A scene from An Unlikely Solution, a film about the online lending industry in Indian Country. Still image: An Unlikely Solution

Agency that targeted tribal lenders in line for even more big changes

The Trump administration continues to chart a dramatic new course for the Consumer Financial Protection Bureau, a federal agency that targeted tribal lending businesses with enforcement actions and lawsuits during the Obama years.

The agency has been "pushing the envelope" for far too long, Mick Mulvaney, its temporary leader, said last week. In one of his strongest statements to date, he said he will no longer stand for attempts to interfere with tribal sovereignty.

"Pushing the envelope also risks trampling upon the liberties of our citizens, or interfering with the sovereignty or autonomy of the states or Indian tribes. I have resolved that this will not happen at the bureau," Mulvaney, whose official title is director of the White House Office of Management and Budget, said in a stategic plan released on February 12.

That same day, Mulvaney included a "restructuring" of the bureau in the administration's fiscal year 2019 budget request. He isn't planning on seeking any new funding for the agency and will ask Congress to change the way it is funded.

Under the proposal, the agency's budget would no longer be considered "mandatory," giving lawmakers the discretion to restrict the flow of dollars to its enforcement efforts. If Congress goes along, it will save taxpayers more than $6.4 billion between now and 2028, according to a budget document.

Tribal lenders and tribal advocates are hailing the new developments. They come after the Trump team withdrew a lawsuit that had targeted the lending companies owned by the Habematolel Pomo of Upper Lake. The tribe, based in California, had been accused of abusing consumers by charging interest rates that would be prohibited under state laws.

"The agency’s new strategic plan is another step in mending the fractured relationship the CFPB had developed with tribal lenders," the Native American Financial Services Association, which represents tribes in the lending industry, said in a February 13 blog post.

The Tribal eCommerce Coalition, another group associated with the lending industry in Indian Country, is also cheering. Dropping the Habematolel Pomo lawsuit "perhaps paves the way to re-center the bureau’s activities on foundational legal principles rather than political views, as we have regrettably sometimes observed in the past," the group said in a statement.

By making changes at the bureau, which was created during the Obama era, "Trump has now struck a mighty blow in favor of tribal sovereignty and self-determination," said Gavin Clarkson, a citizen of the Choctaw Nation who is running for a seat in the U.S. House as a Republican.

An Unlikely Solution - Abridged Version (7 min)

Don't have time to watch the full An Unlikely Solution film (45 minutes)? Watch this 7-minute version.

Posted by An Unlikely Solution on Tuesday, January 12, 2016
An Unlikely Solution Abridged Version

The new developments will be among the issues discussed at the upcoming Conference of Tribal Lending Commissioners, to be held in Las Vegas, Nevada, on March 5. One of the members of the conference's steering committee is David Tomas, a regulator from the Habematolel Pomo of Upper Lake.

Another member is Sarah Auchterlonie, who was a founding employee of the CFPB and was serving as its enforcement director up until her recent departure from the agency. She is vowing to use her expertise at a major Washington law and lobbying firm

The tribal lending industry has long faced scrutiny from regulators across the nation. States in particular argue that tribes should follow state laws that were written to protect consumers from high interest rates and other predatory practices.

Tribes, on the other hand, say they should be able to set their own rules. In the case of the Habematolel Pomo's businesses, loans have been offered with annual percentage rates of between approximately 440 percent and 950 percent, according to the lawsuit that has been dismissed.

"For an $800 loan, a typical loan contract requires the consumer to repay a total of approximately $3,320 over the course of ten months," attorneys for the bureau wrote in an April 2017 complaint that identified the tribe's businesses as Golden Valley Lending, Silver Cloud Financial, Mountain Summit Financial and Majestic Lake Financial.

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