FOR IMMEDIATE RELEASE: September 16, 2020
Bipartisan Leadership of Senate Committees on Indian Affairs and Banking, Housing, and Urban Affairs Call on the Treasury Department and Federal Reserve Board to Better Engage Tribes on Access to CARES Act Funding
WASHINGTON – U.S. Senators Tom Udall (D-N.M.), vice chairman of the Senate Committee on Indian Affairs, John Hoeven (R-N.D.), chairman of the Senate Committee on Indian Affairs, Sherrod Brown (D-Ohio), ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, and Mike Crapo (R-Idaho), Chairman of the U.S. Senate Committee on Banking, Housing and Urban Affairs are encouraging Treasury Secretary Steven Mnuchin and Chairman of the Federal Reserve Board Jerome Powell to increase access to lending programs created under the CARES Act for Tribal governments as they face increasing economic strain from the COVID-19 pandemic.
“Tribes and Tribally-owned businesses from across Indian Country have been severely impacted by the economic strains brought on by the COVID-19 pandemic. These businesses, from hotels, conference centers, restaurants, and entertainment venues to gas stations and shopping malls, are some of the biggest employers and income generators for Tribal and nearby non-Tribal communities. Unlike other governments, Tribes do not have a traditional tax base to generate government revenue; instead, Tribes rely on their businesses to generate revenue for government operations and essential services, such as health care, public safety, and social services, for their communities,” the senators wrote in a letter to Secretary Mnuchin and Chairman Powell.
“Title IV of CARES Act and Section 13(3) of the Federal Reserve Act provide authority for the Department of the Treasury and the Federal Reserve Board to address the many economic issues faced by Tribes and their enterprises during these challenging times. Two programs created under that authority, the Main Street Lending Program (MSLP) for corporations and the Municipal Liquidity Facility (MLF) for governments, provide relief for these entities by providing or facilitating loans,” continued the senators. “Further, by expressly including Indian Tribes in the definition of ‘States,’ Congress gave Treasury broad authority to account for the unique financing needs of Tribal governments and their enterprises.”
In the letter, the bipartisan group of lawmakers expressed appreciation for the Department of Treasury considering the unique lending challenges Tribes face when developing these programs. Moving forward, the senators urged the Treasury and the Federal Reserve Board to increase Tribal access to both the MSLP and the MLF as Congress intended.
“Due to the unique nature of Tribal governments and Tribal enterprise debts, Tribes and their businesses are unable to fully utilize the MSLP and the MLF. Accordingly, we encourage you to provide Tribes and Tribally-owned businesses greater access to the MSLP and MLF,” the senators concluded.
The full letter can be found below and HERE.
The Honorable Steven Mnuchin
Secretary
U.S. Department of the Treasury
1500 Pennsylvania Avenue NW
Washington, D.C. 20220
The Honorable Jerome Powell
Chairman
Federal Reserve Board
20th Street and Constitution Avenue NW
Washington, D.C. 20551
Dear Secretary Mnuchin and Chair Powell:
We write to bring your attention to the economic impact faced by Tribes and Tribally-owned enterprises from the COVID-19 pandemic, and to recommend that the Department of Treasury and the Federal Reserve Board continue to engage Tribes in finding ways to maximize their relief under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Public Law 116-136).
Tribes and Tribally-owned businesses from across Indian Country have been severely impacted by the economic strains brought on by the COVID-19 pandemic. These businesses, from hotels, conference centers, restaurants, and entertainment venues to gas stations and shopping malls, are some of the biggest employers and income generators for Tribal and nearby non-Tribal communities. Unlike other governments, Tribes do not have a traditional tax base to generate government revenue; instead, Tribes rely on their businesses to generate revenue for government operations and essential services, such as health care, public safety, and social services, for their communities.
Nearly 500 Tribally-owned businesses have temporarily closed due to the outbreak of COVID-19, which has left more than 700,000 people out of work. Despite these closures, many Tribal enterprises must continue to fulfill their financial obligations to their partner banks while at the same time combating the virus in their community.
Title IV of CARES Act and Section 13(3) of the Federal Reserve Act provide authority for the Department of the Treasury and the Federal Reserve Board to address the many economic issues faced by Tribes and their enterprises during these challenging times. Two programs created under that authority, the Main Street Lending Program (MSLP) for corporations and the Municipal Liquidity Facility (MLF) for governments, provide relief for these entities by providing or facilitating loans. Further, by expressly including Indian Tribes in the definition of “States,” Congress gave Treasury broad authority to account for the unique financing needs of Tribal governments and their enterprises.
We appreciate that the Department of Treasury considered the unique lending challenges Tribes face as it developed these programs. For example, the Department included Tribes and their businesses in the MSLP so that they have the option of seeking long term financial relief to address the economic impacts of COVID-19. However, because MSLP borrowers are prohibited from making distributions (dividends) to shareholders, Tribes were unable to participate, as revenues generated by Tribally-owned businesses must be distributed to Tribal governments for essential government services pursuant to Tribal and federal law. The Federal Reserve Board reviewed this prohibition and subsequently updated its guidance to exempt Tribes, permitting revenue from Tribally-owned businesses to be distributed to support essential government and community services. As with the distribution prohibition, we encourage you to continue to find ways to meet the direction of Congress and provide greater Tribal access to both the MSLP and the MLF.
In addition, Tribal governments and Tribally-owned businesses must often seek loans from private banks, and that debt is not treated in the same manner as State and Municipal government debt. Tribes are also unable to access tax-exempt debt due to various statutory restrictions and ambiguities. And because Tribal lands are held in trust by the federal government, they cannot be used for collateral or lending purposes. In short, due to the unique nature of Tribal governments and Tribal enterprise debts, Tribes and their businesses are unable to fully utilize the MSLP and the MLF. Accordingly, we encourage you to provide Tribes and Tribally-owned businesses greater access to the MSLP and MLF.
Thank you for your attention to this important matter. We look forward to continuing to work with you on the economic response to the COVID-19 pandemic’s impacts on Indian Country.
Sincerely,