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LCO Team Meets with Feds in Regards to Rule Proposal for Tribal Lending

By Joe Morey, News Editor

The Lac Courte Oreilles tribal leadership was invited by the Bureau of Consumer Financial Protection (BCFP) to attend a tribal consultation on the Bureau’s reconsideration of its Final Rule of Payday, Vehicle Title, and Certain High-Cost Installment Loans held on Dec. 19 in Washington D.C.

“The Bureau respects the unique relationship between the federal government and tribal nations and is committed to ensuring that its work considers the needs of consumers in Indian Country,” the invite stated.

On behalf of LCO, tribal governing board member and LCO Financial Services Board Chairman Tweed Shuman attended the Consultation along with LCO Financial Services director Lee Harden and Dyllan Linehan, Assistant Attorney General for LCO.

The consultation was in-regards-to a rule the Bureau proposed in July of 2016 and again in October of 2017 that affected short-term loans. Many tribes have opposed the Small Dollar Rule because of the negative effects it would have on tribal lending operations. The rule is set to begin in August of 2019, but the BCFP plans to issue notice of its planned rulemaking in January of 2019 following the consultations with tribal leaders.

Tweed Shuman said, “This Consultation is very important to our tribe as LCO Financial Services is going to offer us the ability to diversify our revenue streams. Not only will it provide much needed revenue for the delivery of services to tribal members, but the lending operation also currently employs 14 people and is projected to rise to 40 employees.”

Shuman also mentioned the old Boys & Girls Club building on Trepania Road is being renovated into an office building to house our growing LCO Financial Services business. “This renovation signals the growth that the business is planning, which will result in the posting of numerous employment positions with LCO Financial Services,” said Shuman.

“FS will provide extra revenue to our budget that will allow us to create jobs and support more of our tribal members in need,” added Shuman.

Before the meeting occurred, many tribal leaders had stated that the rule would decrease revenue from lending operations, which would impact their ability to support tribal programs.

Shuman talked about the importance of tribal lending entities to many tribes, for instance, the Fort Belknap tribe is located in an isolated area and has been able to create 160 job opportunities through its lending business.

Shuman began his prepared speech by thanking them for holding the Consultation to revisit the rule prior to instituting the rule.

“Our ancestors would be very proud of us today that we are continuing to meet government to government with respect to our sovereignty,” Shuman said.

“Like many other tribes, LCO experienced the devastating effects of harsh policies from the U.S. government. Throughout the 1800's, our tribe, along with other bands of the Chippewa, were targeted for removal from our ancestral lands and suffered from forced assimilation policies,” Shuman continued.

“Despite these hardships, LCO continues to thrive today. The Lac Courte Oreille Band of Lake Superior Chippewa Indians is a federally recognized tribe located in northwestern Wisconsin. We are 8,000 members strong in a very rural area. The Tribe has created various businesses for economic development, including the creation of tribal lending operations in 2014.

“Casino gaming dollars in such rural communities as ours, no longer meets the needs of our people. We have survived and adapted by diversifying our revenue streams. The Tribal lending business has proven to be a good fit for our people and supports our tribal budget,” Shuman said.

“LCO has engaged in the business of offering consumer loans through the internet via businesses wholly-owned by the Tribe, subject to tribal law, and regulated by the Tribe. These tribally-owned businesses have provided additional revenue to the Tribe and has resulted in increased job opportunities and services for tribal members on the reservation.

“Through the revenue brought in from our tribal lending businesses, LCO is able to supplement and balance our tribal budget, we offer services such as scholarships for education, safe housing for our members, and an elder nutrition site with hot meals delivered for the homebound,” Shuman continued.

“We believe that our Tribe and tribal lending entities should not be subject to any proposed Small Dollar Rule issued by the Bureau because we are a sovereign nation, and not subject to rulemaking under the Dodd-Frank Act, Nonetheless, we are here today to express our concern over various provisions in the rule, as currently drafted, and their potential impact to the operations and in turn, to our tribal community.”

The CFPB sent Shuman a letter following the Consultation in which it said, “Thank you again for your attendance and feedback on the Bureau’s announced plans to revisit the ability-to-repay provisions of the Payday Rule and to address the Rule’s compliance date. We also appreciated your responses to the supporting discussion questions.”

To summarize the meeting between the CFPB and tribal leaders, Shuman said it was productive in that it provided the tribal leaders the opportunity to express their viewpoints regarding the possible impacts of the Small Dollar Rule on their communities and to provide suggestions for improvement.

Shuman said the BCFP indicated there would be another Consultation and opportunity for written comments from tribal leaders following the publication of the Notice of Proposed Rulemaking in late January 2019.

“A second tribal consultation session will be held in late February/early March 2019,” added Shuman.


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