Elizabeth Warren And Native American Lending

by Bob Schwartz

Elizabeth Warren is a figure of considerable talent and successful public service. On the heels of a controversy that has been dogging her, though, an irony has cropped up that is worth a note in passing.

Even in a political season where the bizarre has become the everyday, Elizabeth Warren’s run for a U.S. Senate seat from Massachusetts has taken some strange turns. While her claim to Native American heritage is entirely legitimate, her handling of the politics surrounding it has been less than smooth. And now there is an unremarked upon twist to it.

You’ve probably seen television ads for the Internet lender Western Sky Financial. A pretty woman in braids looks you straight in the eye and offers you a personal loan. “Yes, the money is expensive,” she admits, “but it is a lot cheaper than a payday advance.” All the while, the Western Sky three-tipi logo is emblazoned onscreen, as a drum beats softly in the background.

The Western Sky site explains:

Western Sky Financial is owned wholly by an individual Tribal Member of the Cheyenne River Sioux Tribe and is not owned or operated by the Cheyenne River Sioux Tribe or any of its political subdivisions. Western Sky Financial is a Native American business operating within the exterior boundaries of the Cheyenne River Sioux Reservation, a sovereign nation located within the United States of America.

In an earnest section on Responsible Lending, Western Sky outlines its philosophy:

Fair Dealing among people is a Lakota Tradition, and a concept that is fully embraced by Western Sky. Fair Dealing requires parties to be open and honest and to treat others with respect. Western Sky believes Fair Dealing to be an important aspect of being a responsible Lender.

Western Sky seeks to employ the concept of Fair Dealing at all levels of customer relations, from the application process to the details of loan repayment. This page outlines our approach and what we ask you in return. If you have any questions regarding our commitment to Fair Dealing or our expectations of you, please feel free to ask.

Here are some of the loan rates:

Loan Product Borrower Proceeds Loan Fee  APR   Number of Payments Payment Amount
$10,000 Loan      $9,925          $75   89.68%        84              $743.49
$5,075 Loan       $5,000          $75   116.73%       84              $486.58
$2,600 Loan       $2,525          $75   139.22%       47              $294.46
$1,500 Loan       $1,000          $500  234.25%       24              $198.19
$850 Loan         $500            $350  342.86%       12              $150.72

Demand for easy but high-interest loans has skyrocketed in these hard times. In response to possible overreaching, a number of states that had previously kept their legislative hands off have jumped in to try and set some limits.

It appears that hundreds of Native American-related lending companies, including Western Sky, have cropped up to meet consumer demand. Despite state efforts to weigh in on this development, tribal sovereignty in the face of state laws has prevailed. In 2011 the Native American Lending Alliance  was formed to establish best practices and to make sure that sovereignty in this area remains intact and unassaied.

The only entity empowered to take on any question of tribal-related lending is the federal government. In recent years the federal government did generally take on consumer lending and related  issues with the establishment of the Consumer Financial Protection Bureau. But Native American lending is a legally complex and sensitive matter, and neither the federal government nor the CFPB is currently addressing it as frontline cause.

And that’s where the irony comes in. The CFPB is to a great extent the creation of Elizabeth Warren. She conceived it and helped build it. So at a time when Native American interests are operating just outside the purview and the spirit of the CFPB, Elizabeth Warren’s own Native American heritage has become a bit of a campaign issue.

The two have no direct connection, and all we know tells us that Elizabeth Warren always stands squarely on the side of consumers. But it is ironic: not a big irony, but certainly a curious twist in an endlessly curious and twisted political season.