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DeCoteau: The new money changers
Indian Country Today
In 1933, at the depth of the Great Depression, President Franklin Roosevelt said, ''Practices of the unscrupulous
money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men ...
Faced by failure of credit they have proposed only the lending of more money.''
Fast-forward to 2008, on the brink, some say, of the worst financial crisis since the Depression. The new money
changers entice, ''Come, I'll lend you $325 if you pay me back $793.''
Predatory lending is gaining much attention lately, primarily due to the subprime mortgage lending crisis.
A recent study by the First Nations Development Institute, funded by the Annie E. Casey Foundation, shows
that predatory lending has long been a concern for Indian country, and that the larger concern is with other
predatory lending practices, such as payday loans and loans against tax refunds, also known as RALs or ''Refund
Anticipation Loans.''
History is replete with examples of predatory practices involving American Indian assets, from theft of
land to gross underpayment for the lease or sale of natural resources. Now predators are reaching directly into
Natives' pockets for their paychecks. This is in large part because vulnerable American Indians have no assets to
steal other than their paychecks.
Many of those who use payday lenders lack access to mainstream
banking services, either because there are no such institutions nearby or because borrowers lack collateral
(for example, no home equity), have poor credit or no credit history. To get over a financial crisis, such as a
car repair, medical bills, a missed mortgage payment or a heating bill in winter, these folks have no choice but
to turn to predatory lenders. This fairly describes the situation with many Indian borrowers: they live on the
edge and the next urgency could push them over - or into the warm welcome of a predatory lender.
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