U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

74–393 PDF 2012

S. HRG. 112–407 

OPPORTUNITIES AND CHALLENGES FOR 

ECONOMIC DEVELOPMENT IN INDIAN COUNTRY 

HEARING 

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

ON 

EXAMINING ECONOMIC DEVELOPMENT IN INDIAN COUNTRY 

NOVEMBER 10, 2011 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.fdsys.gov/ 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

TIM JOHNSON, South Dakota, Chairman 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

ROBERT MENENDEZ, New Jersey 

DANIEL K. AKAKA, Hawaii 

SHERROD BROWN, Ohio 

JON TESTER, Montana 

HERB KOHL, Wisconsin 

MARK R. WARNER, Virginia 

JEFF MERKLEY, Oregon 

MICHAEL F. BENNET, Colorado 

KAY HAGAN, North Carolina 

RICHARD C. SHELBY, Alabama 

MIKE CRAPO, Idaho 

BOB CORKER, Tennessee 

JIM DEMINT, South Carolina 

DAVID VITTER, Louisiana 

MIKE JOHANNS, Nebraska 

PATRICK J. TOOMEY, Pennsylvania 

MARK KIRK, Illinois 

JERRY MORAN, Kansas 

ROGER F. WICKER, Mississippi 

DWIGHT FETTIG, Staff Director 

WILLIAM D. DUHNKE, Republican Staff Director 

CHARLES YI, Chief Counsel 

ADAM HEALY, Professional Staff Member 

ANDREW OLMEM, Republican Chief Counsel 

MICHELLE ADAMS, Republican Counsel 

SHANNON HINES, Republican Professional Staff Member 

DAWN RATLIFF, Chief Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

(II)

C O N T E N T S 

THURSDAY, NOVEMBER 10, 2011 

Page 

Opening statement of Chairman Johnson ............................................................. 1 

Prepared statement .......................................................................................... 26 

Opening statements, comments, or prepared statements of: 

Senator Shelby .................................................................................................. 2 

Senator Tester .................................................................................................. 3 

Senator Merkley ............................................................................................... 4 

WITNESSES 

Mark A. Tilsen, President, Native American Natural Foods ............................... 5 

Prepared statement .......................................................................................... 26 

Martin M. Olsson, President, Eagle Bank ............................................................. 7 

Prepared statement .......................................................................................... 32 

Tanya Fiddler, Executive Director, Four Bands Community Fund .................... 8 

Prepared statement .......................................................................................... 37 

Dante Desiderio, Executive Director, Native American Finance Officers 

Association ............................................................................................................ 10 

Prepared statement .......................................................................................... 47 

Susan M. Woodrow, Community Development Advisor, Federal Reserve Bank 

of Minneapolis ...................................................................................................... 12 

Prepared statement .......................................................................................... 50 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

Statement submitted by the National Center for American Indian Enterprise 

Development ......................................................................................................... 57 

Statement submitted by Kent Paul, Chief Executive Officer, Amerind Risk 

Management Corporation .................................................................................... 78 

Statement submitted by Buford Rolin, Chairman, Poarch Band of Creek 

Indians .................................................................................................................. 100 

(III)

(1) 

OPPORTUNITIES AND CHALLENGES FOR ECONOMIC DEVELOPMENT IN INDIAN COUNTRY 

THURSDAY, NOVEMBER 10, 2011 

U.S. SENATE, 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, 

Washington, DC. 

The Committee met at 10:03 a.m., in room SD–538, Dirksen Senate Office Building, Hon. Tim Johnson, Chairman of the Committee, presiding. 

OPENING STATEMENT OF CHAIRMAN TIM JOHNSON 

Chairman JOHNSON. Good morning. I would like to call this hearing to order. 

During my time in Congress, I have enjoyed a strong working relationship with American Indian tribes in South Dakota and 

around the country and have advocated for policies to help improve 

the quality of life for American Indians. 

While progress has been made, many Native communities continue to face significant challenges, including staggering unemployment rates, inadequate health care, crowded and unsafe housing 

conditions, high crime rates, and educational inequalities. This is 

unacceptable. 

Fostering small business growth is a vital step toward increasing 

employment opportunities and improving local economies throughout the country during these difficult economic times. Small business growth in Indian Country is no exception. Encouraging the 

startup and growth of Native American-owned businesses is an important priority to me as Chairman, and that is why I have called 

this important hearing and invited all of you to testify here today. 

For many years I have worked to ensure Native communities in 

South Dakota and across the country have adequate infrastructure 

in place to foster an environment where economic development can 

take place, from being an original cosponsor of the legislation that 

created the NAHASDA block grant for housing to helping fund the 

Mni Wiconi rural water system to supporting tribal bus transit programs. 

Today, the Committee will examine what challenges continue to 

hinder economic growth in Indian Country, including the lack of 

access to capital, small business lending, financial education, and 

support for startup businesses. With unemployment rates reaching 

an astonishing 80 percent in some areas of Indian Country, we 

must do better to address the problems that cause this persistent 

cycle of unemployment. 

2 

While it is sometimes easy to become discouraged when considering all the obstacles that face Native communities, we will also 

hear about the great work so many are doing to help address these 

persistent problems. 

In South Dakota, and in other States, there are many small business owners, community development institutions, community 

banks and credit unions, and dedicated public servants working 

every day to improve the economic climate on tribal lands. Just 

this past August, I had the honor of visiting Eagle Butte on the 

Cheyenne River Indian Reservation in South Dakota where I was 

able to hear directly from small business owners about the challenges they face and the important assistance they received from 

the Four Bands Community Fund. The leaders of these small businesses—ranging from Lakota Archery to Bonnie’s Quilting Boutique—really demonstrated for me the strength of the Native entrepreneurial spirit and how important CDFI programs are to small 

business growth in Indian Country. 

I am very pleased we are joined by such a great panel of witnesses here today, and I thank them for being here. 

I also want to acknowledge and thank Senator Akaka. We are all 

fortunate for his service on this Committee and as the Chairman 

of the Indian Affairs Committee. I am proud to serve on the Indian 

Affairs Committee under his leadership where we have considered 

many of these important issues. 

I will now turn to Ranking Member Shelby for his statement. 

STATEMENT OF SENATOR RICHARD C. SHELBY 

Senator SHELBY. Thank you, Mr. Chairman. Thank you for calling this hearing. 

Economic development is a challenging endeavor even in prosperous times. In Indian Country, however, the problems are more 

acute and persistent and have been made worse by our current economic situation. 

The statistics reveal the severity of this problem. The average income of an Indian living on a reservation in 2009 was $8,000 compared with $14,000 for Indians living off reservations and $21,000 

for the average U.S. citizen at that time. To compound the difficulties, the average poverty rate for Indians on reservations is 28 percent compared to 15 percent for other Americans. 

Despite some well-known successful gaming operations and other 

business ventures pursued by tribes, a majority of those living in 

Indian Country are still struggling. The economic development successes experienced by some tribal governments have not delivered 

improved living standards to all who live on the reservations. Unemployment remains high and access to capital for business formation is virtually nonexistent. 

Much of the research and work that our panelists have focused 

on over the years highlights the inherent difficulty of doing business on reservations. Due to the unique relationship between 

American Indians and the U.S. Government, the Bureau of Indian 

Affairs is the trustee of Native lands. Such an arrangement requires that the Bureau approves each development effort a tribe 

seeks to undertake. Businesses seeking to locate on a reservation 

3 

must navigate murky regulatory waters in dealing with both the 

tribal government and the Bureau of Indian Affairs. 

Additionally, each reservation is governed by a unique set of laws 

and courts. The patchwork of legal rules and regulations has discouraged business activity on reservations, especially by financial 

institutions. The problem is only made worse by what some have 

described as a casual approach to the rule of law. Banks lending 

on some reservations find that they have no recourse when someone defaults on a loan because their tribal courts are unwilling to 

enforce the contract. These legal and regulatory obstacles have long 

hampered economic development. 

I hope that we learn today what steps can be taken to alleviate 

these problems which have impeded economic development in Indian Country for far too long. 

Thank you, Mr. Chairman. 

Chairman JOHNSON. Thank you, Senator Shelby. 

Are there any other Members who wish to make a brief opening 

statement? 

Senator TESTER. Mr. Chairman, if I might. 

Chairman JOHNSON. Senator Tester. 

STATEMENT OF SENATOR JON TESTER 

Senator TESTER. Well, thank you, Mr. Chairman, thank you, 

Ranking Member Shelby, for calling this hearing together. I want 

to welcome the whole panel. To the two people from Montana, Martin Olsson and Sue Woodrow, thank you very much for being here 

today and for your testimony. 

I also want to thank you, Mark Tilsen. I believe you are probably 

responsible for these, and I do not know if Adam Healy was the 

one that got you to come or not, but I have not eaten these yet, 

and I have not heard your testimony, but you can come back anytime. 

[Laughter.] 

Senator TESTER. I want to thank you all. Like many in this body, 

economic development and job creation are my top priority, and 

they are important in every American community, and Indian 

Country is no exception. Like many places, Indian Country has its 

haves and it has its have-nots. A handful of tribes located in more 

populated areas have become wealthy with casinos. 

On the positive side, they have used Federal incentives to do exactly what Congress intended, and that has allowed them to make 

up gaps in services left by inadequate Federal budgets. 

On the negative side, too many people think gaming tribes are 

the norm in Indian Country, and they are not. The rates of unemployment and poverty in the vast majority of Indian Country are 

dramatically higher than the rest of the Nation. In some communities, many in Montana, we see unemployment rates as high as 

70 percent, and the lack of private investment is absolutely crippling in getting those numbers down. 

Unfortunately, the tough economic conditions in this country is— 

Indian Country has been living through it. Challenges stem from 

many sources: rural isolation, lack of institutional investment, poor 

health care, inadequate educational institutions, and in some cases 

tribes were just cheated out of their opportunities which resulted 

4 

in what some experts have described as ‘‘a cycle of poverty.’’ Rather 

than each new generation building on the past, the vicious cycle repeats itself over and over again and prevents American Indians 

from achieving their full potential, and this cruel cycle affects almost every aspect of American Indian life. 

So tribal members have told me that they do not have much to 

lose, so there is not much hope, and hopelessness and despair affect kids and adults struggling against feelings of suicide and it 

causes public safety issues and a whole lot more. 

Where there are challenges there are opportunities, and Indian 

Country is full of opportunities. They hold great potential for traditional and renewable energy. They have a potential for agriculture, 

agricultural tourism, tourism, Government contracting, and small 

businesses. In many cases they need off-reservation private investment to capitalize on those opportunities, and it is not there. So we 

need to figure out ways we can make that happen. 

Tribes need to adopt a Uniform Commercial Code, predictable 

probate laws, and reliable lien filing systems that will give outside 

investors the confidence they need. They need also consistency in 

Government if they are going to be able to succeed in the world 

today and create jobs and move that unemployment rate down. 

I look forward to hearing from the witnesses today and talking 

to them about potential solutions to making inroads into investment in Indian Country. 

Thank you all for being here. 

Chairman JOHNSON. Senator Merkley. 

STATEMENT OF SENATOR JEFF MERKLEY 

Senator MERKLEY. Thank you, Mr. Chair. 

For the tribes in the Northwest and certainly in Oregon, economic development has long been tied to timber, fishing industry, 

and other natural resource areas, but only a few tribes still have 

a timber land base, and for them they are working on diversification, and for other groups that do not have that base, they are looking at any form of tribal business that can provide jobs and economic development in the community. 

One bright spot for our State has been the Oregon Native American Business and Entrepreneurial Network. The graduates of that 

program have established a number of small businesses in partnership with a fair number of banking partners from Seafirst Bank, 

Key Bank, U.S. and National Bank, but we do not have enough 

bright spots in the economy of our Native American communities, 

and I look forward to learning about the experiences that you are 

bringing here today. 

Thank you so much for coming to D.C. to address the Committee 

as we wrestle with this. 

Chairman JOHNSON. Thank you all. 

I would like to remind my colleagues that the record will be open 

for the next 7 days for opening statements and any other materials 

you would like to submit. 

Now I would like to briefly introduce the witnesses that are here 

with us today. I am proud that we have two witnesses from my 

home State of South Dakota here today. Our first witness is Mr. 

Mark Tilsen, the cofounder and president of Native American NatVerDate Nov 24 2008 16:02 Jun 01, 2012 Jkt 048080 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 L:\HEARINGS 2011\11-10 OPPORTUNITIES AND CHALLENGES FOR ECONOMIC DEVELO
5 

ural Foods, located in Kyle, South Dakota, on the Pine Ridge Indian Reservation. Founded in 2006, Native American Natural 

Foods makes the popular Tanka Bar, a protein bar made of buffalo 

meat and cranberries. They also make other buffalo food products. 

Mark, thanks for being here today. I must say I have enjoyed a 

few Tanka Bars over the years. 

I am pleased that my good friend Senator Tester suggested Mr. 

Martin Olsson as a witness. Mr. Olsson is the president of Eagle 

Bank located on the Flathead Reservation in Montana. Eagle Bank 

was chartered by the Confederated Salish and Kootenai tribes and 

is one of only a handful of Native- owned or controlled banks in the 

country. 

I am delighted Ms. Tanya Fiddler, executive director of the Four 

Bands Community Fund, a Native CDFI on the Cheyenne River Indian Reservation in South Dakota, is here with us today. Four 

Bands was created in 2000 and has become the leading organization on the reservation in the areas of small business training and 

lending and financial education. Tanya, thank you for offering your 

insights. 

Mr. Dante Desiderio is executive director of the Native American 

Finance Officers Association. The association works to improve the 

quality of financial and business management of tribal governments and their business entities and supports the development of 

Native American financial professions. 

And Ms. Sue Woodrow, community development advisor at the 

Helena, Montana, branch of the Federal Reserve Bank of Minneapolis. Ms. Woodrow has worked at the Fed since 1990 where 

she has focused on community development with a focus on Indian 

Country legal issues. 

We welcome all of you here today and thank you all for your 

time, especially those of you who have traveled great distances. 

Mr. Tilsen, you may proceed. 

STATEMENT OF MARK A. TILSEN, PRESIDENT, NATIVE 

AMERICAN NATURAL FOODS 

Mr. TILSEN. Thank you, Chairman Johnson, Senator Shelby, and 

Members of the Committee. I am impressed by your understanding 

of the challenges we face already just from your opening statements. 

Native American Natural Foods is located in Kyle in the middle 

of the Pine Ridge Indian Reservation. We are sort of a new approach to economic development, and I want to say that we grew 

out of the CDFI movement. You know, Kyle is the location of the 

Lakota Fund, which was the first reservation-based CDFI formed 

in 1985. When it was created in Kyle, there were two Native American businesses, and now there are literally hundreds of Native 

American businesses. We have a reservation-based Chamber of 

Commerce with several hundred members that have all grown out 

of the CDFI movement. 

The CDFI movement provides the essential first rung for firstgeneration entrepreneurs both in terms of financial literacy, and in 

most of the large land-based tribes, it is the only commercial lender 

of any kind. And your support of the American Indian CDFI proVerDate Nov 24 2008 16:02 Jun 01, 2012 Jkt 048080 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 L:\HEARINGS 2011\11-10 OPPORTUNITIES AND CHALLENGES FOR ECONOMIC DEVELO
6 

grams is essential and their growth is essential for the future of 

economic development. 

We are also excited here on Pine Ridge that we have a new tribal 

transportation program that this Committee supported, and it is 

new and growing and it is helping. It is becoming another central 

part of the infrastructure to have a public transportation system on 

a reservation that is extremely large. And your ongoing support is 

really critical for that, and I would like to thank you for your support of our tribal transportation program. 

I am going to defer to Ms. Fiddler on the particulars of the CDFI 

and talk a little bit about what we are trying to do with Native 

American Natural Foods. My cofounder and myself, Karlene 

Hunter, who has been National Indian Business Woman of the 

Year—she wanted to be here, but she is at another conference— 

have been involved in both community development and economic 

development projects on the Pine Ridge Reservation since the early 

1970s and 1980s. We were involved in creating the first radio station on the reservation and helping build the first tribal college. 

The reason I tell you that is I want you to know that we are experienced entrepreneurs who have worked very, very hard to build economic development in the community. 

What we have learned with Native American Natural Foods, the 

product you have on your desk there is called the Tanka Bar based 

on wasna, that traditional food. That product is an example of Indian entrepreneurship. It was created by some grandma probably 

several thousand years ago who understood that you could preserve 

meat naturally. That product is now the number one selling dried 

meat snack in the natural food category in America. All across the 

country, it is in thousands of stores, and it is sold both in health 

food stores, it is sold on 275 Indian reservations, and it is sold 

through the Internet. 

What is significant here is that we have one of the most economically and geographically isolated places in the country, and we 

have built a national brand. This year we will gross close to $2 million. 

The challenges that that faces for us is that as we try to—we 

built this whole brand, but we are not able to create any equity to 

keep up with growth. We have had a challenge trying to match 

the—we are unable to qualify for a BIA loan. Well, we did have a 

BIA loan that started the company in terms of doing exponential 

growth because we cannot meet the 20-percent equity requirement, 

and there is no provision to allow that to be raised. We used a lot 

of—working on an isolated reservation, we use a lot of Federal programs, so one of our investors is the Empowerment Zone which 

manages EZ funds in the reservation tribal charter. So what happens there is that they are forced into a position as a nonprofit to 

guarantee the loan to qualify for SBA. So, again, the dots do not 

connect. You cannot use the SBA program. 

So when we try to bring in outside equity from the social investment community, we are told, well, you cannot use tribal investment or social investors because they are not making a pure financial decision even though they are the only ones with the courage, 

dedication, and commitment to invest in these poor communities 

and create opportunities for the youth. 

7 

So there are a lot of dots that do not connect here even though 

there are resources in the system. As you all know, there is something close to $30 billion in the job act for small business, but every 

small business will tell you that there is not any lending going on. 

And the dots are not connecting in that aspect. 

On the CDFI side, there is no guarantee for people who invest 

into the CDFIs. There are many people who want to invest in 

there, but we need to create an opportunity to increase that investment. 

You know, the CDFIs are really essentially important on that 

first ring, but we need them to have more resources and more 

power to help us as we try to grow these companies to be exponentially successful, to be large enough to have a real impact on the 

unemployment and economic needs of the community. 

I am sorry for running over my time. 

Chairman JOHNSON. Thank you, Mr. Tilsen. 

Mr. Olsson, you may proceed. 

STATEMENT OF MARTIN M. OLSSON, PRESIDENT, EAGLE BANK 

Mr. OLSSON. Chairman Johnson, Ranking Member Shelby, and 

Members of the Committee, thank you for inviting me to participate in this important hearing on economic development in Indian 

Country. My name is Martin Olsson. I am the president of Eagle 

Bank in Polson, Montana. 

The Confederated Salish and Kootenai tribes recognized the need 

to support credit available for their membership. Over 40 years ago 

the Tribal Credit Program was created with a modest investment 

to assist tribal members with small balance short-term credit needs 

not adequately addressed by banks, and over the years net revenues were retained to grow the fund. This program has grown into 

a $45 million fund providing short-term unsecured, educational, 

home ownership, and commercial loans, and as reserves have 

grown, the program has been able to return dividends to the tribes. 

The tribes also have a smaller fund for small-dollar loans and a 

grant program patterned after the Montana Department of Commerce Indian Equity Fund. The tribes are dedicated to providing 

credit opportunities and grants to tribal members and their small 

and startup businesses that may not have other access to capital. 

After nearly two decades of research and discussion, the tribes 

organized Salish and Kootenai Bancorporation and chartered Eagle 

Bank in 2006. The bank is charged with providing the traditional 

financial services for all residents and businesses within the Flathead Reservation and to provide services for the underserved such 

as small-dollar loan and deposit accounts and check cashing that 

many banks no longer provide. 

Eagle Bank also works with tribal and other funding programs 

to leverage credit for small and startup businesses and serves as 

an advisor and grant reviewer for the Montana Department of 

Commerce Indian Equity Fund, the tribes grant program, and the 

tribes economic development committee. 

Eagle Bank has worked with programs offered by the FDIC during the crises. The temporary unlimited FDIC coverage on non-interest-bearing accounts has provided significant relief in maintaining deposit accounts for the tribes, and I hope this temporary covVerDate Nov 24 2008 16:02 Jun 01, 2012 Jkt 048080 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 L:\HEARINGS 2011\11-10 OPPORTUNITIES AND CHALLENGES FOR ECONOMIC DEVELO
8 

erage will be made permanent not only for Eagle Bank’s somewhat 

unique requirements, but also for all smaller community banks’ 

ability to compete with too-big-to-fail institutions. 

I also hope the FDIC would consider unlimited coverage on interest-bearing balances on a fee basis for those willing to participate. 

Lacking improved FDIC coverage or the return of excess deposit 

bond coverage, the majority of a tribally owned bank’s earning assets may be required to be invested in securities, restricting funds 

available for lending. 

Access to capital on reservations has been an ongoing problem 

with three primary challenges limiting that access: uncertainty created by tribal governments’ willingness to support access to capital, 

uncertainty created by lack of consistency in secured transactions, 

and financial literacy. 

A major impediment to access to capital is the uncertainty in 

lending within the jurisdiction of a sovereign entity. Some tribes 

are very proactive in developing statues that support lending and 

have consistent enforcement through their tribal courts, and other 

tribes continue to maintain a more protective environment for their 

membership. 

Tribal governments need to understand that in order for capital 

to be available, lenders must be assured there is a clear, consistent 

recourse in the case of a default through an independent and unbiased tribal court system. Recipients of the benefit of the capital 

must also be accountable for repaying their debts. 

Tribal governments also need to develop and adopt uniformity in 

regulating transactions secured by real and personal property as 

they exercise their inherent sovereignty. 

Financial literacy is very important on reservations. With no established bank relationships and low credit scores, many people fall 

prey to predatory lenders and check cashers. 

In conclusion, I believe there are opportunities for economic development in Indian Country, but significant challenges remain. 

The Confederates Salish and Kootenai Tribes approach, including 

chartering Eagle Bank, is making a difference on the Flathead Reservation, but chartering or purchasing a bank may not be appropriate for many tribes. 

Thank you. I look forward to your questions. 

Chairman JOHNSON. Thank you, Mr. Olsson. 

Ms. Fiddler, you may proceed. 

STATEMENT OF TANYA FIDDLER, EXECUTIVE DIRECTOR, 

FOUR BANDS COMMUNITY FUND 

Ms. FIDDLER. Hi hanne was‘te. Good morning to Chairman Johnson, Ranking Member Shelby, and the other Members of the Senate. As Senator Johnson said, I am the executive director of Four 

Bands Community Fund, a nationally recognized Native CDFI that 

serves the Cheyenne River Reservation in north-central South Dakota. I also wanted to note that I am the Chair of the South Dakota Indian Business Alliance and Cochair of the Native CDFI Network. 

Let me begin by saying Pilamaya ye, thank you, for the opportunity to appear before you on behalf of the people and organizations that are working to create Native private sector economies 

9 

throughout the State of South Dakota and on reservations nationwide. 

I prepared a written testimony to address the opportunities and 

challenges for economic development from the perspective of the 

Native CDFIs. This was quite an undertaking because of the complex landscapes we work within. As important as providing access 

to financial products and services and development services is for 

a CDFI, we also have to factor in the economic conditions and infrastructure limitations that exist on our reservations and throughout many rural communities. Our purpose is to strategically and 

entrepreneurially respond to those factors, meeting people where 

they are at and providing a path for them to reach for their 

dreams. In the time allotted, I wanted to at least say three things 

of all my testimony that I think are important for the Committee 

to understand. 

First, the mission of Four Bands is to create economic opportunity by helping people build strong and sustainable businesses 

and increase their financial capability to create assets and wealth. 

We do this by taking an integrated asset-building approach to entrepreneurship development in an area of high poverty, low incomes, and remote access. Cheyenne River encompasses Dewey and 

Ziebach counties, two of the poorest counties in the Nation. Sixtytwo percent of the residents in Ziebach live below the poverty level. 

People often travel 50 to 100 miles on poorly maintained roads to 

access basic goods and services. Since our inception we have provided over $3 million in credit 

building, micro enterprise, and small business loans to help create 

and expand over 100 businesses on the reservation. Over 300 people have completed our business training classes, and hundreds 

more have attended our Talking Circle workshops to develop skills 

and the capacity for personal and business development. 

Because of the lack of equity and ownership on the reservation, we also have an IDA program that has invested $300,000 in our 

customers, both adult and youth, who have invested in themselves 

by creating savings and completed trainings to attain assets like 

home ownership, business, and higher education. 

Four Bands has become the go-to organization on the reservation 

when it comes to creating a private sector economy. We also incubate the Cheyenne River Chamber of Commerce and conduct a lot 

of market analyses of the reservation economic opportunities for 

sound planning to help our businesses and our loan fund identify 

the correct sectors, products, and services that are needed locally 

and that can be provided by a local entrepreneur. We cannot afford 

to speculate on the potential market opportunities since people’s 

livelihoods are at stake. 

This is the community development side of CDFI that builds 

community capacity and human capital. The financial institution 

side leads me to my next point, and I want to say ‘‘wulpy la tanka’’ 

to the CDFI fund that means with great thanks—to the Treasury 

Native Initiatives Program. If it were not for this, none of us could 

be doing this work and have the successes that we have. Many of 

us in America believe that entrepreneurship grows and sustains a 

healthy economy, but in many cases banks cannot lend in remote 

areas, and sometimes they do not even exist in real Native commuVerDate Nov 24 2008 16:02 Jun 01, 2012 Jkt 048080 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 L:\HEARINGS 2011\11-10 OPPORTUNITIES AND CHALLENGES FOR ECONOMIC DEVELO
10 

nities, as we heard earlier. My number is 86 percent of reservation 

lands do not have financial institutions within their borders. We 

are fortunate on Cheyenne River. We have three banks serving our 

community, but none of them report the credit history on their clients. That makes it even more challenging for a business to startup 

and secure affordable capital. 

As a Native CDFI, we invest in what appears on paper to be very 

high risk, low-profit target market, but to date we have only written off 2.8 percent, about $100,000 of over $3 million in lending to 

the poorest of the poor in the country, which I think is very wonderful for us. 

We see the strengths and assets in our people and have developed internal systems and external relationships that mitigate risk 

and have helped us support the creation of 400 jobs. I think this 

is important. If banks cannot but we can, we are even more vital 

to a diversified economic development strategy in reservation communities. 

Our tribe agrees and supports our work for reservation-wide financial literacy and entrepreneurship development in our homes, 

in our schools, and in our business community. The tribe is the 

major economic developer, and our work complements and feeds 

their efforts for workforce and private sector development. 

Finally, I think it is important to know that we are seeing results. I am going to run out of time, but I will tell you briefly the 

economic momentum on our reservations in South Dakota that 

have Native CDFIs is two to three times that of the State of South 

Dakota in this time of recession. We are playing catch-up, though. 

Our median household incomes are still less than half of the national average, but we have had a 55-percent increase in median 

household income in our reservation communities. 

I will end there. 

Chairman JOHNSON. Thank you, Ms. Fiddler. 

Mr. Desiderio, you may proceed. 

STATEMENT OF DANTE DESIDERIO, EXECUTIVE DIRECTOR, 

NATIVE AMERICAN FINANCE OFFICERS ASSOCIATION 

Mr. DESIDERIO. Thank you, Chairman Johnson and Senator Shelby and Members of the Banking Committee for hosting this hearing. I know how important Indian issues are to the Committee and 

we appreciate you addressing the economic challenges and opportunities in Indian Country. 

My name is Dante Desiderio and I am a member of the Sappony 

and Executive Director of NAFOA, and NAFOA has had the privilege of helping Tribal communities grow their local economies for 

the past 29 years and we do that by bridging the gap between the 

banking community and the investment community and Indian 

tribes. We also do that by building capacity, and we do it by working directly with tribes to develop effective economic policy. 

And I want to use my time today to address three specific lowcost or no-cost policy recommendations. The first two are designed 

to get rid of uncertainty and bring capital into Indian Country, and 

the last recommendation is the design to look at some of these barriers and challenges that are getting in the way of Tribal Governments being able to grow and develop economically. 

11 

Over the past three decades that we have been helping tribes, we 

have seen industries grow and mature. We have seen Tribal communities prosper, and we have seen Native Americans having the 

opportunity to move home to find jobs and, more importantly, move 

home to professional careers on the reservation. But we still have 

a long way to go. We all know the statistics. The American Indians 

have the highest unemployment rate. We are still at the lowest end 

of just about every social and economic indicator, including having 

the highest suicide rate, and that is a true sign of lack of opportunity. 

And as a Nation, we all struggle with the sustained economic 

downturn and the effects of a stalled economy and we are now living in the age of austerity, with Congress having the challenge of 

trying to cut another $1.5 trillion from the Federal debt. 

This all makes finding solutions even more challenging and urgent. So three immediate solutions come to mind. The first solution 

is for Congress to remove the uncertainty created by imposing an 

essential government function test when Tribal Governments want 

to raise capital through the tax-exempt debt market. Every other 

government uses this tool effectively, but when Congress authorized Tribal Governments to use tax-exempt debt to raise capital, 

they put in an essential government function test and they did not 

adequately define the term. Because the language is unclear and 

because the regulatory agency interpreted Congress’s intent too 

strictly, the capital markets now steer clear of Tribal debt, equating uncertainty with higher risk and higher cost. 

The second fix, or the second solution is providing clarification on 

how tribes are included as governments when it comes to qualifying as accredited investors. It is important that Indian tribes specifically are listed as governments in the Securities and Exchange 

Commission definition of government body used in Regulation D. 

The current definition is extremely broad, and because tribes are 

not specifically referenced in the definitions, we see the financial 

markets are hesitant to extend us the benefit of the doubt and the 

regulatory agency is not willing to interpret tribes as fully included. Fixing this oversight is simple and will help tribes raise 

capital in the same manner as every other government, without 

added administrative costs and legal burdens. This helps tribes to 

help themselves. 

And finally, I want to discuss implementing the existing Indian 

Tribal Regulatory Reform and Business Development Act. This Act 

provides that the Secretary of Commerce convene an authority to 

perform a comprehensive review of the laws, including regulations, 

that stand in the way of investment and development on Indian 

lands. The authority terminates when the report of recommendations is submitted to Congress, meaning there is no added bureaucracy. This type of report could significantly impact development on 

Tribal lands. It could address things like probate, leasing, appraisals, and some of the structural impediments that Senator Shelby 

mentioned in his opening statements. 

We all recognize these are difficult and challenging times, but we 

also recognize this is not a time to throw up our hands and do 

nothing. It is frustrating enough for Native people and all Americans to deal with the impact of an economic downturn, but as we 

12 

have seen in the past, it is even more frustrating to see the rest 

of America recover without Indian tribes. 

We need to support programs that work and clarify language and 

laws and regulations that do not. It is clear when tribes succeed 

economically, so do local and State governments. And we are grateful for the Committee for dedicating the time and attention to this 

matter and we would be happy to help as the Committee moves 

forward to implement any of these recommendations. 

Chairman JOHNSON. Thank you, Mr. Desiderio. 

Ms. Woodrow, you may proceed. 

STATEMENT OF SUSAN M. WOODROW, COMMUNITY DEVELOPMENT ADVISOR, FEDERAL RESERVE BANK OF MINNEAPOLIS 

Ms. WOODROW. Chairman Johnson, Ranking Member Shelby, 

and Members of the Committee, thank you for this opportunity this 

morning. My remarks will focus on the efforts of the Federal Reserve Bank of Minneapolis to promote Tribal legal infrastructure 

development that will support private sector business growth in 

Native communities. I want to emphasize that these remarks reflect my views and not necessarily those of others in the Federal 

Reserve System. 

Let me explain why the Federal Reserve is involved in this work. 

The mission of the Community Development or Community Affairs 

Program is to support the Federal Reserve System’s economic 

growth objectives by promoting fair, impartial access to credit and 

financial services, including in low and moderate income communities. 

The Minneapolis Federal Reserve Bank’s district includes more 

than 40 Indian reservations. Accordingly, for the past two decades, 

we have sought to assist Native communities to overcome the significant barriers they face accessing credit and financial services. 

As Mr. Olsson noted in his testimony, one significant barrier is the 

lack of or inadequate Tribal laws governing secured lending. By secured lending, I mean extensions of credit collateralized by a borrower’s personal property, which includes anything that is not land 

or affixed to land. These types of transactions in all State jurisdictions are governed by Article 9 of the Uniform Commercial Code. 

State law generally does not apply within Tribal jurisdictions, however, and we have found that across Indian Country, with a handful of exceptions, secured transactions law is largely incomplete, 

outdated, or nonexistent. 

The result is that lenders face very uncertain rules and, thus, 

higher risk, actual or perceived, doing business in Native communities. Consequently, loans and other business deals are frequently 

made at higher costs or not made at all. 

To address this, the Federal Reserve Bank of Minneapolis has 

provided substantial assistance to tribes across the country that 

choose to adopt the Uniform Law Commission’s Model Tribal Secured Transactions Act, a comprehensive template law substantially similar to State law but specifically tailored for Tribal environments. We have also helped facilitate several State-Tribal compacts that enable tribes that have adopted the Model Act to utilize 

these States’ UCC filing systems for the filing of liens under Tribal 

law. These arrangements complete the tribes’ secured transaction 

13 

systems in a manner that offers certainty and reliability for lenders 

and for borrowers while at the same time preserving Tribal sovereignty and Tribal jurisdiction. 

We are also involved in working with the Uniform Law Commission to launch an initiative to draft a Model Tribal Probate Code 

to help ameliorate the significant problem of fractionated interests 

in Indian-owned allotted lands. This has the potential to eventually 

free up untold land value for use as collateral or for development 

while again maintaining Tribal sovereignty and Tribal jurisdiction. 

To move forward, however, this initiative needs funding to ensure 

it has broad participation from tribes and Native legal organizations. 

The Minneapolis Federal Reserve also works closely with many 

Indian Country partners and others to provide Native entrepreneurs a voice through broad cross-sector coalitions, including 

the Montana, South Dakota, Minnesota, and soon, North Dakota 

Indian Business Alliances. These Alliances collectively have significantly helped elevate the dialog about the importance of supporting 

Native entrepreneurship and private sector development in Indian 

Country, regionally and nationally. 

Because these initiatives are still recent or pending and because 

good data on Tribal business environments and outcomes are lacking, we cannot thoroughly assess their efficacy at this time. However, we are monitoring progress and in time will provide feedback 

on which approaches are associated with improved economic performance and small business development in Indian Country. 

In closing, many tribes, Native organizations, and Indian entrepreneurs have been working diligently to meet these challenges, 

but much remains to be done. With continuing support for Native 

grassroots leadership and appropriate outside assistance, however, 

I see many more opportunities for tribes and their citizens to further develop the legal and civic institutions that will support small 

business growth in Indian Country. Thank you. 

Chairman JOHNSON. Thank you, Ms. Woodrow. Thank you for 

your testimony. 

As we begin questions, I will ask the Clerk to put 5 minutes on 

the clock for each Member. 

Ms. Fiddler, your written testimony points to the impressive economic data showing an increased number of employed individuals 

in median income on the Cheyenne River and other reservations in 

South Dakota over the past decade. How does Four Bands plan to 

sustain this growth and leverage it for more private capital investment? 

Ms. FIDDLER. Well, as the capacity of the community has been 

coming up and people have been getting introduced into banking, 

savings, and changing their financial behaviors, folks are starting 

to, like with the IDA program, invest in themselves, but also their 

first introduction to microloans, start to get the equipment that 

could be collateralized on larger and larger loans. 

The other trick to this, it is kind of a different way of thinking 

about it, but this financial literacy and entrepreneurship development work, we have integrated into our K through 12 school system and we are replicating it on the Pine Ridge and Crow Creek 

Reservations. So that is kind of a funny answer. When we think 

14 

of sustainability, we are talking about a deep investment to raise 

the skill level of every kid on our reservation, and we impact 2,000 

children a year, with financial literacy and entrepreneur in their 

core subject area so it does not push up against No Child Left Behind or the other requirements in education. We made sure that 

our curriculum meets the education standards. 

So we are kind of hoping we work ourselves out of a job there 

eventually, that the skill levels have come up and that people start 

to change behaviors, we have these ABCs of financial literacy and 

entrepreneurship begin to change behaviors and realize that they 

contribute to the economy, the buying local, the research that we 

have uncovered with the business-to-business market, our institutional market plays with Tribal Governments, and the school systems, where are they spending their money, trying to get people to 

bring the money back home. As the tax revenue increases for the 

tribe, all of a sudden, the economy gets more and more functional 

and our role would be able to back out. 

People will have credit histories, because we also warehouse 

through a nonprofit collaboration with the Credit Builders Alliance 

here in D.C. to report credit histories on our clients. So now they 

are actually doing some credit as an asset, building a credit identity that is going to help them access affordable products. 

So there are a number of different ways that we look at this, but 

I think most strategically identifying the opportunities for entrepreneurs to fill local gaps, next steps out are connecting them regionally and hoping that the State of South Dakota sees our reservations as contributors to economic development strategies, not 

just these isolated places, but that there is more engagement. 

And on the part of rural, as well, sustainability for us on Cheyenne River means that the national dialog on job creation includes 

rural places as much as the urban centers, where most of our jobs 

occur. But we have to look at the assets in rural and see what we 

are contributing. There is infrastructure development with energy, 

highways, and things like that that are going to impact us locally 

because we do have those assets, wind assets and those kinds of 

things. 

Chairman JOHNSON. Mr. Tilsen, you have recently encountered 

difficulty finding a lender willing to loan Native American Natural 

Foods money to increase the company’s capacity due to increase 

product demand. How critical was the loan you received from a 

CDFI to your business being able to meet increased consumer demand? 

Mr. TILSEN. The truth of the matter is, if it was not for our local 

CDFI, we would have never been able to originally launch the company, and if it was not for the CDFI clearinghouse out of Los Angeles in cooperation with the Minnewaukan Sioux Tribe and the 

American Indian Land Tenured Stewardship Foundation, we would 

have had to probably close down last May because we did not have 

any way to access the money because of the problem of not being 

able to use a Federal guarantee on the SBI side or the BIA side. 

So the dots did not connect. 

So we created a complicated transaction in which the tribe made 

a donor-designated grant to the American Indian Land Tenured 

Stewardship Foundation, which is one of our equity investors. They 

15 

pledged that $250,000 to the CDFI clearinghouse clearinghouse 

CDFI in Los Angeles, and that gave us a million dollars’ worth of 

lending. 

But you have got to understand, this is a very complicated transaction that we had to do in order to save the company, and that 

is what I am talking about in terms of a lot of these programs do 

not connect. 

I will give you another example. A lot of our reservation-based 

businesses, we used to work with the American Indian Employment Tax Credit. But because we have marginally profitable businesses, that tax credit, we cannot fully use it and it is not transferable to our minority investors, who are often much more successful 

and profitable than us. So just by making that credit transferable 

to the minority investor, you would create an opportunity to increase investment and equity in the small business. 

And there are a series of things like that where we see opportunity where we just do not—we spend a lot of our creative energy 

trying to get these dots to connect to grow these businesses. 

And our situation is not unique. I can tell you about a hotel on 

the reservation, a current entrepreneur is trying to open a movie 

theater. Everybody is having the exact same problem as the—firstgeneration entrepreneurs are reinvesting back into the community, 

trying to make it grow into this second-level tier, and equity is our 

big challenge. 

Chairman JOHNSON. Mr. Olsson, your written testimony makes 

it clear that chartering a bank may not make sense for every tribe. 

Can you expand upon what other tribes might learn from your experiences on the Flathead Reservation in determining whether or 

not it makes sense to charter a bank, and is a credit union easier 

to charter? 

Mr. OLSSON. Senator, in the case of the Confederated Salish and 

Kootenai Tribes, the reservation was open to homesteading in 1910 

and a significant part of the developable real estate is owned by 

non-Native Americans. You have less than 25 percent of the residents on that reservation have claimed Native American status as 

heritage in the 2010 Census. This provides a broad basis that a 

bank can utilize for gathering deposits and make loans. 

Banks, as you well know, are somewhat regulated, and that may 

be a topic for discussions down the road. But in those cases, you 

have severe limitations on what you can do in banking in transactions with affiliates. If you are on a reservation that is not as diverse as the Confederated Salish and Kootenai Tribes, you may not 

have a sustainable base to support a bank and be able to have adequate lending to generate revenues. 

I commented in my written testimony that perhaps a credit 

union may be a more viable opportunity in some of these instances, 

because you are dealing with individuals, small loans, those kinds 

of things, but you are not in a spot that you need to provide a profit for the bank and the shareholder and your regulatory requirements for assisting members in a credit union appear to be at least 

somewhat less stringent than banks. 

Chairman JOHNSON. Senator Shelby. 

Senator SHELBY. Thank you, Mr. Chairman. I will help move this 

on. Thank you. 

16 

Chairman JOHNSON. Senator Tester. 

Senator TESTER. Thank you, Mr. Chairman, and I want to, once 

again, thank all the witnesses for their testimony. 

I am going to start with Martin Olsson. In your testimony, you 

address technical assistance for entrepreneurs in Tribal communities. You point out some room for improvement, to say the least. 

One of the deficiencies that you point out is some of the folks responsible for technical assistance may not have any business experience themselves, which I find unfortunate, and that may be an 

understatement, too. 

Can you give me an idea of who these folks work for? Do they 

work for government agencies? Are they private technical assistance folks, or—— 

Mr. OLSSON. We have, in our area, at least, we do have some 

contract providers of technical assistance and we also have some 

Tribal employees who are providing technical assistance under 

some of the Tribal business entities. 

Please do not misunderstand me. The people that I know and 

work with are highly dedicated. They work hard. They are really 

trying to do what they are charged to do. But unfortunately, at 

least on the area I am familiar with, you have a lot of small businesses that what you really need to do is mentor them in understanding how to manage a checkbook to keep track of records for 

a small business. You do not need to be developing a business plan 

or a chart of accounts or a QuickBooks accounting system because 

the individuals have not grown in their financial literacy to that 

level. 

I tend to be a little crossways sometimes with our TA providers 

because I have told them repeatedly, if they are bringing in a grant 

application that I am charged with reviewing or a loan application, 

if the information provided is not a business plan that the potential 

recipient has participated in preparing and understands and is able 

to use that to mark guideposts for his business, then it is absolutely worthless. 

Senator TESTER. Right. 

Mr. OLSSON. So mentoring may be a better way to go if we can 

put something like that together. I am not sure how something like 

that could be organized or funded. 

Senator TESTER. Well, you answered my second question already, 

and that was if you had any ideas on how we could put a greater 

focus on mentorship, and maybe some other folks on the panel 

have the same experience that Martin Olsson has. Mark Tilsen. 

Mr. TILSEN. I wanted to add, on the other side of the situation, 

we are a company that is investigating look at the New Market 

Tax Credit, but in terms of technical assistance, that means we 

need expertise in integrated supply chain, just-in-time supply chain 

management in order to make that next goal, and within the current structure, there are not any resources to pay for those consultants. So if the CDFI funds could have money to contract experts 

to help with exponential growth, I think it would allow us to better 

utilize tools like the New Market Tax Credit. 

Senator TESTER. OK. Tanya, did you have a comment? 

Ms. FIDDLER. Real quick, that Four Bands, our model is a little 

bit different. We have a business coaching model. We connect peoVerDate Nov 24 2008 16:02 Jun 01, 2012 Jkt 048080 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 L:\HEARINGS 2011\11-10 OPPORTUNITIES AND CHALLENGES FOR ECONOMIC DEVELO
17 

ple with mentors on a case-by-case basis, bigger businesses when 

we have bigger loans. We are able to do that. So we would be 

happy to advise or have people in. We actually have anywhere from 

five to six Native Nations that come visit us on Cheyenne River a 

year to learn how we do things, because my coaches are the loan 

originators, but all of the business planning is driven by the client. 

We do not do for anybody because it is important for them to have 

the skills. And then coming out the other side of it, we offer workshops that are specific. We have check-ins, and we are trying to get 

better at doing our job with folks. 

Senator TESTER. Yes. I think the point that I found somewhat 

distressing is the fact that if we are going to have folks that are 

going to be able to be successful in the end, which is what we are 

about, creating jobs and successful business interests, those technical assistance folks, no matter how well-meaning they might be 

and how hard they work, they have to have the business experience that can relate to the level of business they are working with, 

whether it is startups or whether it is expansions like you are talking about. So if there are ways we can help in that, that would be 

good. 

I want to talk about trust property real quick, because my time 

is running out. Trust property is something that is pretty unique 

to Indian reservations and it is something that I know, Martin, you 

have worked with. I know, Sue, you are an expert on it. But there 

are many financial institutions that, quite honestly, do not have a 

clue about what it is about, and we have had experience through 

you, Martin, with one of them, and we got to the bottom of it, but 

it takes a while. 

The question is, and this is for both Martin and Sue, is—and you 

can go first, Sue—is there a role for regulators like the Fed and 

FDIC and NCUA for credit unions in helping financial institutions 

understand the issues unique to Tribal communities as it relates 

to trust lands? 

Ms. WOODROW. Thank you for the question, Senator, and certainly, there is always room on the education front to help financial 

institutions understand these things. 

The one thing that I would like to point out, and I am going to 

circle back to the Uniform Law Commission’s proposed Model Tribal Probate Code Initiative, is that we need to begin tackling the 

trust land issues. Vast areas of land in Indian Country are tied up 

and unable to be used as collateral to access credit—— 

Senator TESTER. That is right. 

Ms. WOODROW. ——or for development purposes. This particular 

initiative will begin to tackle just one small piece, and that is to 

tackle the problem of fractionated interests in allotted lands. This 

initiative needs funding to move forward. The intent, as reflected 

in our preliminary stakeholder meetings is to include a broad representation not only of Federal agencies that are involved in this, 

but also key stakeholders from tribes, Native legal organizations, 

and others to come together and really work on tackling this issue. 

So I encourage support for this initiative to get off the ground. 

I think it is a critical one. 

Senator TESTER. OK. Martin, from your perspective as a banker, 

can the regulators have an impact on knowledge about trust lands? 

18 

Mr. OLSSON. There is a definite need for education, both on behalf of banks who do not participate in trust financing as well as 

a lot of Tribal Governments where trust property financing is not 

currently being utilized. The role and scope of that education is 

something that, I think, needs to be addressed. I am not sure who 

is the best to take that lead, but you know me, Senator Tester. I 

am always reluctant to suggest a regulatory agency provide additional guidance. 

Senator TESTER. Got you. Point well taken. Thanks, and I ate 

one of the bars and they are great. Keep business going. 

[Laughter.] 

Chairman JOHNSON. Senator Akaka. 

Senator AKAKA. Thank you. Thank you very much, Mr. Chairman, for your leadership in holding this important hearing. 

Chairman Johnson, Senator Tester, and I also serve together on 

Indian Affairs, where we have been examining economic development and job creation opportunities and challenges in Native communities. Sustainable economic development provides a key to selfdetermination for Indian tribes. Even though some Native communities have seen improvements in economic development opportunities, most Tribal economies continue to suffer high unemployment. 

It is important for us to look at where tribes have been successful 

and support those efforts, because when tribes succeed economically, it does not just benefit their members. It also contributes to 

creating jobs and boosting economies of local communities and 

States, as well. So when we invest in Indian Country, we are making investments that impact all of us, investments that will help 

us navigate the road to American economic recovery. 

It is also important to talk about the limitations of restrictions 

in Federal law or policy that hinder economic prosperity and selfsufficiency in Indian Country and to examine what we in Congress 

need to do to remove those barriers. I look forward to address the 

economic development needs in Indian Country and surrounding 

communities. 

I would like to ask Ms. Sue Woodrow, the Federal Reserve Bank 

of Minneapolis has been proactive in identifying the needs in Indian Country to encourage economic development in Native communities. Mr. Olsson has testified that one of the big problems 

with access to capital for independent businesses is lack of financial literacy. In your view, how can we continue to improve our efforts to empower Native communities to make informed financial 

decisions? 

Ms. WOODROW. Thank you for your question, Senator. I would 

agree with Ms. Fiddler that the need to support financial education 

efforts is imperative in Indian Country, and I know that there are 

a few ways that this can be done. One way is by supporting the 

development of culturally and economically relevant curricula for 

schools. 

Continued support for community development financial institutions is imperative. Currently, CDFIs are among the primary providers of financial education in Native communities. Support of 

small business sector growth in Native communities is also important. Where we have areas of high unemployment, small business 

growth will provide jobs, provide opportunities for people to actuVerDate Nov 24 2008 16:02 Jun 01, 2012 Jkt 048080 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 L:\HEARINGS 2011\11-10 OPPORTUNITIES AND CHALLENGES FOR ECONOMIC DEVELO
19 

ally work and have an income and, therefore, have something to financially manage. It is very difficult to learn financial management 

when you have no money to manage. 

And last is to encourage Tribal Government policies that require 

financial education in their schools. 

Senator AKAKA. Thank you very much. 

Dr. Desiderio, your Association testified at a recent hearing of 

the Indian Affairs Committee on the impacts the Carcieri decision 

has had on economic development in Indian Country. Can you describe those impacts for this Committee? 

Mr. DESIDERIO. Sure, Senator Akaka. First, I want to make a 

comment based on what Ms. Woodrow had talked about in building 

capacity, and I think we do focus a lot of efforts on building the 

capacity on the Tribal side, and our organization certainly does 

that. But there is also building the capacity on the other side of 

this, which is the banking community, investment community, and 

I think that is part of our job in NAFOA, is to bring those two together. And I think when we do that, we bring more competition 

and we bring better rates, more affordable capital. 

One of those—it is difficult enough to do financial transaction on 

its own, and like we have heard today, it is more difficult in Indian 

Country. You do have trust land issues to deal with. You also have 

sovereignty issues to deal with. And that gets to your question of 

this added uncertainty that the capital markets need to deal with 

when they want to do business with Indian Country. 

As it was in my testimony today, we have that uncertainty when 

we deal with trying to raise money for tax-exempt bonds using the 

bond market for that. Our administrative costs are higher and our 

capital costs are usually higher because of that uncertainty. We 

also have uncertainty when we want to invest and partner with 

other tribes, and we pay more each year for those administrative 

costs. 

And the Carcieri decision, Carcieri v. Salazar, basically adds another layer of uncertainty, another layer of legal costs to our financial transactions, and I think, besides turning 75 years of Federal 

policy on its head, there is now this idea that you need to have this 

Carcieri test for financial firms to do business in Indian Country, 

and the problem with that is that nobody has really come out with 

a firm idea of what the decision—what tribes are going to be impacted on the decision. So it absolutely adds an additional layer of 

uncertainty and cost for tribes to transact business. 

Senator AKAKA. Well, thank you very much as you relate that to 

the Carcieri decision. Uncertainty has really plagued the Indian 

communities. Thank you very much for your response. 

Mr. Chairman, my time has expired, but I have other questions 

here that I would like to ask. 

Chairman JOHNSON. I will go to a second round. 

Senator AKAKA. All right. 

Chairman JOHNSON. Mr. Desiderio, what barriers do you see that 

limit access to capital in Indian Country and what role does your 

organization and your individual members play in helping to eliminate these barriers? 

Mr. DESIDERIO. Well, I think as some of the panelists have suggested, it is difficult to set up businesses and access capital on resVerDate Nov 24 2008 16:02 Jun 01, 2012 Jkt 048080 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 L:\HEARINGS 2011\11-10 OPPORTUNITIES AND CHALLENGES FOR ECONOMIC DEVELO
20 

ervations, and you have another layer of issues to deal with. There 

was a study that was conducted and funded by the Casey Foundation a few years ago which set out to examine banking in Indian 

Country, and it is obvious that Indian Country is some of the most 

unbanked or underbanked parts of the country. And I think until 

we get our Native consumers and businesses and tribal enterprises 

in a position where they have competition, where they have different choices for short-term loans, home loans, business loans, and 

enterprise loans that tribes are going to be in a position of paying 

more for capital or struggling to make these businesses and enterprises work. 

Our organization plays a role in trying to bridge that gap and 

trying to educate the banking community into coming into Indian 

Country, and I think one of the tools that we have is the Community Reinvestment Act, which tribes are eligible but for some reason the Indian community is not considered a lot of times when 

banks are making the decisions to invest outside of the specific 

communities where they bank, so this is a which-comes-first situation. We need banks in Indian Country, we need community reinvestment funds in Indian Country, and we need to continue to educate both on building the capacity side for the investment and 

banking community and the tribal community. And, you know, also 

on the building capacity side, one of our missions, which we take 

a lot of pride in, is to build the next generation of financial and economic leaders, and we do have programs where we do send—you 

know, we do give scholarships, and we do send our kids to the Lead 

Program which builds business skills and leadership skills. And we 

also are working with Wall Street to give Native kids that opportunity to go and learn how things work in different investment 

communities. So it all helps to build that capacity. 

Chairman JOHNSON. Ms. Fiddler, do you see the CDFIs competing with the banking industry and with the credit union industry or complementing those entities? 

Ms. FIDDLER. On both the Cheyenne River and Pine Ridge reservations, we have a credit union, the Community First Credit 

Union on Cheyenne River, and Lakota Funds is sponsoring to start 

a credit union on Pine Ridge, and we are looking forward to it for 

the opportunity to complement each other’s work. 

The one thing that we do not do as a revolving loan fund is take 

deposits. You know, the credit union model and getting them up 

and running, we will have helpers when it comes to this financial 

education that we are trying to provide reservation-wide and carry 

that. The credit unions that are working in our communities are 

taking some of that on. They have a different dialog when they 

work with a consumer, and we need places where folks can be depositors. And like I said earlier, hopefully their creditworthiness reported out. We gave testimony last year on behalf of Native communities on the CRA re-look that they were doing, and I would like 

to send that to the Committee after the fact here because there 

were a lot of recommendations. It is not about regulation and creating more complex systems, but including some innovations that 

help people get credit. The banks in my community get credit for 

their work in distressed communities, you know, more tagging like 

that, you know, possible investment, that could take place that 

21 

they would get credit for, because my local banks do not know they 

can do that. 

So I do not see us competing, but I see us being ahead and competing in a positive way when we have a better product and service 

in a low-profit, low-margin area. I think that has to be considered. 

So it gets all of us performing to the needs of the consumer and 

looking at them, that that is driving it, not necessarily our ideals 

or a top-down philosophy. You really have to engage and realize 

what your local community can support and is willing to support 

to have conscience in what we do in these places, because there are 

too many opportunities for payday lenders. We have got them 

downtown on Main Street, you know, that kind of thing now. And 

as much as we do in the financial education side, folks are free to 

make those choices. But if there are not alternatives for them to 

develop real banking relationships—and we do that with our youth. 

We are walking them in, introducing them to banks, opening up 

savings accounts so they can begin to develop that relationship. 

Coming out of poverty, I was not comfortable going into a bank 

until I was in my mid-thirties. I was terrified just because of the 

unknown. So we try to do that to complement the relationship of 

the bank in the community with what we are doing with our clients. 

Chairman JOHNSON. Mr. Tilsen, what role does trust land circumstances play in developing resources? 

Mr. TILSEN. Karlene Hunter and I are also the owners of Lakota 

Express, and we have a 6,000-square-foot paid-off building that sits 

on 5 acres of tribal trust land that we cannot leverage to grow our 

business with. We can leverage the building, but we cannot leverage the complete asset that we have invested and paid off over the 

last 10 years. That is just one example. 

When we are dealing with trying—you know, the buffalo industry is growing at a tremendous rate right now, but the average age 

of the Native buffalo producers is over 60, and a lot of young people 

are interested in getting into that, but they cannot access capital 

even if they own their own land. And so they do not have the 20- 

percent equity requirement to be able to access that. 

I think there may be some models to look at, like the 874 loan 

program that has opened up mortgages for houses, that maybe 

there could be a model similar to that that would allow some kind 

of leverage to help people get over that barrier. I am not exactly 

sure. Or looking at creating an equity bank that people could then 

use some of that equity. 

But I also really want to emphasize here that doing economic development on the Indian reservation where all the power exists 

outside the reservation and the historical model of subsidizing businesses, their capital and labor to move on to the reservation has 

never worked at wealth creation. Now that we have a pool of growing entrepreneurs in Indian Country and a growing population in 

Indian Country, we really have to recognize that the leadership, 

the creativity, and the courage is in the Indian community, and we 

have to figure out how to make sure that the minority investor can 

take the tax advantage, but the power, direction, and authority, 

both because of sovereignty and because those are the people who 

are creating the wealth, have to be the ones that hold the power. 

22 

But we have to have a way to incentivize these minority investors, 

whether it is in the new market tax credit, whether it is creating 

some insurances inside the CDFI program, whether, you know, it 

is structurally within the American Indian employment tax credit. 

It is essential to me that the leadership be allowed to lead, people 

like Tanya, people like Mr. Olsson who are right there on the front 

lines, because we are often dictated to by all these Federal agencies, and you cannot get the lines to dot. There needs to be from 

the Federal level a little bit more risk taking to allow some flexibility and allow the leadership. 

I want to use as an example, if you would just indulge me for 

a second, the Partnership for Sustainable Communities, which our 

reservation is one of those. It is a unique opportunity that gets the 

tribe, State, Federal, county programs to all work together to come 

out with a sustainable plan, and there has been—you know, it is 

a great project, and people are very excited about it on Pine Ridge. 

Currently the hearings going on on the House side are going to 

eliminate—they are going to make it—the new proposal is that 

Federal agencies will not be able to talk to each other in trying to 

find solutions to sustainable development and cooperation in that, 

which is the language that is on the House side today. That is the 

opposite direction that we need to go. If we are going to solve economic development, we need to create more flexibility on the 

ground level, and the leadership has to come from the people who 

are actually doing it and reverse this model if we are going to go 

from dependency to independence. 

I have seen this time and time again, and I am a big believer 

in this, both in terms of sovereignty but in effective use of Federal, 

State, tribal, and entrepreneurial dollars. 

Chairman JOHNSON. Mr. Olsson, how do you deal with the collateral you have? Do you go to tribal court or State court when enforcing your rights? 

Mr. OLSSON. Senator, where we have a large population that is 

not Native American within the reservation, it makes a bigger 

challenge for banks who are dealing in collection areas. Obviously, 

we are prohibited from inquiring to any nationality or if you are 

a tribal member at the time a loan is originated. Unfortunately, at 

the time you end up looking at a collection issue, what we typically 

do then is to, number one, verify whether or not the individual is 

an enrolled member of the tribe before we proceed with a collection 

action. If they are an enrolled member with the tribe, then we do 

go ahead and utilize a tribal court system for all collection actions. 

If we are dealing with a trust property issue, that is a piece 

where you know up front that the individual is a Native American 

within the reservation. You have to go through a fairly detailed application process and approval by the BIA or their delegated authority before you can perfect a mortgage on trust property. 

Fortunately, we have not had to look at any collection actions on 

trust property or any real estate at this point, so we feel fairly good 

about that. But if we do come into a point that we have to look at 

a collection action on trust property, that will go through the tribal 

court system. 

Chairman JOHNSON. Senator Akaka. 

Senator AKAKA. Thank you very much, Mr. Chairman. 

23 

Mr. Olsson, thank you for the work that your bank has done in 

the community to assist tribal members whose needs were not 

being met by traditional institutions. In addition to the programs 

that Eagle Bank runs, you also observed that the programs that 

are available for the first-time home buyers and students can be 

effective. So my question to you is: How could you expand your 

coaching services into a more formal program of financial literacy? 

And what would the benefits be? 

Mr. OLSSON. Senator, one of the premises when Eagle Bank was 

chartered was to develop financial literacy and work closely with 

the underbanked within our market, whether they are tribal members or not. Unfortunately, in the current economic environment, 

our resources are extremely limited, as is our staff time. 

What we would hope to be able to do is either through increased 

revenues and retained income or perhaps if there may be some 

type of grant program available, we would like to be able to offer 

dedicated staff to the financial literacy and training. We just are 

not able to do that at the moment. So if you have got some good 

ideas on how we can increase staff, why, that would be greatly appreciated. 

Senator AKAKA. Well, thank you very much for that. We certainly 

want to tell you to try to work on it. 

Mr. OLSSON. Thank you. 

Senator AKAKA. Ms. Fiddler, can you describe for us the Four 

Bands youth and entrepreneur internship program and the benefits 

you have found by bringing students into this program? 

Ms. FIDDLER. Thank you for the question, Senator. Back in the 

day—it was about 2005, 2006—when these match savings programs were coming about, our tribe, one of our tribal programs for 

poverty alleviation, wanted to invest in youth individual development accounts. But the problem is that the kids need to earn the 

money somewhere in order for them to be eligible for match monies. Meanwhile, our business community, being a low-profit area, 

cannot afford the employees and kinds of things that they need, 

and the wonderful thing about our Native business community is 

that they are always giving back, whether they can or not. They 

are just a generous place. So we matched up businesses with these 

young people that were needing to earn some money, for higher 

education for the most part. They do 100 hours of internship with 

a local business. We pay them a stipend. They save half of that stipend, and many of these kids are saving all of their stipend to go 

on to college. And then there are the teachable moments. That includes financial education as part of their internship that they 

have to do. They have to complete asset training, so if it is higher 

education, we do have some young single mothers that are looking 

to get into home ownership through our Habitat for Humanity office. So they are completing home buyer training. So whatever the 

asset that they identify in the internship, they save for, we match, 

and the businesses are getting the benefit. Many of the businesses, 

because they are—you know, not knowing what the workforce looks 

like, many of our local businesses have actually picked the kids up 

after. So we have gotten nearly 100 kids that have completed the 

program. Most of them made their goals, are on to college. Now we 

are studying out to see if they are completing, and the majority of 

24 

the kids are still working on their higher education. Our young 

lady is still working on getting a home for her and her new baby, 

that kind of thing. 

So it was an innovative way to address all the shortcomings that 

we had with lack of jobs, you know, lack of experience, and our 

business has not been able to afford to take on the employees that 

they need. So they jump up and volunteer to help us out in that 

way. So that in a nutshell is the youth entrepreneurship. 

Senator AKAKA. Thank you very much. 

Mr. Tilsen, your success in creating food products that promote 

a Native American way of wellness that feeds mind, body, and spirit is impressive and inspiring. But the difficulties that you have 

had in securing support to keep your company alive and growing 

is sobering. The number of agencies and banks you have had to 

visit is daunting. If you were to give advice to a Native American 

entrepreneur who is interested in starting a business in Indian 

Country, what are the important lessons you could provide based 

on your experiences? 

Mr. TILSEN. Focus and flexibility. You know, we started out with 

the model of—we launched a natural food company in the middle 

of a food desert on an isolated Indian reservation because we wanted to figure out how we could create a product that would impact 

our growing rate of diabetes in the community. Our original business model thought we could distribute it nationally and make 

enough money to subsidize it and make it available at an affordable rate within our school system. That business model has not 

succeeded at that goal. We still have this—we have got a lot of 

young people involved, and a lot of young people love the Tanka 

brand. We faced the reality of not making it affordable. 

So we have to be flexible in that, and we have to try to hunt out 

each agency. There is a lot of talk about food deserts right now and 

a lot of talk about diabetes, but, again, trying to connect those dots 

and making those resources available to get the product into the 

schools, you know, we are all over the country, but we are not in 

the high school across the street from my office except for maybe 

on a special occasion. 

So that is a real challenge, and I guess that is why it takes a 

lot of focus and a huge amount of networking, and you have to stay 

focused on your mission and your goal. And we go back to our mission every day with every decision, and it is the support of the entire network within the CDFI community, within the social venture 

network community, within the local community where so many 

people want you to succeed. You know, right now there are 50,000 

people that interact with the Tanka brand that are listening on the 

Internet right now, people all over the country and all over the reservation through with Web broadcast, and that is the encouraging 

part. But how do you connect those dots to make it work? That is 

the challenge. And I think it takes a lot of focus, and it takes the 

flexibility to try to connect these dots all the time. That is why it 

is such a great honor to be here because we are able to tell this 

story. 

Senator AKAKA. Well, thank you very much. I want to thank our 

witnesses very much for your responses. 

Thank you, Mr. Chairman. 

25 

Chairman JOHNSON. Thank you all for your testimony and for 

being here with us today. I am grateful to all of you for the important work you do to make economic development a reality in Indian 

Country. As Chairman of this Committee, I will continue to work 

to improve the lives of all American Indians, and we need to continue supporting your efforts. 

This hearing is adjourned. 

[Whereupon, at 11:29 a.m., the hearing was adjourned.] 

[Prepared statements and additional material supplied for the 

record follow:] 

26 

PREPARED STATEMENT OF CHAIRMAN TIM JOHNSON 

During my time in Congress, I have enjoyed a strong working relationship with 

American Indian tribes in South Dakota and around the country and have advocated for policies to help improve the quality of life for American Indians. While 

progress has been made, many Native communities continue to face significant challenges, including staggering unemployment rates, inadequate health care, crowded 

and unsafe housing conditions, high crime rates, and educational inequalities. This 

is unacceptable. 

Fostering small business growth is a vital step toward increasing employment opportunities and improving local economies throughout the country during these difficult economic times. Small business growth in Indian Country is no exception. Encouraging the startup and growth of Native American-owned businesses is an important priority to me as Chairman, and that is why I have called this important 

hearing and invited all of you to testify here today. 

For many years, I have worked to ensure Native communities in South Dakota, 

and across the country, have adequate infrastructure in place to foster an environment where economic development can take place—from being an original cosponsor 

of the legislation that created the NAHASDA block grant for housing to helping 

fund the Mni Wiconi rural water system to supporting tribal bus transit programs. 

Today, the Committee will examine what challenges continue to hinder economic 

growth in Indian Country, including the lack of access to capital, small business 

lending, financial education, and support for start-up businesses. With unemployment rates reaching an astonishing 80 percent in some areas of Indian Country, we 

must do better to address the problems that cause this persistent cycle of unemployment. 

While it’s sometimes easy to become discouraged when considering all the obstacles that face Native communities, we will also hear about the great work so many 

are doing to help address these persistent problems. In South Dakota, and in other 

States, there are many small business owners, community development institutions, 

community banks, and credit unions, and dedicated public servants working every 

day to improve the economic climate on tribal lands. 

Just this past August, I had the honor of visiting Eagle Butte on the Cheyenne 

River Indian Reservation in South Dakota, where I was able to hear directly from 

small business owners about the challenges they face and the important assistance 

they received from the Four Bands Community Fund. The leaders of these small 

businesses—ranging from Lakota Archery to Bonnie’s Quilting Boutique—really 

demonstrated for me the strength of the Native entrepreneurial spirit and how important CDFI programs are to small business growth in Indian Country. 

I’m very pleased we are joined by such a great panel of witnesses today, and I 

thank them for being here. I also want to acknowledge and thank Senator Akaka. 

We are all fortunate for his service on this Committee and as the Chairman of the 

Indian Affairs Committee. I’m proud to serve on the Indian Affairs Committee 

under his leadership, where we’ve considered many of these important issues. 

PREPARED STATEMENT OF MARK A. TILSEN 

PRESIDENT, NATIVE AMERICAN NATURAL FOODS

NOVEMBER 10, 2011 

Thank you, Chairmen Johnson and Senator Shelby, for this time to share the 

story of Native American Natural Foods as well as the challenges and opportunities 

facing entrepreneurs in Indian country, in our case the Pine Ridge Indian Reservation, home of the Oglala Sioux Tribe. 

I would also like to thank Senator Johnson and Members of the Committee for 

your support of the tribal transportation program. It is a great asset to our growing 

business community to finally have a new and growing public transportation system. 

I also want to acknowledge and thank you for your ongoing support of the Native 

American CDFI programs. Lakota Funds was the first Native CDFI when it was 

started in 1985. At that time, there were only two Native American businesses on 

the Pine Ridge Reservation. Today there are hundreds. Many of them are members 

of the Pine Ridge Area Chamber of Commerce, which I am also proud to represent 

here today. Lakota Funds and other Native CDFIs provide the necessary ‘‘first 

rung’’ on the economic ladder for most first-generation entrepreneurs on many reservations. The CDFIs are the primary source for learning financial literacy. On 

many reservations, they are the only commercial lenders of any kind. 

27 

Your work has had a positive impact on the lives of many. I hope my input here 

today will help you to find more ways of helping the Oglala Lakota people make 

the transition from dependence to a self-sufficient, sustainable economy. 

Native American Natural Foods (NANF) was founded by my long-term business 

partner, Karlene Hunter (Oglala) and South Dakota’s 2004 Native American Business Woman of the Year, and myself Mark A. Tilsen. Ms. Hunter and I have been 

involved in economic and community development projects on the Pine Ridge Indian 

Reservation since the 1970s. Ms. Hunter was the first registrar of Oglala Lakota 

College and one of its first graduates to earn a master’s degree. I served as the first 

development staff person for Lakota Communication, Inc., from 1979 to 1986, and 

coordinated the development and launch of KILI 90.1 FM, the first 100,000-watt 

Native American community-controlled radio station in America. 

Karlene Hunter and I started Lakota Express, Inc., a successful marketing and 

management company, 17 years ago. The company was launched in Ms. Hunter’s 

basement in Kyle, SD, in the center of the Pine Ridge Reservation. We have run 

the company at a profit from its beginning. Focused on direct marketing and fundraising, Lakota Express has raised more than $30 million in net revenue for its reservation-based clients. While we are proud to have helped build the first library on 

the Pine Ridge Indian Reservation, helped cofound the Pine Ridge Area Chamber 

of Commerce, trained more than 100 staff people, and helped to strengthen many 

important organizations on the reservation, we also know it is not enough. 

Working with our local CDFI, the Lakota Funds, we began to study distance-neutral business opportunities that had the potential to be large enough to have a positive impact on the health and economy of the Oglala Lakota Oyate (people). It was 

during this period that we began to learn about brand value and modern brand 

strategy, and that many of the newest, most successful companies in the country 

were based on the value of their brands. 

In 2006, we reinvested our profits back into the community and applied our experience in marketing to a new strategy by founding Native American Natural Foods, 

LLC. We decided to enter the natural food market by creating a brand based on 

modernized versions of naturally healthy Native American foods. 

With the help of the Northwest Area Foundation, the Lakota Funds (CDFI) became our first equity partner as a model of community ownership. 

We started out wanting to create healthy alternative snacks for Native youth in 

an effort to help slow down the out-of-control juvenile obesity and diabetes rates affecting the youth in reservation communities and to bring the healthy impact of buffalo back into their diets. 

We created Tanka Bar based on a centuries-old traditional recipe called ‘‘Wasna,’’ 

which was made of dried fruit and smoked buffalo meat. Wasna was carried by 

Lakota hunters and warriors for hundreds of years, so I like to call it America’s true 

first fast food. 

In October 2007, we launched our first product at the Black Hills Powwow as an 

Internet-only product, but the story was picked by the Associated Press. Only 10 

days after our launch, we were on the cover of the ‘‘Dining In’’ section of the New 

York Times. The response was great, but it overwhelmed our production with requests for product literally coming from all over the world. 

Working with our long-term banking partners at the First National Bank of Gordon, NE, and the Bureau of Indian Affairs, we obtained a $916,000 loan with a 90 

percent guarantee and interest rate subsidy. This loan enabled us to contract with 

a large co-packer and to launch the Tanka Bar nationally. 

It is important to note that this loan was only possible because of the personal 

guarantee signed by Ms. Hunter and myself and the equity in Lakota Express, Inc. 

In March 2008, we launched Tanka Bar nationally at the Natural Products Expo 

West in Anaheim, CA, to a great response from retailers and national distributors. 

For the first 6 months, we doubled our sales every month until August 2008, 

when orders stopped. The markets froze, retailers were no longer adding new products, distributors were cutting back or canceling orders, Internet orders slid by more 

than 50 percent and our operating losses began to grow. 

In order to keep Native American Natural Foods alive and growing, we sold 

shares to the Oglala Oyate Woitancan Empowerment Zone (EZ) a tribally chartered 

development agency that managed USDA funds under the EZ Program. With the 

help of a PRI from the Northwest Area Foundation to the American Indian Land 

Tenure foundation, we were able to raise a total of $750,000 in equity. 

As Native American Natural Foods continued to grow at more than 200 percent 

per year along with the increased price for buffalo, in the winter of 2010, we hit 

a cash crises and began to seek help to refinance. But because we were running 

with a negative equity balance sheet and no way to fully capitalize our assets that 

are on trust lands or add the value of the brand we are building to our balance 

28 

sheet, we did not meet the required 20 percent equity to qualify for a guaranteed 

loan under the BIA loan guarantee programs. 

We presented our case to every major bank in western South Dakota. While many 

of them were impressed with our growth opportunities, they did not feel the loan 

would pass the equity requirement of the auditors, even if we were able to secure 

a Government guarantee. 

During this process, we had the help of Brian L. Brandt, President, Center for 

Business and Economics of the Northern Plains. Mr. Brandt said: 

My experience (and the experience of many of our colleagues and clients) 

is that most of the lending officers at community and regional banks that 

serve the Midwest (and in particular, in Indian Country) lack the financial 

sophistication required to understand the business models followed by most 

successful emerging businesses—low collateral and low inventory levels, 

and financing operating capital out of projected growth. Virtually none of 

the high tech companies we now use as models—from Apple to Microsoft 

to Google (which over time have created 125,000 high paying jobs) would 

have ever qualified for any kind of bank loan from any community bank 

in the U.S. 

On numerous occasions with Native American Natural Foods (among others) after laying out a growth plan (that included testimony from retailers 

and distributors alike that backed up the conservative financial forecasts)— 

forecasts that would have easily allowed both debt service and repayment 

out of verifiable growth—we’d still get the question, ‘‘Yes, but where’s the 

collateral?’’ 

The $30 billion of the Small Business Lending Fund (from the Small Business Jobs Act of 2010) that many in Congress thought would provide a solution was poured into community banks and went primarily to their balance 

sheets. Very little of it has found its way into community small businesses. 

We then decided to seek a loan with the First National Bank of Gordon, NE, asking SBA to provide a guarantee under the SBA 7a Program. We were turned down 

this time because of the Empowerment Zone, which is a tribally chartered organization. The SBA mistakenly believed it needed the tribe to waive sovereign immunity. 

After our attorneys at Patton Boggs here in Washington, DC, solved that problem, 

the SBA then wanted the Empowerment Zone to sign the guarantee because it 

owned 20 percent of the company. But, because the Empowerment Zone is a nonprofit tribal development agency established to administer USDA funds set up 

through its program, its board was not willing to approve the guarantee. 

By the spring of 2010, Ms. Hunter and I had over-extended our resources to the 

point that we were seriously looking at shutting down operations. But first, we decided to reach out nationally to any tribe or lender who was willing to help. 

The Clearinghouse CDFI Fund of Los Angeles, whom we had met during a tour 

of the reservation organized by Oweesta Corp., a national Native American CDFI 

that supports Native economic development throughout Indian Country, decided 

that it would be willing to make its first-ever loan to a reservation-based business 

if we could get the BIA to approve the loan. We were not able to get the approval. 

The Clearinghouse CDFI then said that if we could find a guarantor to put up 

250,000 in equity, it would approve a $500,000 loan with a second $500,000 if we 

could meet specific performance and equity goals. 

The Shakopee Mdewakanton Sioux Tribe made a donor directed recoverable grant 

to the American Indian Land Tenure Foundation, which was used to put up a CD 

in the American Indian National Bank. And the Clearinghouse CDFI completed the 

initial $500,000 transaction and kept Native American Natural Foods alive and 

growing. 

In the coming weeks, we expect to complete the second $500,000 loan from the 

Clearinghouse CDFI. But we still have not found the necessary equity capital to 

build Native American Natural Foods into the large, high-performance company 

needed to real have the economic and social impacts that Indian country requires. 

We are currently studying the use of New Market Tax Credits to access the equity 

and capital to facilitate this growth. 

I share this example with you to show the extremes that we had to go through 

just to survive. And even with the help of the top-rated attorneys at Patton Boggs, 

we were unable to utilize the Federal loan programs that were intended to help 

businesses in our situation. This causes great concern for Native American businesses that do not have our national reach or the highly experienced and committed 

help we received from Patton Boggs. Do they really have a chance to grow? 

29 

There is no doubt that being a cash-constrained business increases our risk and 

our operating costs and limits our growth. 

Native American Natural Foods: A Success Story Striving to Happen 

As we celebrate the fourth anniversary of Native American Natural Foods, let’s 

look at what we have accomplished: 

• We now have nine products—six ready-to-eat shelf-stable products and three 

heart healthy frozen buffalo hot dogs. 

• We have created 16 full-time jobs on the reservation and the equivalent of four 

part-time jobs. For most of our employees, this is their first private-sector job. 

• Our products are distributed nationally by United Natural Foods (UNFI), 

KeHE/Tree of Life, and Nature’s Best. 

• They are also sold by the case through our customer care center (800-416-7212) 

and directly to the consumers on Tankabar.com. 

• Tanka products are sold in more than 4,000 locations in all 50 States and more 

than 275 Native American reservations. 

While Tanka products are a popular item at Mount Rushmore, they are not sold 

in the U.S. Senate cafeteria or any Government building in Washington, DC, with 

the exception of the National Museum of the American Indian. 

Syndicated industry sales data by Spins for August 2012 shows the Tanka Bar 

has grown by more than 202 percent in sales, representing more than 50 percent 

of the growth in the category. And four of our products are now in the top 16 nationally. This data is based on actual cash register scans at the store level and proves 

customer acceptance of the product. 

Tanka Bar Spicy Pepper Blend was recognized in 2010 by Backpacker Magazine 

as one of the best new products of the year. In May 2011, Golf Digest Magazine 

named Tanka Bar as a bar that every golfer should have in the bag. 

Tanka products are the official snack of the Oglala Sioux Tribe; certified as Native 

American Made by the Intertribal Agricultural Council; USDA-approved; certified 

by the Gluten Intolerance Group (GIG); and certified as a sustainable product by 

Green America. We have won numerous awards for both entrepreneurship and our 

products. Most recently, we were given the 2011 Innovation Award by the Social 

Venture Network. 

We have built this brand through the innovative use of social media. Every staff 

person has been trained and is expected to use social media every day to build 

brand awareness. By building a cross-publishing platform, we have built a Web experience that attracts more than 50,000 visitors per month and empowers our staff 

to interact with consumers and retailers nationally, effectively breaking the economic isolation of the reservation. 

Social media has enabled us to build the Tanka brand without having to buy any 

advertising other than what is required by some national retailers. Just last month, 

we were approved to start selling our product into Whole Foods, the largest natural 

food retailer in the United States. 

Looking to the Future 

The future of Native American Natural Foods is one of hope and opportunity that 

is limited by our access to affordable capital and business-based on-the-job training 

opportunities for Native American youth. 

Anyone who watched ABC’s powerful news magazine 20/20 presentation, ‘‘Hidden 

America: Children of the Plains,’’ cannot help but see the challenges we face and 

that the needs are great. I view the show as a challenge to all of us who profess 

to want to improve the conditions of Indian people, to do more, to think bigger, to 

reach across the fence, the reservation boundaries, or political barriers to find solutions. This type of stagnant historical poverty has become the norm on South Dakota’s Indian reservations. We find this unexcitable. It is time for change. 

Here are a few solution-based ideas that we see on the ground level—or the front 

lines, you may say—that would help: 

• We need to recognize that the solution to economic development in Indian country is within the creativity, courage, and commitment of Indian people. 

• We need to look at the population growth on South Dakota Indian reservations 

as opportunity, not as a problem. Work with these young people to give them 

the opportunities so they can see a future of hope and promise and become the 

entrepreneurs of tomorrow! 

• We can no longer subsidize off-reservation businesses with capital and subsidize 

labor and expect it to grow the economy. We need to find ways to incentivize 

30 

larger, more profitable companies to support Native-controlled business from 

minority ownership positions. 

• Renew the American Indian Employment tax credit for job creation. But this 

credit has to be transferable to the minority shareholder at 100 percent value 

to encourage larger, more profitable companies to partner with reservationbased businesses. 

• Create a 4-year Tax Holiday for all profits made from investments on reservations where the unemployment rate is more than 30 percent. 

• Make exceptions to the 20 percent equity requirement. Within the authorizing 

legislation of the BIA Loan program, there is a provision to allow for exceptions 

to the 20 percent equity requirement, but it is seldom or ever used. There needs 

to be a requirement to waive this for growing businesses within impoverished 

areas. And exceptions made for that business that lost equity, but was able to 

survive the economic downturn of 2008. 

• Support equity from Indian country’s CDFIs, CDCs. Also, in cases like ours in 

Indian Country where CDFIs, CDCs and other nonprofits—whether they are 

chartered by a State or a tribe that holds minority ownership as the result of 

managing Federal, State or foundation funds in the project—should not be required to provide a guarantee for a business in which they do not hold any decision-making authority. 

• CDFIs: Please continue to grow the Native American CDFI program; expand its 

capacity to provide technical assistance contracting to larger growing businesses 

to help plan and execute expansion. 

• Support New Markets Tax Credits for reservation-based business. Native American Natural Foods has had preliminary discussions regarding a New Markets 

Tax Credit transaction that may assist us in obtaining equity for our corporation. Equity is extremely difficult for small businesses, yet vital for obtaining 

debt capital and continued growth. I understand this program has helped many 

small businesses and has created thousands of jobs across the country. This is 

an extremely important initiative at this time. 

• Healthy Foods Initiative: The recent emphasis on ‘‘healthy foods’’ in this country 

is a concept we certainly support. As the creators of a healthy snack food, we 

recognize the important role nutrition plays in health care, education, and 

worker productivity. However, we are concerned that the current policy emphasis for ‘‘Healthy Foods’’ is seemingly focused solely on creating grocery stores 

in ‘‘food deserts.’’ We encourage those involved in this initiative to strongly consider supporting those businesses that are actually creating ‘‘healthy foods’’; 

such as companies like Native American Natural Foods. Grants and loan dollars 

earmarked for those creating and promoting healthy foods will provide a much 

better return than what is projected from additional grocery stores and markets. 

• Agricultural: I understand U.S. Senator Casey from Pennsylvania is planning 

to introduce a new bill, which through USDA, will create a new loan fund, 

backed by a partial Federal guarantee similar to the SBA 7A program, for helping support a new generation of local farmer entrepreneurs to provide fresh 

local food to meet the rapidly growing demand across the country for locally 

grown foods. It includes some funds for technical assistance to help ensure the 

success rate of these new farm entrepreneurs. This is a much-needed program 

and needs to include a Native American set-aside for the larger land-based 

Tribal areas. We would also like to see the bill increase to create lending opportunity for Native Americans who wish to become buffalo producers. 

• Return the buffalo to the economy and diets of Indian people. We also would like 

to see a tax-incentive to encourage investments with Native American buffalo 

producers. While the buffalo industry is growing fast and doing well, there is 

little opportunity for Native American buffalo producers to enter the industry. 

In 2010, we were only able to purchase about 22 percent of the buffalo needed 

for the Tanka Bar from Native producers. The historical record supports an argument that the last time the Lakota People had a healthy sustainable economy 

it was based on the buffalo. This record also shows that the Buffalo were destroyed as an act of war to subjugate Indian people. It is clear that many Native 

peoples and tribes would like to return to a partial buffalo-based economy. And 

the Federal Government has a responsibility to support these efforts every way 

possible. We have a collective vision of returning buffalo to 1,000,0000 acres of 

Native lands in the next 10 years and have launched the Tanka Fund to make 

this dream a reality. 

31 

• Investor protection. In order to attract more investments on to reservation-based 

CDFIs, their needs to be some deposit insurance and some tax incentives to 

help CFDIs provide higher levels of funding as a business grows. 

• The BIA Loan Guarantee Program. Needs to be expanded to tribes who invest 

in private businesses outside of their own. Currently, the largest tribal lender 

in Indian country is the Mdewakanton Sioux Tribe. They only lend to tribal enterprises. But in order to incentivize more tribes to lend or invest in small businesses there needs to some protection on investments. 

• Transportation: We would like to see you continue to grow the much-needed 

public transportation programs in Indian country. You have started a great and 

much-needed program that needs to be supported to grow. 

• We would also like to make you aware of the challenges in shipping and receiving. When shipping LTL; trucks only come to the reservation two times 

per week, even UPS who markets itself as logistic does not acutely guarantee 

overnight shipping from the reservation. 

• U.S./Mail: It is a business necessity to have daily mail delivery on the reservation. Any cut back in mail service will increase the economic isolation of the 

reservation. 

• State/Tribal Gaming Compacts: The Federal Government needs to use its influence with States to make sure that investments that are made by tribes are 

allowed to grow to their full potential. For example, the Mdewakanton Sioux 

community made one of the largest business loans ever on the Pine Ridge Reservation to the Oglala Sioux Tribe to build a new casino and hotel. But, the 

State refuses to allow them to put in all the machines they could because of 

the States protectionist policy toward off reservation private casinos. This interferes with the growth of commerce on the reservation. It is also true that protectionist policy limits competition that reduces value of the protected industry 

over all. 

• Business evaluations: How business value is evaluated in Indian country is a 

large and complicated issue since many businesses are on trust land and not 

easy transferable. It is also true that successful businesses; owe our success to 

our relationships with our vender/distributors and, most importantly, our customers. 

• Brand Value: What bankers often refer to as blue sky, but currently there is 

no method to establish Brand Value without selling the company. But if your 

goal is like ours to build a sustainable economy on the reservation, you do 

not want to sell. But even when we sell equity to a tribe’s nonprofit or social 

investors who see the value in our triple bottom line approach of money, people and lands, we are told that these investors do not count as real investors 

because they are not making a financial decision that can be used to establish 

value. As if the lender or Government bureaucrat has some right to decide 

what an investors motivation is. It also ignores the reality that only a courageous investor with deep belief in helping to give people opportunity’s that 

have been denied it throughout all of history would make such a investment. 

Last, it ignores the fact that social and sustainable investing is growing and 

needs to grow as a result of limited Government recourses to fund market 

based solutions to the problems of poverty and changes in our environment. 

It is estimated that socially motivated investing is now over $60 billion and 

growing. 

• Facilitate the use of Confirmed Market Forecast as collateral for Small Business—Some mechanism has to be created (if it does not already exist in the 

form of the CDFI) to provide operating capital to growing businesses based 

on a high-degree of due diligence and verification of the growth potential of 

that business. The lending model simply has to be decoupled from the requirement for hard-asset collateral and coupled to verification of the growth 

potential and cash-flow analysis for businesses, as is the practice for most of 

the new and emerging business models. 

• Support small sustainable business growth by making lending to small businesses a banking requirement. It is common knowledge and most experts agree 

that small business is the key to job creation. But every small business owner 

I know will tell you that the Banks are not lending to small business. While 

the banks have received the $30 billion of the Small Business Lending Fund 

(from the Small Business Jobs Act of 2010. According to both CNN and The 

Huffington Post, (among many others,) 87 percent of the community banks that 

potentially qualified didn’t apply. Out of the ones that did apply, 40 percent of 

32 

1This statement reflects my views and not necessarily those of the Board of Directors of Eagle 

Bank or the Confederated Salish and Kootenai Tribes of the Flathead Nation. 

those ultimately didn’t qualify. Of those that did qualify, many, like M&T Bank 

and MB Financial are holding onto their cash and cynically using the money 

to acquire other banks and buy investments for their portfolios. Dozens more 

like Security Business Bank of San Diego are simply swapping their Federal 

rescue money for potentially cheaper financing from the same source: the Government. 

Mark Wilson, a former bank examiner for the Federal Reserve characterizes the 

program this way: ‘‘This is a below-the-radar bailout for community banks. 

What we lack here is oversight and true accountability.’’ 

Existing Federal programs aimed at making critical operating capital available 

to emerging and growing businesses have failed to have any significant impact 

on job creation and the only impact Indian country is to create false hope as 

we waste precious time chasing funds from a system that does not work. The 

result is forcing many small businesses into using credit cards to pay for operating supplies. I have had to do it times. Often costing them 12 percent–16 percent or even more than 20 percent interest. In effect, the banks can increase 

profit by not approving loans. Worst yet are the predatory lenders that victimize 

our small business and our employees. 

• Create regulation that grades banks and their access to capital on how well they 

serve smaller independent businesses as well as sustainable business models. 

While we in small business are often required to use our creative energy’s to 

navigate the Federal, State, and banking bureaucracy in order to survive, we 

are not the ones lobbying for less regulation or oversight. We want clean air, 

clear water, safe food, better schools and affordable college education. But we 

also want and need a level-paying field. Ninety-nine percent of the American 

people support small independent businesses. Indian people are at the bottom 

of the 99 percent percentile in America and are hungry for opportunity. The Oglala Lakota people are people in transition from poverty to sustainable healthy 

communities. There are more Indian business owners than any time in history. 

There are more Indian people in college than ever before. The coming generations is asking for our help. We need to open the doors of opportunity by doubling and tripling our efforts to give access to markets and capital. Native 

American Natural Foods is proud to be part of this transformational movement 

and look forward to working with all of you to find solutions to the many problems we face. 

I would like to thank Chairman Johnson and Members of this Committee for allowing me to share my thoughts here today. Your tenure in the Senate is at a pivotal time in American history. The streets, coffee shops, Web sites and social networks of America are filled with frustration as the poverty and neglect that has besieged Indian reservations is now spreading across America. 

I challenge each of you to please listen to the American people who want and need 

change. America has the courage, talent and resources to build a healthy, sustainable, fair and just economy. You have the power, use it wisely. Inaction is not an 

option. 

PREPARED STATEMENT OF MARTIN M. OLSSON 

PRESIDENT, EAGLE BANK

NOVEMBER 10, 2011 

Chairman Johnson, Ranking Member Shelby, and Members of the Committee, 

thank you for inviting me to participate in this discussion of Opportunities and 

Challenges for Economic Development in Indian Country. You have asked that I 

comment on several topics regarding Eagle Bank’s role in encouraging economic development and challenges and opportunities. 1

Economic Development and the Organization of Eagle Bank 

The Confederated Salish and Kootenai Tribes of the Flathead Nation (Tribes) 

have been proactive in economic development for many years, investing in tribal enterprises with the intent of promoting tribal employment and generating net revenues. Tribal businesses include resort and gaming operations, electronic and component manufacturing, information technology development, energy development, and 

environmental restoration. The Tribes have recognized the need for developing alVerDate Nov 24 2008 16:02 Jun 01, 2012 Jkt 048080 PO 00000 Frm 00036 Fmt 6621 Sfmt 6621 L:\HEARINGS 2011\11-10 OPPORTUNITIES AND CHALLENGES FOR ECONOMIC DEVELO
33 

2The Montana Department of Commerce Indian Equity Fund provides for two $7,000 grants 

to Native American owned business on each reservation in Montana and one $7,000 at large 

grant. 3Salish and Kootenai Bancorporation is the only bank holding company organized under Section 17 of the Indian Reorganization Act of 1934. 

ternative sources of revenues to support their governmental and economic development needs, and the tribal enterprises are generating welcome dividends. 

The Tribes also recognized the need to support credit availability for their membership. Over 40 years ago the Tribal Credit Program was created with a modest 

investment to assist tribal members with small balance short-term credit needs that 

were not adequately addressed by traditional financial institutions, and over the 

years net revenues were retained to grow the fund. This program has grown into 

a $45 million fund providing short-term unsecured loans, educational loans, home 

ownership loans and commercial loans, and as reserves have grown, the program 

has been able to return dividends to the Tribes. 

The Tribes also have a smaller fund for small dollar loans supporting tribal member economic development—Sovereign Leasing and Financing—and have instituted 

a grant program patterned after the Montana Department of Commerce Montana 

Indian Equity Fund. 2 The Tribes are dedicated to providing credit opportunities and 

grants to tribal members and their small and start-up business that may not have 

access to capital from traditional financial institutions. 

The Tribes’ desire to expand into banking was a natural extension of their economic development goals and their desire to provide financial services for underserved members. After nearly two decades of research and discussion, the Tribes organized Salish and Kootenai Bancorporation 3 and chartered Eagle Bank in 2006. 

The bank is charged with providing the traditional financial services for all residents and businesses within the Flathead Reservation, and to provide services for 

the under-served population such as small dollar loan and deposit accounts and 

check cashing that many financial institutions no longer provide. 

The Role of Eagle Bank 

The Flathead Reservation was established by the Hellgate Treaty of 1855 and encompasses approximately 1.3 million acres of some of the most scenic agricultural 

and recreational areas of Western Montana. The Reservation overlays the majority 

of Lake County and portions of Flathead, Missoula and Sanders Counties and was 

settled by several bands of the Salish, Kootenai, and Pend d’Oreilles Tribes. 

During the early part of the 1910s the unallocated portions of the Reservation 

were opened to homesteading and, as a result, the majority of the residents within 

the exterior boundaries of the Reservation are not tribal members. The 2010 Census 

reports only 24.7 percent of the residents claimed American Indian/Alaska Native 

for their ancestry, making the Tribes the minority within their own reservation. 

Land ownership also reflects the population status with the majority of the Ag 

and developable real estate held in fee status, rather than Trust, and the Tribes 

are working to reacquire real estate holdings as they become available and budgets 

allow. 

The influx of people following the homesteading days led to significant economic 

development on fee land, and banking and commerce evolved over the past century 

in a manner more reflective of off-reservation development. Unfortunately, trust 

property issues and lending to Native Americans were not addressed appropriately 

in the past, and the Tribes have worked hard to improve the understanding that 

banking and commerce need to be more inclusive and responsive to their inherent 

Sovereignty. 

Eagle Bank is one of five banks domiciled within the Flathead Indian Reservation 

and the market is also served by branches of two larger out of market banks and 

a branch of a large out of market credit union. This is an unusually high concentration of financial institutions located within an Indian reservation, and is the direct 

result of the opening of the Flathead Reservation to homesteading. 

Eagle Bank is charged with serving the general market with traditional banking 

services, but is also charged with providing financial services to the under-served. 

These services include (1) small dollar consumer loans, both secured and unsecured, 

(2) small dollar deposit accounts with access to debit and ATM cards, (3) check cashing for noncustomers who reside within the Reservation, (4) trust property loans, 

and (5) providing ‘‘coaching’’ on deposit accounts and access to credit. Eagle Bank 

would like to expand its ‘‘coaching’’ to a more formal program of financial literacy, 

and will do so when limited staff and resources permit. 

Eagle Bank also works with Tribal and other funding programs to leverage credit 

for small and start-up businesses, and serves as an advisor/grant reviewer for the 

34 

4Overnight funds average in excess of 25 percent of assets, and deposit swings in excess of 

40 percent of assets have occurred. 

Montana Department of Commerce Montana Indian Equity Fund, the Tribes grant 

program and the Tribes economic development committee. 

Eagle Bank Model 

Eagle Bank opened at arguably the worst time, and continues to struggle with 

profitability during the most severe economic conditions since the Great Depression. 

The historic low interest rates are a major detriment to profitability because volatile 

tribal deposits 4 require maintenance of excessive short-term/overnight funds that 

provide no margin. In a more ‘‘normal’’ interest rate environment, the bank would 

be able to realize positive margins on liquidity and an improved profitability. 

The tribally owned bank model may have limited usefulness on many reservations 

because of the regulatory limitations on banks and their dealings with affiliates and 

operational limitations. In the case of Eagle Bank, the Flathead Reservation market 

offers a broad range of customers, tribal and nontribal, to support both deposits and 

loans, but the potential customer base on other reservations may not be broad 

enough to support a commercial bank. 

Regulatory limitations on dealings with affiliates have evolved over the years to 

address insider abuses of the past, but do not reflect the unique relationship between a tribe and a tribally owned bank. The tribe is the dominate economic driver 

on most reservations, and for the tribe and its bank to be successful, the bank needs 

the ability to work with the tribe and the affiliated entities on a scale that is not 

allowed under current regulations. 

The primary operational limitation is the dependence upon tribal deposit accounts 

and the manner in which they can be held. Many tribes compact for services with 

the BIA and under the terms of many of those compacts, the deposits associated 

with the services must be both interest bearing and secured. Temporary FDIC coverage of interest bearing transaction accounts (with restrictions on rate paid) during 

2010 provided relief, but the elimination of that coverage has increased the difficulty 

of providing tribal accounts. 

If the majority of the deposits are tribal and volatile, it is very difficult to provide 

adequate coverage by pledging securities and maintain adequate levels of liquidity. 

Additionally, current yields on securities have been too low to cover FDIC assessments and fixed costs to maintain the deposits. 

The temporary unlimited FDIC coverage on noninterest bearing transaction accounts has provided significant relief in maintaining deposit accounts for the Tribes, 

and I hope this temporary coverage will be made permanent, not only for Eagle 

Bank’s somewhat unique requirements, but also for all smaller community bank’s 

ability to compete with the perceived too-big-to-fail institutions. 

I would also hope the FDIC would consider unlimited coverage on interest bearing 

deposits on a fee basis for those willing to participate. The elimination of privately 

offered excess deposit bond coverage during the economic crises has placed additional burdens on community banks in general and Eagle Bank in particular. 

Lacking improved FDIC coverage or the return of excess deposit bond coverage, 

the majority of a tribally owned bank’s earning assets may be required to be invested in securities to secure those deposits, restricting funds available for lending. 

There are a couple of third party providers working on multibank sweep accounts 

designed to increase FDIC coverage for excess deposits and it will be interesting to 

see how successful these products will be. 

If the potential deposit mix of a reservation is not broad enough to allow a tribally 

owned bank to have a diversified deposit base, it may be more appropriate for a 

tribe to partner with an existing bank to provide services on the reservation or to 

sponsor a credit union to promote access to financial services for its membership. 

Partnering may provide some return on a tribal investment, but there would be no 

return on sponsoring a credit union, and there would be additional regulatory restrictions on what services a credit union could provide the tribe and its business 

affiliates. 

Challenges to Access to Capital 

Access to capital on reservations has been an ongoing problem for Native Americans, and I have observed three primary challenges limiting access (1) uncertainty 

created by tribal governments’ willingness to support access to capital, (2) uncertainty created by lack of consistency in secured transactions, and (3) financial literacy. 

Tribal government uncertainty—One major impediment to accessing credit from financial institutions is the uncertainty in lending within the jurisdiction of a SovVerDate Nov 24 2008 16:02 Jun 01, 2012 Jkt 048080 PO 00000 Frm 00038 Fmt 6621 Sfmt 6621 L:\HEARINGS 2011\11-10 OPPORTUNITIES AND CHALLENGES FOR ECONOMIC DEVELO
35 

ereign entity. Each federally recognized tribe is a sovereign government and is responsible for developing its own governing laws, statues and court systems. Some 

tribes are very proactive in developing statues that support lending and have consistent enforcement through their tribal courts, and other tribes continue to maintain a more protective environment for their membership. 

Banks are reluctant to lend in an environment that is not governed by a strong, 

consistent court system that will allow collection of debt, and bank regulators have 

been increasing critical of loan administration not based upon solid, well documented credit administration and collection practices. 

This creates a difficult environment for banks—there is a perception banks are 

discriminating against Native Americans by not lending on reservations, but if secured credit is extended on some reservations, there is the very real potential that 

the bank will have no recourse in the case of default. Within the past year, Eagle 

Bank was not successful in civil actions in 2 of the 3 courts approached—a Washington tribal court refused to schedule a hearing, and a Montana tribal court scheduled a hearing, but when Eagle Bank appeared as scheduled, no one else appeared, 

not even the judge. 

I believe this to be more of an educational issue rather than a jurisdictional issue 

between sovereign tribal governments and financial institutions organized under either State of Federal charters. The Confederated Salish and Kootenai tribal court 

is an example of an unbiased court that is consistent in its treatment of collection 

actions. Creditors can be confident that a collection action filed with this court will 

receive a fair hearing, and the court will rule on the merits of the case. 

Tribal governments need to understand that for capital to be made available within reservations, those receiving the benefit of the capital must be accountable for 

repaying their debts and the tribal governments must take responsibility to assure 

lenders have a clear, consistent recourse in the case of a default through an independent and unbiased tribal court system. 

Lack of consistency in regulating secured transactions—In addition to a consistent 

and unbiased court system, it is necessary to develop and adopt uniformity in regulating transaction secured by real and personal property. Trust property issues vary 

from reservation to reservation, and even though there are established procedures 

in place for perfecting mortgages on individually owned trust property and assignment of leasehold interests in tribal trust property, the ability to sell foreclosed real 

estate is often limited on some reservations. Credit underwriting must take into 

consideration the ability to sell foreclosed real estate, and this may have an adverse 

impact on the ability of a Native American to borrow. 

The inability to adequately record and search liens on nontitled personal property 

creates nearly as much uncertainty in lending as an unresponsive or inconsistent 

court system. Susan Woodrow’s testimony today will address the ongoing efforts to 

develop a uniform tribal secured transaction code and I strongly support this effort. 

Financial literacy and technical assistance—Financial literacy continues to be a 

challenge accessing capital and is not limited to Indian Country. There is a significant population that does not have the basic financial understanding and/or training 

to successfully manage deposit accounts, complete loan applications or understand 

the importance of credit ratings. Many banks have taken the approach, and perhaps 

rightfully so from a profitability and litigation point of view, that if a potential borrower does not have the ability to complete a loan application and does not have 

a predetermined credit score, the application will be rejected. 

Many Native Americans do not understand the significance of credit scores and 

the impact low scores have on their ability to not only borrow money but their cost 

of insurance and other credit dependent services. A primary negative factor for 

many Native American’s credit score is medical collections. Many tribal members assume the IHS or the tribal health services are responsible for their health care, but 

often medical payments are not processed timely and the bills are not paid in their 

entirety. Medical providers routinely submit these unpaid bills to collection agencies, and because the tribal member assumes they are not responsible for payment, 

they to not respond to the collection activities. I routinely see credit scores in 500 

range with medical collections the primary derogatory items. 

With no established banking relationship and low credit scores, many people fall 

prey to predatory lenders and check cashers. Once this pattern of borrowing and 

check cashing is established, it is very difficult for the individual to break free of 

a very expensive credit environment. 

There are numerous programs available for education of first time home buyers, 

out-reach through the school systems and technical assistance for small businesses. 

The first time home buyers programs appear to have value and the out-reach programs through the schools appear to be of benefit for those students that are 

reached. Unfortunately many students who need the basic financial education do 

36 

5 Robert Gauthier is the Chairman of Eagle Bank and was instrumental in the development 

of the HUD 184 guaranteed loan program. He has been involved in Native American housing 

issues for nearly 30 years and consults on Native American housing and infrastructure issues. 

not take the elective courses or who do not advance far enough in the school systems to participate in the out-reach. 

I am disappointed with some of the technical assistance programs I have observed. These are generally presented through a grant funded program and the TA 

providers are minimally paid individuals with little or no successful business experience. I am not suggesting that the providers are not very motivated and work hard 

to assist their clients, I am only suggesting that without personal successful business experience, it is hard to provide the financial training necessary to build a solid 

basis for someone attempting to start or expand a small business. 

Most TA providers follow a set pattern of developing a business plan (generally 

from a canned program) including at least three years projections and setting up 

basic accounting systems with balance sheets, income statements, cash flows and 

break even analysis. This may be an appropriate approach for those small business 

owners who have a general understanding of business and bookkeeping, but for 

those folks who do not have a good understanding of managing a check book, this 

approach is not appropriate. 

An example—I participate in reviewing grant applications for small Native American businesses, and recently I reviewed an application for a woodcutter. His business is to cut firewood and supply the wood to needy folks under a tribal program. 

He needs to understand what his fuel costs are to go to the woods, cut the firewood, 

and deliver it, what his costs are to maintain his equipment are make his loan payments. Anything in excess of those costs will provide for his personal living expenses. If he understands these costs, he could keep track of them by maintaining 

receipts in an envelope and basic notes of loads hauled, income and expenses on the 

back of that same envelope. He does not need a QuickBooks accounting system providing balance sheet, income statement and cash flow information when he will 

most likely not even use a checking account. 

His grant application included a ‘‘text book’’ business plan, including forecasts and 

cash flows, all prepared by a TA provider, and the TA provider commented that the 

applicant had difficulty understanding the cash flow analysis. 

Unfortunately the level of technical assistance training is not well matched to the 

needs of the small business owner, and for the most part, the technical assistance 

is only given in an attempt to apply for a grant or a loan. I feel strongly that all 

technical assistance should be directed to the understanding and management of the 

business, not to apply for a loan or grant, and should be provided by trainers with 

successful business experience and in a manner consistent with the level of sophistication of the business they are advising. Perhaps a partnership with a minority 

financial institution that would assist with funding financial literacy in local communities would be an option. As noted above, Eagle Bank is charged with providing 

financial literacy, but limited resources and staffing have prevented development of 

a more formal program. 

Opportunities 

There are many opportunities for banks to assist with credit needs in Indian 

Country, and as Federal funding becomes more difficult, commercial lending can, 

and should, step up to fill the gap. Housing is a prime example. 

Many reservations have limited individual home ownership and the tribal housing 

authority owns and rents most units. The HUD 184 loan program offers an alternative to rental units, can increase the amount of housing available, and free limited tribal resources for other pressing needs. Robert Gauthier 5 is a strong advocate 

for the HUD 184 loan program, and it his opinion that freeing tribal housing resources by increasing home ownership must begin with educating tribal governments of the value of home ownership before attempting to educate the potential 

homeowners and the financial institutions that could serve those homeowners. 

This is an educational issue that does not appear to be addressed in the current 

technical assistance programs. Perhaps some level of support could be directed to 

this specific need, recognizing that educating tribal governments is a very unique 

challenge and may not be adequately addressed by conventional contract providers. 

Without educating tribal governments, expansion of individual home ownership or 

small business development on many reservations will continue to be very slow. 

In conclusion, I believe there are opportunities for economic development in Indian Country, but significant challenges remain. The Confederates Salish and 

Kootenai Tribes approach, including chartering Eagle Bank, is making a difference 

37 

on the Flathead Reservation, but chartering or purchasing a bank may not be appropriate for many tribes. 

The primary challenges limiting access to capital have not changed significantly 

during the nearly 30 years I have worked on the Flathead Reservation, but I am 

optimistic progress is being made. 

I thank you for the opportunity to provide my comments this morning. I look forward to answering any questions that you may have. 

PREPARED STATEMENT OF TANYA FIDDLER 

EXECUTIVE DIRECTOR, FOUR BANDS COMMUNITY FUND

NOVEMBER 10, 2011 

Pilamaya ye, thank you! 

Chairman Johnson, Ranking Member Shelby, and distinguished Members of the 

Senate Committee on Banking, Housing, and Urban Affairs—Mitakuyapi, Tuktel He 

Najin Oyate Wiyankapi Win Lakota emaciyapi na Tanya Fiddler English emaciyapi, 

k’sto. To all of you, my Lakota name is ‘‘She Stands Where the People Watch Her 

Woman’’ and my English name is Tanya Fiddler. I am an enrolled member of the 

Cheyenne River Sioux Tribe. I am the Executive Director of Four Bands Community 

Fund, a nationally recognized Native CDFI that serves the Cheyenne River Sioux 

Reservation in north central South Dakota. I am also the Chair of the South Dakota 

Indian Business Alliance (SDIBA) and Cochair of the Native CDFI Network (NCN). 

Let me begin by saying Pilamaya ye, thank you, for the opportunity to appear before 

you on behalf of the people and organizations that are working to create Native private sector economies throughout the State of South Dakota and on reservations nationwide. 

Introduction 

The mission of Four Bands Community Fund is to create economic opportunity 

by helping people build strong and sustainable small businesses and increase their 

financial capability to create assets and wealth. This is no easy feat on the Cheyenne River Sioux Reservation. Similar to other rural reservation communities we 

experience substantially higher rates of poverty and unemployment than mainstream America and face a unique set of challenges to economic growth. Lack of 

physical, legal and telecommunications infrastructure, access to affordable financial 

products and services, and limited workforce development strategies are common 

challenges that our growing Native business owners face and must overcome in 

order to be successful in our economy. 

The Cheyenne River Reservation encompasses Dewey and Ziebach Counties, two 

of the poorest counties in the Nation. Sixty-two percent of the residents in Ziebach 

County live below the poverty level. People often travel 50 to 100 miles on poorly 

maintained roads to access basic goods and services. The median household income 

is $27,000, nearly half of the United States average. The Bureau of Indian Affairs 

estimates that we have an 88 percent unemployment rate. 

Most residents of Cheyenne River have little expertise with banks, savings accounts, or effective use of credit. The Bank On Initiative estimates 21 percent of 

households are unbanked and 26 percent are underbanked in Dewey and Ziebach 

counties. The majority of Native communities, 86 percent, lack a single financial institution within their borders to access affordable financial products and services. 

We are fortunate to have three banks on the Cheyenne River Reservation but none 

of them report credit histories for their customers, adding to our challenges when 

it comes to small business lending. In other places without a local bank, like the 

Pine Ridge Reservation, the Native CDFI is developing a Native-owned Credit 

Union to responsibly meet the needs of their population. 

Despite these economic conditions, there is evidence to show that the work of Four 

Bands and other dedicated community and economic development organizations is 

beginning to pay off. According to data from the South Dakota Department of Labor, 

U.S. Census Bureau 2000, and U.S. Census Bureau 2005–2009 American Community Survey 5-Year Estimate, South Dakota’s reservation counties with operating 

Native CDFIs have experienced significant growth over the last decade and have an 

economic momentum index that exceeds the State of South Dakota’s index. From 

2000 to 2009, the median household income on the Cheyenne River Indian Reservation increased 51 percent—surpassing the State’s average by 24 percent. During 

that same timeframe, our reservation saw a 20 percent increase in employment— 

nearly triple the State’s average of 7 percent. The neighboring Pine Ridge Reservation where Lakota Funds has been operating for 20-plus years saw similar results. 

From this data, we can determine that Native CDFIs are a proven solution to reviVerDate Nov 24 2008 16:02 Jun 01, 2012 Jkt 048080 PO 00000 Frm 00041 Fmt 6621 Sfmt 6621 L:\HEARINGS 2011\11-10 OPPORTUNITIES AND CHALLENGES FOR ECONOMIC DEVELO
38 

talizing reservation communities. More importantly in the world of business development, our reservation communities are demonstrating that we have the economic 

momentum for strategic investment that is critical for economic development. Yet, 

we have the huge task of securing partners at the State and local level for private 

investment and inclusive economic development strategies that will help us overcome the poverty and unemployment we experience. This is where the U.S. Treasury CDFI Fund program comes in! 

Growing the Private Sector on Cheyenne River 

Four Bands has developed and implemented a number of strategies that contribute to the successful development of our local economy. A CDFIs greatest investment is in human capital—the community development financial institution model 

provides financial products in combination with development services, such as business and financial education, training and technical assistance, that increase entrepreneurial skills and financial capability for our tribal members. We realize that reversing multigenerational poverty requires a comprehensive approach to several 

issues at once, therefore, our core program areas include: (a) Business & Entrepreneur Development—offering loan products and customized services aimed at creating businesses and developing entrepreneurial skills; (b) Mazaska K’sapa Nitawa 

(Your Money Wisdom)—helping develop sound financial management practices and 

asset building skills for adult individuals and families; and (c) Wicoicage Sakowin 

kin un Wicakagapi (Building for the Seventh Generation)—building long-term employment and life skills of our youth. 

Since Four Bands began lending in 2002, our community impact has been steadily 

climbing as our programs experience significant growth. In 2002, we provided services to 84 clients and disbursed 19 loans. By 2010, those numbers progressed and 

we served 576 clients and disbursed 105 loans. On average, 80 percent of our loans 

are used to finance start-ups. We recently reached the $3,000,000 mark in lending, 

and as a direct result have created over 100 Native-owned businesses and nearly 

400 jobs since our inception. 

A unique challenge in our area is the creditworthiness of our client base. Over 

55 percent of our clients have no credit file and of the 45 percent who do have credit 

histories we’ve seen their average score 100 points lower than the national average. 

With this in mind, we have created a Credit Builder Loan program that has made 

62 loans, totaling $130,500, to help individuals create and repair credit histories, 

resulting in improved credit scores for nearly 90 percent of these clients within the 

first 6 months of participating in the program. 

We also run an Individual Development Account (IDA) program, or matched savings program, that was launched in 2005 to help create owner’s equity in assets like 

home ownership, business start up and higher education. Overall, $300,000 in savings match has been committed in our IDA savings program for 52 adults and 95 

youth to achieve their goals and move beyond poverty. The Federal program that 

supports IDA programs, Assets for Independence under the Office of Community 

Service, is currently being recommended for a 63 percent cut in funding in the 

House version of the 2012 budget. This program is one of the few resources available to invest in community asset building efforts. 

In 2008 Four Bands launched a comprehensive public education campaign called 

Making Waves as part of the Wicoicage Sakowin kin un Wicakagapi (Building for 

the Seventh Generation) program in order to replace poverty and unemployment 

with financial literacy and entrepreneurship on the Cheyenne River Reservation. 

This program promotes the ABCs of Financial Literacy and Entrepreneurship®—key 

behaviors that people can incorporate into their lives. Through the implementation 

of the Making Waves Teacher Toolkits and Trainings, over 2,000 Cheyenne River 

Youth in 60-plus classrooms on our five reservation schools have been exposed to 

concepts of financial literacy and entrepreneurship. The Making Waves program 

had the support of tribal government, the school system and business community 

implementing the ‘‘Make Money Matter’’ and ‘‘Shop Cheyenne River’’ strategies that 

encouraged wise management of financial resources and local shopping habits. The 

Making Waves strategy has spread to the Pine Ridge and Crow Creek Reservations 

where they are implementing the ABCs of Financial Literacy and Entrepreneurship® as well. 

Because of limited data and limited resources, we have also conducted in-depth 

market analyses in order to identify prime sectors for development and to keep dollars in the local economy. Our report, ‘‘Business Opportunities in the Cheyenne 

River Reservation Market,’’ released in September 2008, has been used by local entrepreneurs to identify customers, competition, successful marketing strategies, effective business operations, and potential business opportunities. As our economy 

has matured, we found the need to analyze the business-to-business market and are 

39 

currently working on the final version of a similar report to help boost our economy 

to another level. 

As demands for our products and services continue to grow, Four Bands has developed into the ‘‘go-to’’ place for: 

• Adult entrepreneurs with limited access to capital, business training, and coaching that assist in building sustainable businesses; 

• Adults and families committed to financial independence and wealth creation; 

and 

• K–12 youth interested in learning about entrepreneurship and planning for a 

sound financial future. 

We understand the complex challenges of business development in our local environment and are able to assist businesses that are dealing with local, Tribal, State, 

and Federal jurisdictional issues. 

Identifying and Overcoming Barriers 

In our State, we are fortunate to have the South Dakota Indian Business Alliance 

working to enhance Indian business development by leveraging partnerships and resources of diverse institutions and organizations. SDIBA’s policy agenda addresses 

four sectors of economic development in Indian Country: Governance, Infrastructure, 

Finance, and Resources. More detail on SDIBA’s policy recommendations can be 

found in Appendix A of this document. Through the work of SDIBA, our State’s 

Tribes have celebrated two recent victories in influencing policies that support Indian business development. In March 2011, our Governor appointed the first-ever 

Secretary of Tribal Relations for South Dakota to emphasize the importance of Native American economic development and foster a better relationship between the 

State and South Dakota’s nine tribes. Also, Tribal identification cards are now accepted as a legitimate form of identification and facilitate Tribal members in doing 

business throughout South Dakota. 

In the near future, SDIBA will be releasing a report titled, ‘‘Native American Entrepreneurship in South Dakota’s Nine Reservations,’’ which is a result of an indepth market analysis of the small business development environment on South Dakota’s nine Indian reservations. Native entrepreneurs in reservation communities 

face many of the same challenges that non-Native, rural entrepreneurs face when 

trying to start or grow a business: isolated geographical locations, lack of access to 

small business capital, and lack of access to peer networks. The ‘‘Native American 

Entrepreneurship in South Dakota’s Nine Reservations’’ report identified the challenges that Native entrepreneurs on South Dakota’s other reservations face and include: 

• Difficulty in securing collateral because of the trust status of Tribal lands 

• Lack of affordable financial products and services 

• Lack of entrepreneurship training and support services 

• Lack of equity investment in Native-owned enterprises 

• Inadequate telecommunications and transportation infrastructure 

Some of the barriers identified in the report are similar to those identified in the 

Native American Lending Study conducted 10 years ago by the Department Treasury’s CDFI Fund. Native CDFIs are the key organizations that have been working 

to create innovative solutions to overcome these barriers. Additionally, the CDFI 

Fund’s research found that there exists a significant difference in the amount of 

capital investment in Indian Lands and Hawaiian Home Lands compared to the rest 

of the United States. The CDFI Fund’s Equity Research Report estimated that the 

investment gap between Native American and Native Hawaiian economies and the 

United States overall totaled $44 billion. 

This March, the U.S. Census Bureau released 2007 Statistics for American 

Indian- and Alaska Native-Owned Businesses in the United States. This data 

showed the fruits of labor by Native economic development practitioners across the 

Nation. In 2007, there were about 237,000 American Indian- and Alaskan Nativeowned firms generating $34.4 billion in gross receipts and employing 184,000 paid 

workers. Between 2002 and 2007, American Indian- and Alaskan Native-owned 

firms outpaced the growth of nonminority firms with a 28 percent increase in gross 

receipts and an 18 percent increase in number of firms. 

However, according to the U.S. Department of Commerce Minority Business Development Agency, there is still an entrepreneurial parity gap between American Indian and Alaskan Native firms. If American Indian and Alaska Native firms’ gross 

receipts reflected the 2007 adult American Indian and Alaska Native population 

share, receipts would have amounted to more than $160 billion—about $126 billion 

40 

more than the actual figure. Paid employment would have totaled nearly 829,000— 

about 4.5 times the actual employment. The number of American Indian and Alaska 

Native firms would have been over 383,000 firms—nearly 147,000 additional firms. 

This entrepreneurial parity gap is the focus and opportunity for Native CDFIs 

throughout Indian Country. With investments from and partnerships with the Department of Treasury and other agencies, we continue to create innovative economic 

development strategies that are addressing these disparities. The Native CDFI Network, a member network formed in 2009, works to unite Native CDFIs in these efforts and to serve as a national advocate for Native communities throughout the Nation. Their policy agenda, included in Appendix B, outlines several key recommendations to overcome the unique financial and economic barriers that exist in Indian 

Country. For example, NCN supports establishing a supportive financial infrastructure that promotes economic stability in Native communities. In order to achieve 

this policy priority, NCN strongly recommends giving the Native Initiatives permanent language in the CDFI Fund’s authorizing statute to secure future investment 

for Native Americans. We also work to demonstrate our impact in order to build private investment throughout Indian Country. One of the most significant tools for 

this is the New Markets Tax Credit program under Treasury that has been successful in attracting outside investment to leverage local efforts for the development of 

business, housing and community facilities that are needed for sustainable economic 

development. 

Conclusion 

Numbering 69 today, Native CDFIs are making a difference, have created economic development momentum within the communities they serve, and are still the 

main source of capital access and resources for Native business development. These 

unique financial institutions are helping to develop local businesses, create jobs, expand affordable housing, and build the skills of Native people throughout the Nation. More importantly, Four Bands’ investment in our reservation youth is creating 

a new culture of entrepreneurship and financial capability, giving us all hope for 

a strong economic future. 

41 

42 

43 

44 

45 

46 

47 

PREPARED STATEMENT OF DANTE DESIDARIO 

EXECUTIVE DIRECTOR, NATIVE AMERICAN FINANCE OFFICERS ASSOCIATION

NOVEMBER 10, 2011 

The Native American Finance Officers Association (NAFOA) has been a resource 

for tribal leaders and finance professionals for 29 years. NAFOA has focused its efforts on building capacity, developing effective tribal economic policy, and building 

relationships with the investment and banking community in an effort to promote 

tribal economic growth. In our years of service to tribes, we recognize there is a 

clear role for Congress in creating laws that keep tribes from continuing to occupy 

the bottom of the socioeconomic statistics. To that end, we are grateful the Senate 

Committee on Banking, Housing and Urban Affairs has focused an entire hearing 

on the economic challenges and opportunities of Indian Country. And, we are hopeful this hearing is the first step to addressing our concerns. 

Indian Country Economic Background 

Over our nearly three decades of service, NAFOA has witnessed exceptional economic growth for a number of Indian tribes. Over the same period of time, the overall economic growth for Indian Country in general has improved substantially as 

well. An analysis of socioeconomic change between 1990 and 2000 showed that Indian Country economies grew at a faster pace than the economy as a whole. In fact, 

over the last 30 years the inflation adjusted per capita income of Indians on reservations grew by 83 percent compared to 64 percent for the U.S. population as a whole. 

While these gains are remarkable, our per capita income remains one-third of the 

U.S. average. If incomes were to continue to grow at their 1990s rate, the gap would 

not close for another 55 years. 

Most Americans are familiar with the success of a relatively small percentage of 

gaming tribes that are located near metropolitan centers or Alaska Native Corporations that have successfully entered the mainstream economy through Government 

contracting. However, the economic potential of too many tribes remains unfulfilled. 

Many tribal governments lack the ability to provide the basic infrastructure that 

most U.S. citizens take for granted, such as passable roadways, affordable housing, 

plumbing, electricity, and telephone service. 

Economic development in Indian Country lags behind the rest of the Nation and 

impacts nearly every aspect of reservation life and tribal governance. For generations our communities have faced economic conditions that are even more pronounced than those of the current economic crisis. Eight of the ten poorest counties 

in America are home to Indian reservations. While economists worry as the national 

unemployment rate settles closer to 9 percent, data shows that unemployment 

among Native people was 15 percent in 2003 and has not dropped below 10 percent 

for generations. To compare directly to the Great Depression, the 2000 Census recorded unemployment for American Indians on reservations at 22 percent compared 

to the unemployment rate during the Great Depression of 25 percent. 

The 2000 Census reported the per capita income for American Indians and Alaska 

Natives living on reservations at $7,942, merely one-third the U.S. average for all 

races, which was $21,587. Low average income, coupled with high unemployment, 

means the poverty rate for Indian families on reservations is 36 percent, which is 

two-and-half-times the national average. 

Homes in Indian Country reflect the pronounced challenges of persistent poverty. 

Eleven percent of Native households lack kitchen facilities, 17 percent lack telephone service and 12 percent lack complete plumbing, while less than 1 percent of 

the U.S. population lack any of these facilities. Only half of reservation homes are 

connected to public sewer lines and our homes are almost three times more likely 

to be overcrowded than the national average. In addition, there is a tribal average 

of 3 in 10 households without basic means of communication. 

These substandard economic and quality of life indicators have a social toll as 

well. Health disparities are prevalent and suicide rates (a symptom of lack of opportunity) are high with over 60 percent more incidents than the average in America. 

Alcoholism on reservations and diseases like Tuberculosis are both over 500 percent 

higher among Indians. 

What Works? 

Despite the challenging social and economic conditions on reservations, there are 

a number of recent economic successes resulting from tribes exercising their sovereignty and utilizing available Federal tools to grow their local economies and provide their citizens with a better quality of life—the goal of every government. For 

example, a few tribes located near major metropolitan centers have seen startling 

success by creating destination gaming enterprises. Some tribes further from popuVerDate Nov 24 2008 16:02 Jun 01, 2012 Jkt 048080 PO 00000 Frm 00051 Fmt 6621 Sfmt 6621 L:\HEARINGS 2011\11-10 OPPORTUNITIES AND CHALLENGES FOR ECONOMIC DEVELO
48 

lation centers operate economic enterprises that serve to create reservation jobs and 

provide revenue for Government program support. 

For example, in the 1960s, rural Neshoba County in Mississippi was once one of 

the country’s most economically depressed areas. Neshoba County is home to the 

Mississippi Band of Choctaw Indians who lived under depressed economic and 

health conditions. Nearly all houses on the reservation were considered substandard: 90 percent had no indoor plumbing; one-third had no electricity. 

In the 1980s, the Tribe worked hard to turn conditions around by building the 

infrastructure necessary to draw industrial jobs to the reservation. After completing 

an industrial park, the tribe convinced a division of General Motors and the American Greetings company to locate on the remote reservation. Soon after, the tribe 

diversified its economy by creating service sector enterprises. Today, the tribe is the 

State of Mississippi’s second largest employer with over 8,000 employees on its payrolls. After generations of living in the worst economic conditions, the tribe has become a regional economic leader in the south. 

Tribal governments, when given the right tools, can effectively lift their communities out of poverty and fully participate in the American economy. Not only can 

tribes raise their economic profile, but they have proven time and again that investing in tribes is an investment in rural America. Surrounding communities, and 

sometimes entire regions, are also beneficiaries when tribes succeed economically. 

The researchers at the Harvard Project on American Indian Economic Development and others have found time and time again that creating an environment 

which supports tribal self-determination and tribally driven economic development 

is the most effective strategy for confronting the persistent poverty in many Indian 

communities. This same conclusion was drawn in a report prepared for the Department of Health and Human Services in 2004. The report concluded that of the more 

than 100 Federal programs available to assist tribes or tribal members with economic development, none stands out as the most beneficial for every tribe. Rather, 

the researchers concluded, ‘‘the Federal Government’s ongoing commitment to Indian self-determination, tribal self-governance, and tribal sovereignty has had a 

positive impact on [business and economic development] in Indian country.’’ In acknowledging this reality, it is vitally important that Federal policy makers give tribal governments the tools necessary to create vibrant economies on reservations that 

empower tribal leaders to govern effectively. 

Tools for Empowerment and Growth 

The Community Development Financial Institutions (CDFI) program at the Department of Treasury has seen success in Indian Country for a few compelling reasons. First, the program is designed to not only meet locally identified needs but 

be implemented locally as well. This fully supports the principal that self-determination and tribally driven programs cited as keys to success. The CDFI program has 

also been successful because of the way that tribes were included in in the program. 

A portion of the program was set-aside for Native participation and it included technical assistance. Congress should continue to support this successful program and 

look to expand the participation beyond the grass roots level to include broad tribal 

economic needs using the same formula that has seen success. 

While CDFI’s represent programs that work in Indian Country, the tax-exempt 

debt available to tribal governments represents a financing tool that has not 

worked. Tax-exempt bonding authority for tribal governments has not realized its 

potential because language related to its allowable use was unclear, the regulatory 

agency interpreted Congress’ intent too strictly, and capital markets have steered 

clear—equating uncertainty with risk. 

Congress first authorized tribes to issue tax-exempt bonds in 1982. At that time, 

it limited tribes to issuing tax-exempt bonds for ‘‘essential governmental purposes,’’ 

but did not define the term. In 1984, the Treasury Department issued Regulations 

that defined an essential governmental function very broadly for tribal purposes. 

Among other things, this included matters treated as essential governmental purposes for States and local governments under Section 115 of the Internal Revenue 

Code, in addition to the many commercial and industrial activities eligible for funding under the Snyder Act and the Indian Self-Determination Act. 

In 1987, Congress modified the broad regulatory definition of an essential governmental function by amending the law so that it did ‘‘not include any function which 

is not customarily performed by State and local governments with general taxing 

powers.’’ The 1987 amendment does not affirmatively define an essential governmental function, but simply excludes certain types of facilities from the eligibility 

list. 

Congress’ intent was simply to limit tribes to the same essential governmental 

functions that apply to State and local governments. However, conflicting views as 

49 

to what Congress intended are paralyzing the ability of tribes to access the low-cost 

benefits of tax-exempt financing—the very benefit that was intended for tribes by 

the 1982 Act. 

Even tribes that have sought financing projects that would appear by any other 

measure to be essential have been denied mostly because there is a commercial component that would also utilize the service. For example a tribe attempted to secure 

financing for a water distribution system and reservoir only to be disallowed because it would also serve the tribe’s commercial enterprise. The same held true for 

a tribe trying to establish a parking garage. Other State and local governments typically provide roads, water, parking to attract businesses with no challenges to their 

bond offerings. State and local governments routinely finance golf courses, marinas, 

and convention centers. Even the new stadiums are built with the proposed use taxexempt financing although some are finally questioning the public benefit. 

Included in the American Recovery and Reinvestment Act (ARRA) was an allotment of $2 billion in tax-exempt bonding authority for economic development purposes. The bonding authority allocations were divided into two $1 billion tranches 

to be utilized by interested tribes at two separate intervals. Both tranches were 

heavily subscribed by tribes, however; over 90 percent of the allocations went unused. Tribes were not able to secure credit in this difficult banking environment and 

the tax-exempt market has simply overlooked tribes because of past uncertainty and 

difficulties of their own in managing the strained debt of distressed State and local 

governments. 

As part of the ARRA, the Department of Treasury is required to submit a report 

on the viability of the use of the essential government function test for tribal governments. The current law, with its focus on the essential governmental function 

test, tends to hamstring intergovernmental efforts, as well as, public–private partnerships. Uncertainty and risk are two formidable roadblocks to raising capital. 

Congress should act to provide clear guidance and do away with the essential government function test for the tribal use of tax-exempt financing. Tribes need access 

to one of the most effective government financing tools to meet basic citizen infrastructure needs and develop a revenue stream for local tribal government programs. 

There is similar confusion and uncertainty when it comes to tribes having the 

ability to raise capital as governments or invest in other tribal governments. To 

achieve parity with other Government entities, it is important that Indian tribes be 

included and specifically listed as governments in the Securities and Exchange Commission (SEC) definition of ‘‘government body’’ used in Regulation D. The current 

definition of governmental body as proposed is extremely broad and already implicitly includes Indian tribes as it includes any ‘‘jurisdiction of any nature’’ and any 

‘‘body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature.’’ Indian tribal 

governments regularly exercise all of these forms of governmental powers, however, 

because they are not specifically listed as such, the financial markets are hesitant 

to extend the definition to tribal governments and regulatory bodies do not afford 

tribes the benefit of inclusion. 

Congress should remove the barrier imposed on tribes by this lack of clarity. It 

only serves to increase administrative costs, deter investment, and serve as a barrier for economic growth. 

The need for consistent laws and regulations would greatly help Native American 

communities. In 2000, Congress recognized this need and enacted the Indian Tribal 

Regulatory Reform and Business Development Act. This Act provided for regulatory 

reform in order to encourage investment, business, and economic development with 

respect to activities conducted on Indian lands. In short, Congress asked for a comprehensive review of the laws (including regulations) that affect investment and 

business decisions concerning activities conducted on Indian lands. The law also set 

out to determine the extent to which those laws unnecessarily or inappropriately 

impair investment and business development on Indian lands and determine the financial stability and management efficiency of Indian tribal governments. An authority was to be established in the Secretary of Commerce called the Regulatory 

Reform and Business Development on Indian Lands Authority that was to report 

its findings to the President and Congress. However, the Act was never implemented and many constricting laws and regulations remain. 

Congress has agreed that tribal governments need the tools to access and attract 

capital and investment, but has not authorized their full use. Because of built-in uncertainty, added cost and risks, tribes have not been given the full opportunity to 

succeed. In addition, Congress has also recognized the need to identify and remove 

existing barriers, but no action has been taken. 

50 

1These remarks reflect my views and not necessarily those of the Federal Reserve Bank of 

Minneapolis or the Federal Reserve System. 

To be successful, Congress should give tribes full use of Government financing authority, include tribes as accredited investors with the SEC, and, in its oversight 

role, encourage the responsible agencies to identify and remove barriers to growth. 

We know what works and look forward to working with the Committee to ensure 

these barriers are removed and programs are supported that promote self-determination and local control. These actions hold the promise of creating quality jobs 

on the reservation and in surrounding communities. 

PREPARED STATEMENT OF SUSAN M. WOODROW 

COMMUNITY DEVELOPMENT ADVISOR, FEDERAL RESERVE BANK OF MINNEAPOLIS

NOVEMBER 10, 2011 

Chairman Johnson, Ranking Member Shelby, and Members of the Committee, 

thank you for this opportunity to discuss economic development in Indian Country. 1

This is a very broad topic, and I will mainly discuss one aspect of it—promoting the 

growth of a vibrant private business sector in Indian Country. In particular, I will 

emphasize that, despite many challenges, tribes have promising opportunities to 

strengthen the legal and civic institutions that support private enterprise in Indian 

Country. My primary point is that tribes can overcome the challenges and seize 

these opportunities, and that they can do so with appropriate outside assistance. 

The remainder of my remarks will address how tribes can develop a legal and civic 

framework to promote business development. 

Let me briefly explain why the Community Development department of the Federal Reserve Bank of Minneapolis is involved in helping to strengthen the institutional foundations of the Indian Country business sector. The mission of the Federal 

Reserve’s Community Development, or Community Affairs, program is to support 

the Federal Reserve System’s economic growth objectives by promoting fair, impartial access to credit and financial services. In pursuing that mission, Community Development staff members serve as conduits for information to facilitate relationships 

between bankers and community organizations and to help them develop new insights and approaches to meeting local credit needs. Toward this end, Federal Reserve Banks may specialize on issues that are relevant within their respective geographic districts. The Federal Reserve Bank of Minneapolis covers the Federal Reserve’s Ninth District, which stretches from the Upper Peninsula of Michigan to 

Montana and includes more than 40 Indian reservations. Accordingly, for the past 

20 years or more, the Community Development department of the Federal Reserve 

Bank of Minneapolis has sought to assist tribes and their members in overcoming 

the significant barriers they often face in accessing credit and financial services for 

consumer and business purposes. 

From early on, we learned that actual or perceived differences in legal institutions 

between reservation and off-reservation areas are one of the barriers to financial 

services access in Indian Country, and much of the outreach and technical assistance we have targeted to tribes has been related to developing their commercial and 

business laws. We also realized that the lack or inadequacy of these laws especially 

impacts independent small businesses in Indian Country, which typically do not 

have the resources, powers, and privileges that tribal governments have to arrange 

financing for larger deals. With that in mind, the Federal Reserve Bank of Minneapolis has supported numerous initiatives aimed at enhancing the private sector 

business environment in Indian Country. (Additional information on our initiatives 

and those of our partners is available on our Indian Country Currents Web page 

at www.minneapolisfed.org/indiancountry.) 

As an attorney, I have been encouraged to play a lead role in these efforts over 

the last decade. Based on that experience, I see significant opportunities to boost 

small business development in Indian Country by fully and effectively implementing 

the Uniform Law Commission’s Model Tribal Secured Transactions Act for 

collateralized lending. Other important efforts include working with the Uniform 

Law Commission to develop a Model Tribal Probate Code that will free up land 

value and facilitate its use as collateral by helping to ameliorate the significant 

problem of fractionated interests in Indian-owned allotted lands, and to provide Indian entrepreneurs a civic voice through voluntary, cross-sector coalitions like the 

Montana, South Dakota, Minnesota, and North Dakota Indian Business Alliances. 

Because these initiatives are still recent or pending, and because good data on 

tribal business environments and outcomes are lacking, we cannot provide a thorVerDate Nov 24 2008 16:02 Jun 01, 2012 Jkt 048080 PO 00000 Frm 00054 Fmt 6621 Sfmt 6621 L:\HEARINGS 2011\11-10 OPPORTUNITIES AND CHALLENGES FOR ECONOMIC DEVELO
51 

2The State of the Native Nations, Harvard Project on American Indian Economic Development, Oxford University Press, 2008, p. xxi. 3Most government establishments are excluded from the County Business Patterns data. Exceptions include Government-sponsored wholesale liquor establishments, retail liquor stores, 

book publishers, federally chartered savings institutions, federally chartered credit unions, and 

hospitals. 4 Economic Development in Indian Country, April 14, 2011. Available at 

www.minneapolisfed.org/newslevents/pres/speechldisplay.cfm?id=4650. 

ough assessment of their efficacy at this time. However, the Federal Reserve Bank 

of Minneapolis will monitor progress and, over time, provide feedback on which approaches are associated with improved economic performance and small business development in Indian Country. 

The Opportunity for Private Sector Development in Indian Country 

In our outreach work, we see many signs that the private business sector in Indian Country is underdeveloped. Documenting these impressions with hard data at 

the local level is not always easy because, as noted by leading scholars, 2 data on 

the private sector in Indian Country are generally scarce. However, some revealing 

data are available in South Dakota, which is unusual in that it has several counties 

lying entirely within reservations (or nearly so) and bordering similarly remote and 

rural counties that are entirely outside of Indian Country. This uncommon political 

geography means that data from the U.S. Census Bureau’s County Business Patterns can be used to compare the number of nonagricultural private sector establishments, employees, and payrolls for these adjacent reservation and nonreservation 

counties. 3

For example, Ziebach and Dewey counties in north-central South Dakota lie mostly on the Cheyenne River Reservation, with only a bit of Dewey County included 

in the Standing Rock Reservation. Bordering them to the south are the nonreservation counties of Haakon and Stanley. According to the 2009 County Business Patterns data, Ziebach and Dewey counties together hosted 8,100 residents and 122 

nonagricultural private sector establishments with 764 employees receiving just 

over $22 million in annual pay. Despite a significantly smaller combined population 

(4,900), Haakon and Stanley counties together were home to considerably more nonagricultural private sector establishments (186), employees (1,580), and pay (over 

$41 million). 

Similar patterns are common for other pairs of reservation and nonreservation 

counties in South Dakota. These gaps partly reflect the generally lagging State of 

economic development on reservations. From another perspective, however, they 

also reveal the potential opportunities to boost reservation economies by expanding 

their private business sectors, including retail and professional services as well as 

manufacturing. 

Institutional Challenges 

The underdeveloped State of the private business sector in Indian Country is not 

an accident. It reflects the difficult history of dislocation and dependence that tribal 

societies experienced well into the twentieth century. These experiences directly 

stripped tribal societies of their traditional sources of wealth and disrupted the formation of new enterprises. They also sapped traditional tribal governing institutions 

and inhibited the bottom-up development of new institutions adapted to the modern 

economy. By the 1970s, when tribes finally gained a robust degree of self-governing 

autonomy within the United States, reservations had a weak private sector and 

lacked the types of legal infrastructure and civic institutions that help the off-reservation business sector grow. 

Let me illustrate the challenges involved by discussing the impact that inadequate commercial law has on entrepreneurs in Indian Country. In particular, I will 

focus on the lack of clear laws and institutions to support the use of personal property as collateral to secure loans and other extensions of credit. By personal property, I mean tangible and intangible property, such as machinery and accounts receivable, that is not land or affixed to land. These types of transactions outside of 

Indian Country are governed by Article 9 (titled Secured Transactions) of the Uniform Commercial Code (UCC), which has been uniformly adopted by all 50 States 

as well as the U.S. territories. Within Indian Country, however, the State of secured 

transactions law is largely incomplete, outdated, or nonexistent, and highly nonuniform. 

Federal Reserve Bank of Minneapolis President Narayana Kocherlakota captured 

the essence of the problem in a speech he gave in Helena, Mont., earlier this year: 4

52 

5 In a recent conversation with the business manager of a State UCC-filing office, it was noted 

that its soon-to-be implemented updated UCC-filing system is costing approximately $500,000. 

This cost is for the programming alone, and does not include staffing costs or maintenance. 

In the United States, the bulk of our practical, everyday business law is 

State, not Federal, law. But tribes are sovereign, to varying but significant 

degrees, with respect to State law. That is, State laws and State legal procedures and institutions often do not apply, or do not clearly apply, to business disputes on reservations. Unless appropriate tribal laws and institutions are in place, the result can be a vacuum, a real or perceived lack of 

business law and related institutions on reservations. Not surprisingly, this 

has a chilling effect on business and economic development. 

The lack of fully developed laws to support collateralized lending that President 

Kocherlakota referred to is a widespread impediment to economic development, and 

especially private sector business development, in Indian Country. While tribal governments may be able to negotiate loan terms for large-dollar initiatives, small businesses located within tribal jurisdictions do not have such negotiating power. The 

lack of laws that establish the rules for these kinds of transactions creates a highrisk environment for lenders and other creditors. The result is either no deals or 

high-cost deals to compensate for the risk. 

Of course, some tribes and lenders are aware of this problem and have implemented a number of remedies. Some tribes have simply adopted by resolution the 

secured transactions law of an adjacent State. Others have hired attorneys or engaged law school students to draft unique tribal secured transactions laws or, more 

often, discrete components of such laws, such as provisions governing the processes 

for repossessing collateral upon default. Some tribes have accommodated the needs 

of lenders by entering into contracts with special provisions that incorporate by reference the provisions of Article 9 as enacted by a particular State for discrete financing deals. Most tribes, however, have no laws governing secured lending. In 

these tribal jurisdictions, the law of various State jurisdictions is typically left to 

fill the vacuum on a transaction-by-transaction, and very uncertain, basis. 

Although these varied approaches have accommodated a degree of lending and 

economic development on reservations, most have significant defects. Tribes that 

have simply adopted State secured transactions laws often find them culturally inappropriate (for example, because they do not prohibit using, and thereby placing 

at risk, sacred or historically significant objects as collateral) or inadequate (for example, because State secured transactions laws incorporate by reference other State 

laws that the tribe has not adopted). High legal costs have prohibited many tribes 

from engaging legal counsel to draft customized tribal secured transactions laws, 

and those that have engaged counsel to do so often fail to keep their statutes up 

to date as the related laws in surrounding States have evolved. For example, UCC 

Article 9 was significantly revised in the late 1990s, and by the early 2000s the revisions had been adopted by all of the States. Many tribes that had based their laws 

on State Article 9 versions prior to the revisions have not similarly updated their 

laws and, as a result, many provisions in the tribal laws have been rendered essentially unworkable in the current secured lending environment. 

Another significant issue with tribal secured transactions laws is the lack or inadequacy of mechanisms for publicly filing liens in collateral. Secured transactions 

laws necessarily rely on public lien-filing systems to perfect security interests in collateral for purposes of determining priority of those interests vis-a-vis other creditors or parties of interest such as trustees in bankruptcy. States generally administer their UCC filing systems in a central location, typically within the office of 

their Secretary of State or banking division. Without a sound, credible UCC lienfiling system that readily allows electronic public filings as well as searches of debtors and liens against collateral, a secured transactions law is incomplete and thus 

ineffective. In my experience in reviewing the laws and processes of dozens of tribes, 

a sufficient, reliable, and easily accessible tribal-based lien-filing system does not 

exist. This is not surprising. Filing systems are complex and costly to implement 

and maintain. 5 Some tribes’ secured transactions laws identify the office of the clerk 

of the tribal court or tribal secretary as the location to file a security interest. However, in my experience, the actual mechanisms for filing financing statements as 

well as continuations, amendments, and terminations, often do not exist. Discussions with staff in the appointed offices generally reveal no filings and no staff 

awareness of actual processes to file financing statements or conduct lien searches 

pursuant to public requests. Other tribes defer unofficially to a State filing system 

for lien filings under tribal law. The result, often, is that lenders and others face 

confusing and uncertain rules, and thus risky legal environments, that either deter 

53 

6Further information on the development of the MTSTA is available on our Indian Country 

Currents Web page at www.minneapolisfed.org/indiancountry and in the articles cited there. 7 ‘‘About the ULC’’, ULC Web site, www.nccusl.org/Narrative.aspx?title=About%20the%20ULC. 

them from doing business in Indian Country or raise the costs of doing business in 

tribal jurisdictions. 

Seizing the Opportunity To Improve the Institutions of Business Law in Indian Country 

The development challenges resulting from the lack of satisfactory institutions for 

collateralized lending in Indian Country are formidable. Nonetheless, with some assistance, tribes are meeting the challenges and seizing the opportunities for developing institutions that support private sector business development in Indian Country. I will illustrate this by summarizing the drafting, adoption, and implementation 

of a Model Tribal Secured Transactions Act (MTSTA). 6

In response to tribal leaders’ concerns about the lack of affordable credit for business development and consumers in their communities, a special committee of attorneys attacked the issue with an approach pioneered by State Governments. Like 

tribal governments, State governments face the dilemma of exercising their sovereign independence while ensuring that their laws are sufficiently similar to other 

States’ laws to encourage commercial activity, including cross-border business. To 

address this need, States often base their laws on model statutes drafted by the 

Uniform Law Commission (ULC)—a group of lawyers, judges, legislators, legislative 

staff, and law professors appointed by State governments ‘‘to research, draft and 

promote enactment of uniform State laws in areas of State law where uniformity 

is desirable and practical.’’ 7 In 2001, the ULC formed a special committee to extend 

this approach to tribes, by drafting a Model Tribal Secured Transactions Act 

(MTSTA). The idea was to develop model legislation that tribes could adapt to local 

cultural and business needs while still providing a solid, stand-alone law sufficiently 

similar to State law so as to encourage cross-border commerce (e.g., a secured loan 

from an off-reservation lender to a business located on the reservation). The MTSTA 

was to be available at no cost to tribes. 

Along with more than a dozen ULC commercial law experts, I served as an advisor to the MTSTA drafting committee from its inception. To ensure that tribal concerns were identified and appropriately addressed, we were advised by legal counsel 

for several California rancherias and representatives from 10 Indian tribes, including Crow Nation, Sac and Fox Nation, Navajo Nation, Chitimacha Tribe of Louisiana, Oneida Indian Nation of New York, Cherokee Nation, Confederated Tribes 

of the Warm Springs Reservation, Chickasaw Nation, and Little Traverse Bay 

Bands of Odawa Indians. Their active participation was critical to the project. 

With the completion and publication of the MTSTA in August 2005, I and other 

members of the drafting committee made ourselves available to explain the model 

act to interested tribal governments. We published a comprehensive accompanying 

guide on how tribes could adapt and implement the law, and over the last 5 years 

have made dozens of presentations to tribal representatives, community development specialists, bankers, and other important stakeholders around the country. 

In 2006, Crow Nation, situated in southeastern Montana, became the first tribe 

to adopt the MTSTA. Their experience illustrates some of the challenges of implementing it effectively. Explaining the 100-page act to tribal legislators required a 

strong commitment from individual leaders within the tribe. Official tribal business 

is conducted in the Crow language, so additional effort was required to translate key 

legal concepts into Crow. 

Passage of an adapted version of the MTSTA by the Crow Legislature did not end 

the implementation challenges. The tribe recognized the need (discussed earlier) for 

a reliable public lien-filing system to complete their secured transactions system. I 

worked with the Montana Secretary of State’s Office and the tribe to facilitate discussions about utilizing the State UCC lien-filing system as the tribe’s official filing 

system. The result of negotiations was a Joint Sovereign Filing System Compact 

that officially recognizes Montana’s UCC filing system as the location for filing financing statements pursuant to the Crow Nation’s Secured Transactions Act. The 

arrangement does not infringe on tribal sovereignty or tribal jurisdiction. The State 

of Montana simply provides a ministerial function on behalf of and at no cost to the 

tribe. Because these filing systems are complex and costly to implement and administer, the arrangement offers the tribe a reliable and recognized public filing system 

that lenders and other creditors know and trust. The arrangement is a win-win for 

the State and the tribe. 

54 

8 15 U.S.C. §2201 et seq., Public Law 108-374, October 27, 2004; 118 Stat. 1173. 

The official compact signing ceremony was held in February, 2007, in the Mansfield Room of the U.S. Capitol and was attended by a large number of Crow dignitaries; the Montana Secretary of State and other State officials; Montana’s three 

U.S. Congressional delegates—Senators Tester and Baucus, and Representative 

Rehberg; and representatives of the ULC and the Federal Reserve, as well as several other Federal agencies and Native organizations. 

The Crow-Montana compact set a precedent. The following year, the Oglala Sioux 

Tribe on the Pine Ridge Reservation in southwestern South Dakota, having also enacted the MTSTA, entered into a similar UCC-filing arrangement with the South 

Dakota Secretary of State; and just last month, the Leech Lake Band of Ojibwe 

signed a joint powers agreement with the Minnesota Secretary of State to do the 

same. Statewide initiatives are now under way in Montana and South Dakota to 

encourage the remaining tribes in those States to enact the MTSTA and consider 

entering into similar filing system compacts with their respective States. The hope 

is to establish a reasonably uniform and reliable lending environment throughout 

Indian Country across the region. 

The Federal Reserve Bank of Minneapolis recognized that enactment of the law 

and establishment of a credible filing system arrangement were not all that was 

needed to create a sound legal environment for secured lending in tribal jurisdictions. Together with the ULC, the Federal Reserve Bank of Minneapolis has hosted 

two multiple-day training sessions for tribal judges and attorneys on the MTSTA, 

and I have provided several shorter training sessions for tribal judges on the model 

act. In addition, we have hosted workshops for those tribes that have enacted the 

law to ensure that local lenders have an opportunity to learn about the new legal 

environment for lending in these tribal jurisdictions. We will continue to provide 

such support to tribes in our District that adopt the law and establish appropriate 

filing system arrangements. To date, and to the best of our knowledge, more than 

25 tribes have either adopted or are in some stage of reviewing the MTSTA for enactment. Demand for our technical assistance in these matters is significant, which 

is promising in that more and more tribes seem to be taking an interest in enacting 

the model law. 

Further Challenges and Opportunities 

ULC Model Tribal Probate Code Initiative. The need for additional model tribal 

laws addressing a variety of issues that impact business development is great. One 

initiative being considered by the ULC is a model tribal probate code that would 

provide tribes with a comprehensive legal framework to address the significant 

problem of land fractionation moving forward, and that would be consistent with 

and further supplement the American Indian Probate Reform Act of 2004 (AIPRA). 8

Pursuant to Federal policy of the times, fractionation of lands allotted to individual 

Native Americans in the early part of the twentieth century has rendered vast areas 

of Native American-held land useless for development purposes or as collateral for 

loans, because land parcels are held in joint ownership, often by dozens or even hundreds of owners. The effect has been to tie up untold land value that could otherwise 

serve as collateral or contribute to development. Comprehensive and thoughtful probate laws are needed to help address some of the issues that land fractionation has 

caused. The ULC has hosted several preliminary meetings with key stakeholders 

from across the country who heartily support the effort. A modest amount of funding, however, is needed to enable the ULC to proceed in a way that ensures Native 

attorneys and other experts are able to fully participate as advisors to the drafting 

process. 

Indian Business Alliances. Concurrent with our work assisting tribes with commercial law development, the Federal Reserve Bank of Minneapolis has provided 

technical and organizational assistance to establish coalitions of diverse institutions 

and organizations with the mission of supporting Native private business development. The Montana Indian Business Alliance (MIBA), South Dakota Indian Business Alliance (SDIBA), and Minnesota Indian Business Alliance (MNIBA), established in 2006, 2007, and 2008, respectively, share a common mission and strategic 

approach to developing and supporting Native entrepreneurs. These alliances are 

made up of representatives of tribal, State, and Federal governments and their respective agencies; tribal colleges and other educational institutions; community development organizations; foundations; financial institutions; corporations; nonprofits; and Native small businesses. 

By working together, IBA members have helped to elevate the dialogue, regionally 

and nationally, about the importance of incorporating Native entrepreneur development into strategic discussions regarding Indian Country economic development. 

55 

9For further information on Indian Country initiatives at all of the Reserve Banks, see, the 

Community Development links at www.federalreserve.gov/communityaffairs/national/ 

reservebanks.htm. 

The IBAs focus their work in four strategic areas: governance, infrastructure, finance, and resources. 

Governance includes such things as development of tribal policies that are favorable to private business, comprehensive ethics codes and systems, and constitutional 

reform to institute independent courts and other dispute resolution mechanisms. Infrastructure includes the development of legal and regulatory infrastructure; physical infrastructure such as telecommunications networks, zoned industrial sectors, 

and road enhancements; and workforce development. Finance incorporates all 

sources of business funding, including commercial lenders, community development 

financial institutions, equity funds, microloan funds, and other gap financing 

sources. And resources include such things as technical assistance and education for 

business owners, financial education, credit counseling and repair programs, and 

business mentoring. 

The IBAs tackle their objectives through conferences, workshops, policy forums, 

webinars, and research initiatives; and each hosts a comprehensive Web site featuring, among other things, resources for tribal governments and small business 

owners. Notable initiatives and accomplishments of the IBAs include: (1) significant 

work on capital access issues, including a survey of nonbank and commercial bank 

lenders in Montana and their lending to Native businesses, and related analyses of 

the capital access environment for Indian entrepreneurs; (2) support for input into 

the development of the Montana Department of Commerce’s Indian Equity Fund 

which provides small equity grants to Native small businesses; (3) an in-depth research initiative examining the business environments on all of South Dakota’s reservations; (4) advocacy for tribes’ adoption of the MTSTA and filing system arrangements with their respective States; (5) Statewide policy forums; and (6) Indian business directories. 

Together, the IBAs have provided a significant voice for Native entrepreneurs in 

our Northern Plains and Rocky Mountain regions. We are also pleased to announce 

that, according to North Dakota Indian Affairs Commissioner Scott Davis, North 

Dakota has begun the process of forming a North Dakota Indian Business Alliance 

aligned with the common mission of the MIBA, SDIBA, and MNIBA. 

The Challenge of Assessing Results 

The efforts and opportunities I have described for strengthening the institutional 

foundation of the private sector in Indian Country are new, and some have not yet 

taken shape. Their newness makes it nearly impossible to assess their effectiveness 

at this time. However, the passage of time alone will not fully solve the assessment 

challenge, for—as indicated above—data on the business environment and business 

outcomes on reservations are very limited. 

Over time, the Federal Reserve Bank of Minneapolis intends to contribute on this 

front, too, because we are committed to a fact-based, realistic approach to economic 

development in Indian Country. In the near future, we expect to gather at least anecdotal information from bankers and other lenders regarding their perceptions of 

and experiences with new tribal business laws. We are gathering information about 

business laws and other business environmental factors on a number of reservations 

in order to statistically assess how these factors relate to the best measures we have 

of economic outcomes and well-being on reservations. I am hopeful that we will be 

able to make at least some preliminary findings available next year. 

Additional Initiatives 

I have focused on the Federal Reserve Bank of Minneapolis’ institution-focused 

program for promoting private sector development in Indian Country. Although this 

has long been our primary program related to access to financial services in Indian 

Country, we recognize that financial services access and economic growth in general 

depend on a wide array of factors. Accordingly, we and our Community Development 

colleagues from around the Federal Reserve System engage in many other Indian 

Country initiatives, including efforts aimed at enhancing personal financial education and credit counseling, access to housing finance, reservation employment and 

transportation opportunities, and tribal usage of Federal financial programs. 9

This year, Community Development staff from the Board of Governors of the Federal Reserve System and multiple Reserve Banks collaborated to host tribal leaders 

and officials from nine Federal agencies at daylong ‘‘Growing Economies in Indian 

Country’’ dialogues in Phoenix; San Diego; Portland, Ore.; Billings, Mont.; Bangor, 

56 

10For further information on these conferences, see, www.frbsf.org/community/resources/ 

2011/0601-Growing-Economies-in-Indian-Country/index.html. 

Maine; and Lac du Flambeau, Wis. 10 The workshop series engaged nearly 600 tribal 

leaders, community organizations, and financial institutions in a dialogue about the 

short-term and long-term opportunities for growing economies in Indian Country. 

The results of these conversations are being summarized and compared in order to 

identify follow-up steps for the Reserve Banks and others. In addition, and as a continuation of this work, the Federal Reserve is planning to organize a national summit as a way to gather key stakeholders. This forum will be designed to provide an 

opportunity to share thinking on where additional research and data collection may 

be useful, to identify promising practices observed in the field, and to make policy 

recommendations that will address economic development strategies and solutions. 

Conclusion 

The challenges to economic growth in Indian Country are numerous, but over the 

past decade we have seen many tribal governments and individuals meet those challenges and create new opportunities. Mr. Chairman, in your letter inviting this testimony you stated that ‘‘Fostering small business growth is a vital step toward increasing employment opportunities and improving local economies in Indian Country.’’ We wholeheartedly agree. We are well aware of the legacy of barriers and gaps 

that history has placed in front of Native American entrepreneurs, including barriers to accessing capital and financial services. Speaking personally, I can say that 

the legacy of weak legal and civic organizations important to small business growth 

and financial access is a particularly challenging barrier that I have witnessed on 

reservations across the United States. I am pleased to say, however, that our efforts 

at the Federal Reserve Bank of Minneapolis, such as the initiatives on model tribal 

codes, IBAs, and Indian Country economic research that I have described, allow us 

to work with tribal leaders and other Native and non-Native partners to remove 

these barriers. I have seen much progress in institution building in Indian Country 

over the past decade. With the right combination of grassroots leadership and appropriate outside assistance, I see many more opportunities for tribal citizens and 

their leaders to further develop sound legal and civic institutions to support a vibrant small business sector in Indian Country. 

57 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

STATEMENT SUBMITTED BY THE NATIONAL CENTER FOR AMERICAN 

INDIAN ENTERPRISE DEVELOPMENT 

58 

59 

60 

61 

62 

63 

64 

65 

66 

67 

Attachment I 

68 

69 

70 

71 

72 

73 

Attachment II 

74 

75 

76 

Attachment III 

77 

78 

STATEMENT SUBMITTED BY KENT PAUL, CHIEF EXECUTIVE OFFICER, 

AMERIND RISK MANAGEMENT CORPORATION 

79 

80 

81 

82 

83 

84 

85 

86 

87 

88 

89 

90 

91 

92 

93 

94 

95 

Attachment I 

96 

97 

Attachment II 

98 

99 

100 

STATEMENT SUBMITTED BY BUFORD ROLIN, CHAIRMAN, POARCH 

BAND OF CREEK INDIANS 

101 

102