For release on delivery
3:30 p.m. CT
October 13, 2021
Financial Inclusion and Economic Challenges in the Shadow of the Pandemic: A
Conversation with Tribal Leaders
Remarks by
Lael Brainard
Member
Board of Governors of the Federal Reserve System
at
Fed Listens: Roundtable with Oklahoma Tribal Leaders
Oklahoma City, Oklahoma
October 13, 2021
I would like to join Esther George in expressing my appreciation to the leaders of tribal
nations assembled here for this opportunity to listen and learn from this afternoon's conversation.
I also want to thank Governor Anoatubby for hosting us.1 I am humbled to be here at the First
Americans Museum, which is promoting a richer understanding of Native American history by
sharing the cultural diversity, history, and resilience of the 39 Native nations of Oklahoma.
In addition to civic and cultural contributions whose impact reaches far beyond tribal
lands, I want to recognize the important economic contributions Native American communities
are making, despite daunting impediments that were exacerbated by the COVID-19 pandemic.
By working together to address economic challenges and improving access to financial services,
we can build a more inclusive economy that supports the economic potential of Native
communities here in Oklahoma and across the country.
The COVID-19 Pandemic in Indian Country: Challenge and Resilience
Tribal nations have long been a critical source of economic opportunity and stability. For
the U.S. economy overall, tribes provided over 1.1 million jobs prior to the pandemic.2 Here in
Oklahoma, when looking at how the economic activity of tribes compares with different
industries in the state, tribes would rank 9th in output, at over $7 billion, and 11th in job
creation-greater than either the construction or utilities industries. By one estimate, tribal
government activities supported nearly 100,000 jobs in the state and brought nearly $5 billion in
wages and benefits to Oklahoma workers as of 2017.3 Oklahoma tribes also contributed nearly
$43 million for the construction and maintenance of Oklahoma roads, bridges, and other
transportation infrastructure that are used by all Oklahomans.4
The resilience of Native communities was evident in the strong response of tribal nations
to the pandemic. As early as April 2020, just a month after the pandemic swept across the U.S.,
tribal nations were proactively offering COVID-19 testing for the general public. Once vaccines
began to roll out in early 2021, tribal nations distributed them under a prioritized and phased
timeline developed in accordance with Centers for Disease Control and Prevention guidance.
This assistance from tribal nations helped make Oklahoma one of the top 10 states for vaccine
rollout.5
But the pandemic added to sharp economic disparities that are longstanding. Prior to the
pandemic, the median household income for American Indian and Alaska Native (AI/AN)
households was about $20,000 lower than for non-Hispanic White households.6 Native
American women faced particularly large disparities with 18 percent living in poverty before the
pandemic-about 12 percentage points higher than White women.7 About 59 percent of AI/AN
women overall are considered financially fragile.8 Such disparities were only exacerbated by the
pandemic.9 The Federal Reserve Bank of Minneapolis's Center for Indian Country
in-oklahoma.pdf. The report defines economic output as business revenues, government expenditures, and
expenditures for capital improvements including roads projects.
4
See Dean, Economic Impact of Tribal Nations.
5
See "Safely Navigating a Global Pandemic," United for Oklahoma,
https://www.unitedforoklahoma.com/community-impact/pandemic-response/.
6
See "Profile: American Indian/Alaska Native," U.S. Department of Health and Human Services, Office of
Minority Health, last modified October 8, 2021, https://minorityhealth.hhs.gov/omh/browse.aspx?lvl=3&lvlid=62.
7
See Amanda Fins, "National Snapshot: Poverty among Women & Families, 2020," fact sheet (Washington:
National Women's Law Center, December 2020),
https://nwlc.org/wpcontent/uploads/2020/12/PovertySnapshot2020.pdf.
8
See Sarah Dewees and Gary Mottola, "Race and Financial Capability in America: Understanding the Native
American Experience," Insights: Financial Capability (April 2017): 1-17,
https://www.usfinancialcapability.org/downloads/Native-American-Experience-Fin-Cap.pdf.
9
See Donna Feir, Chris James, Casey Lozar, and Ryan Nunn, "Indian Country Small Businesses Face Strong
Headwinds in COVID-19 Recovery," Federal Reserve Bank of Minneapolis, September 8, 2020,
Development, a research institute dedicated to tribal economic development, estimates that the
employment-to-population ratio for AI/AN households is 2.5 percentage points lower than the
national average in August 2021, down from June 2020, when the gap was over 4 percentage
points.10
The pandemic also led to significant declines in the revenues of tribal governments and
businesses at a time when their services were more important than ever. In recent surveys by the
Center for Indian Country Development, many respondents reported large, persistent revenue
losses, with only one in five tribal entities indicating they have stable revenues.11 At the same
time, they reported facing substantial increases in their operational costs that they expected to
remain elevated for at least six months.
Identifying Barriers to Financial Inclusion
To address these disparities, it will be important to understand and make progress on key
impediments to financial access. Native communities face impediments to accessing a range of
financial services, including banking, mortgage financing, small business credit, and financial
education.
Perhaps most fundamentally, access to banking services is important to ensure the
financial wellbeing of individuals and the vitality of the communities in which they live. Over
https://www.minneapolisfed.org/article/2020/indian-country-small-businesses-face-strong-headwinds-in-covid-19recovery; Casey Lozar, Donna Feir, and James Robert Colombe, "COVID-19: A Deep Economic Crisis in Indian
Country," Federal Reserve Bank of Minneapolis, May 13, 2020,
https://www.minneapolisfed.org/article/2020/covid19-a-deep-economic-crisis-in-indian-country; and Casey Lozar, Donna Feir, and James Robert Colombe,
"COVID19 and Indian Country: Early Snapshot Reveals Disproportionate Economic Exposure and Uncertainty," Federal
Reserve Bank of Minneapolis, April 10, 2020,
https://www.minneapolisfed.org/article/2020/covid-19-and-indiancountry-early-snapshot-reveals-disproportionate-economic-exposure-and-uncertainty.
10
See Center for Indian Country Development, "Native American Labor Market Dashboard," webpage, Sept. 22,
https://www.minneapolisfed.org/indiancountry/resources/native-american-labor-market-dashboard.
11
See Matthew Greg and Casey Lozar (2021), "One Year into Covid-19, pandemic's negative effects persist in
Indian Country," Federal Reserve Bank of Minneapolis, May 19, 2021,
https://www.minneapolisfed.org/article/2021/one-year-into-covid-19-pandemics-negative-effects-persist-in-indiancountry.
16 percent of AI/AN households were unbanked in 2019-three times higher than the national
average.12 The low levels of banking relationships are partly due to a lack of proximate bank
branches: Majority-Native American counties, on average, have only three bank branches, which
is below the nine-branch average in nonmetro counties, and well below the 26-branch overall
average for all counties.13 Just the basic act of opening a bank account is challenging when the
nearest bank branch is, on average, 12 miles away from the geographic center of a reservation
and may be more than 60 miles away-in comparison to less than 1 mile on average for most
counties.14
Native households also face barriers to homeownership, which is a vital tool to build
wealth. According to the 2019 Survey of Consumer Finances, the median homeowner has 40
times the household wealth of a renter.15 While 75 percent of Native households reported a
strong desire to own their home, Native American communities face significant impediments.
First, they face a lack of adequate supply.16 Overcrowding and physical housing problems are
12
See Federal Deposit Insurance Corporation, How America Banks: Household Use of Banking and
Financial Services: 2019 FDIC Survey (Washington: Federal Deposit Insurance Corporation, October 2020),
https://www.fdic.gov/analysis/household-survey/2019report.pdf.
13
Information calculated using Summary of Deposits (SoD) 2020. Note that not all counties, especially some with
high Native American populations, exist in the SoD dataset.
14
See Miriam Jorgensen and Randall K.Q. Akee, Access to Capital and Credit in Native Communities: A Data
Review (Tucson: Native Nations Institute, February 2017),
https://www.novoco.com/sites/default/files/atoms/files/nni_find_access_to_capital_and_credit_in_native_communit
ies_020117.pdf and "Branch Closings Typically Create Modest Increase in Distance to Banks," Federal Reserve
Bank of St. Louis, last modified April 19, 2021,
https://www.stlouisfed.org/on-the-economy/2021/april/branchclosings-limit-access-to-bank-services.
15
See Neil Bhutta, Jesse Bricker, Andrew C. Chang, Lisa J. Dettling, Sarena Goodman, Joanne W.
Hsu, Kevin B. Moore, Sarah Reber, Alice Henriques Volz, and Richard A. Windle, "Changes in U.S. Family
Finances from 2016 to 2019: Evidence from the Survey of Consumer Finances," Federal Reserve Bulletin 106
(September 2020): 1-42, https://www.federalreserve.gov/publications/files/scf20.pdf.
16
See "Alaska Rural Homeownership Resource Guide," Federal Reserve Bank of San Francisco, January 2017,
https://www.frbsf.org/community-development/files/alaska-rural-homeownership-guide.pdf and "Native
Communities," Federal Reserve Bank of San Francisco,
https://www.frbsf.org/communitydevelopment/initiatives/native-communities/.
far more severe than in other parts of the country.17 A 2017 Department of Housing and Urban
Development assessment concluded that to alleviate substandard and overcrowded homes in
Indian Country, 68,000 units need to be built.18 Second, tribally designated housing authorities
reported that the credit readiness of individual tribal borrowers was a key challenge in obtaining
credit, followed by the lack of homebuyer education.19 In addition, tribal members have trouble
obtaining home loans, especially for properties located on trust land due to the complexity in
using trust property as collateral.
Overcoming these challenges to expand homeownership options on trust and restricted
land could strengthen reservation economies and the well-being of tribal members.20 Building
new homes and preserving older ones employs a wide range of workers and provides
opportunities to build valuable skills. These activities have a ripple effect as related jobs are
spread over other sectors of the community, including manufacturing, retail, and business
services.21
Native small businesses also face special challenges in obtaining credit. Small businesses
can be the lifeblood of a community, providing jobs, goods and services, and stability as well as
17
See Patrice H. Kunesh, "Tribal Leaders Handbook on Homeownership," Center for Indian Country Development,
Federal Reserve Bank of Minneapolis, 2018,
https://www.minneapolisfed.org/indiancountry/resources/triballeaders-handbook-on-homeownership. The differences in incomes, ages, and race/ethnicity of homeowners also
play a part in the magnitude of these identified issues.
18
See Jennifer Biess, Christopher Hayes, G. Thomas Kingsley, Diane Levy, Nancy Pindus, and Jasmine Simington,
Housing Needs of American Indians and Alaska Natives in Tribal Areas: A Report From the Assessment of
American Indian, Alaska Native, and Native Hawaiian Housing Needs (Washington: U.S. Department of Housing
and Urban Development, January 2017),
https://www.huduser.gov/portal/sites/default/files/pdf/HNAIHousingNeeds.pdf.
19
See Nikki Pieratos and Tony Walters, "Findings from the 2018 National Tribal Housing and Homeownership
Survey," Center for Indian Country Development,
http://naihc.net/wpcontent/uploads/2019/01/NAIHCSurveyLetter.pdf.
20
In the case of trust lands, the United States holds the legal title to property, and the individual Indian(s) or tribe
holds the beneficial interest. For restricted lands, the individual Indian(s) or tribe holds the legal title. Both trust
and restricted lands cannot be alienated without approval of the United States. See Angelique Wambdi EagleWoman
and Stacy L. Leeds, Mastering American Indian Law: Second Edition (Durham, NC: Carolina Academic Press,
2019).
21
See Kunesh, "Tribal Leaders Handbook on Homeownership."
the opportunity for owners to build wealth.22 About 300,000 Native American-owned small
businesses and enterprises exist in the U.S. today, generating around $50 billion of revenue a
year.23 Native American business owners have made their mark in various industries, including
tourism, gaming, energy, agriculture, forestry, manufacturing, and federal contracting.
Yet, Native small businesses struggle to access bank credit, a critical part of encouraging
small business growth and formation. Data from the Survey of Business Owners and Self-
Employed Persons show far fewer AI/AN-owned businesses were started by using bank
financing compared with all business owners.24 These differences are supported by anecdotal
perspective that Native Americans have more difficulty financing their new businesses with
loans from traditional lenders than non-Natives do.25 In addition, Native business owners
consistently reported using credit cards to finance business startups at a greater rate than other
startups.26 The CDFI Fund's Accessing Capital and Credit in Native Communities Report
concludes a possible explanation is that Native business owners have more difficulty accessing
lower-cost standard bank loans than do other entrepreneurs.
Native small businesses faced much greater challenges as a result of the COVID-19
pandemic, and generally received less robust support.27 Small businesses in tribal areas were
22
See U.S. Small Business Administration, "Small Businesses Generate 44 Percent of U.S. Economic Activity,"
news release, January 30, 2019,
https://advocacy.sba.gov/2019/01/30/small-businesses-generate-44-percent-of-u-seconomic-activity/.
23
See "How SBA Helps Native American Small Business Owners Succeed," U.S. Small Business Administration,
November 10, 2020, https://www.sba.gov/blog/how-sba-helps-native-american-small-business-owners-succeed.
24
See Jorgensen and Akee, Access to Capital and Credit.
25
See Jorgensen and Akee, Access to Capital and Credit.
26
According to the CDFI Fund's Accessing Capital and Credit in Native Communities Report, AI/AN business
owners report using credit cards to finance startups at a rate 3-5% higher than the average.
27
Following the onset of the pandemic, conditions for Native small businesses worsened. The Center for Indian
Country Development and National Center for American Indian Enterprise Development surveyed small businesses
in Indian Country in 2020 and found that about 68 percent of businesses saw at least a 20 percent revenue reduction,
while 1 in 6 businesses reported having lost all revenue (as of mid-July 2020) because of COVID-19. See Feir,
James, Lozar, and Nunn, "Indian Country Small Businesses."
both less likely to receive Paycheck Protection Program assistance and received less, on average,
than businesses in non-tribal areas.28
Financial literacy and personal financial management skills are critically important,
especially for households with low liquid savings and wealth. While there are limited data about
financial behaviors in Indian Country, available information suggests that Native Americans face
higher levels of financial fragility than many other groups. Given these challenges, Native
American youth may stand to benefit from opportunities to develop personal finance skills and
financial management experience.29
Addressing Barriers to Inclusion
As Native communities tackle these impediments to financial inclusion, collaborative
efforts across a range of public-sector, private-sector, and nonprofit organizations can be helpful.
As part of our mission to build a strong, inclusive economy, the Federal Reserve has a role to
play in supporting economic growth and financial inclusion in Native communities.
Community Reinvestment Act (CRA) Reform
The CRA is one powerful tool in building a more inclusive economy for individuals and
communities. As one of several landmark civil rights laws to address systemic inequities in
credit access, the CRA confers an affirmative obligation on banks to help meet the credit needs
of the local communities in which they do business, including low- and moderate-income
neighborhoods. The CRA prompts banks to be not only more active lenders in LMI areas, but it
also encourages activities with minority depository institutions (MDIs) that are especially
important to serving the credit and investment needs of minority communities.
We are working with the other banking agencies to propose CRA reforms that should
improve financial inclusion and the availability of community development financing in
underserved communities.30 As we work together to propose reforms to strengthen the law's
core purpose, we have a unique opportunity to design a regulation that better addresses the credit
needs for Native communities and in Indian Country-including increasing banking services,
access to credit for households and businesses, and funding for community development.31
Two years ago, I had the pleasure of visiting with the Thunder Valley Community
Development Corporation on the Pine Ridge Reservation in South Dakota. We toured a major
housing, small business, and community development mixed-use project, which was under
construction. Despite the importance of the Thunder Valley project to the community, banks
were not among the funders listed for this important project. This illustrates the broader
challenge faced by underserved communities where there are few bank branches.
I want to highlight two of the proposals that the Federal Reserve Board (the Board)
sought feedback on in the September 2020 Advance Notice of Proposed Rulemaking to
strengthen CRA regulations. Recognizing that many places in Indian Country have few bank
branches and are located outside of branch-based assessment areas, the Board proposed that a
bank in any part of the country could receive credit for eligible CRA activities in Indian Country,
even when there is not a branch nearby. Banks need to be confident about receiving CRA credit
to seek out activities and investments in these areas.
The Board has also sought feedback on ways to encourage and reward banks for activities
that are responsive to community needs, particularly in harder-to-serve areas. One approach is
the use of impact scores for community development activities to ensure that performance
evaluations adequately reflect the relative importance of loans and investments within
communities. As we work toward a set of interagency proposals on how to strengthen CRA
regulations, we will continue to focus on and seek feedback on how to best encourage impactful
CRA activities in Indian Country, including for building climate resilience where needed.32
Supporting Native Community Development Financial Institutions (CDFIs) and MDIs
In addition to traditional banks and credit unions, a robust CDFI ecosystem can also be a
lifeline to support credit access in underserved communities. Between 2001 and 2021, the
number of Native CDFIs increased fivefold from just 14 to 71 in the U.S.33 While Native CDFI
loans tend to be small-the average loan size was just $16,000 in 2017-they fill a critical gap,
especially for those who have thin credit profiles or have poor credit profiles.34 Moreover,
CDFIs can help improve clients' credit and boost their financial access.
Native CDFIs in Oklahoma have been highly successful in providing financial access to
Native Americans, supporting mortgage lending, small business growth, and economic activity
more broadly. Despite the challenges presented by the pandemic, Native CDFIs across the
country avoided the increases in delinquencies and charge offs that were anticipated early on,
and only a few have had to restructure their organization's corporate debt as a result of COVID-
19 so far, highlighting the quality of Native CDFI investments.35
The Federal Reserve Bank of Kansas City (FRB Kansas City) Community Development
department supports Native CDFIs and Native MDIs in a number of ways with a focus on
convening, facilitation, and resource development.36 For example, staff support state-wide CDFI
working groups in Oklahoma and New Mexico, which both have significant representation of
Native CDFIs. Further, through its flagship program, Investment Connection, FRB Kansas City
links banks with CRA-eligible activities. Since its creation in 2011, Investment Connection has
enabled $50 million in loans and grants to be connected with community organizations.37 These
funds have supported work in affordable housing, small business development, and workforce
development, among other areas. Several organizations working in Indian Country have been
able to make successful, CRA-eligible connections through FRB Kansas City's Investment
Connection, including an Oklahoma based Native American CDFI. The Federal Reserve System
will continue to be a resource to provide information and best practices for CDFIs as more tribes
seek information about establishing their own financial institution.
Economic Education
The Economic Education team at the Federal Reserve Bank of St. Louis with support
from the Atlanta and Kansas City Reserve Banks has been committed to providing tribal nations
and Native communities in Oklahoma and across the country with personal finance and
economic education programming. Understanding the diversity of Native languages and
cultures, the programming offers the flexibility to adapt to local needs. This work, led by Megan
Cruz, a citizen of the Osage Nation, who is here today, brings financial education to tribal
programs spanning all ages-including early childhood learning, youth programs, housing,
reservation schools, higher education, workforce development, children and family services, and
elder programs.38
Center for Indian Country Development
A pervasive lack of data makes it difficult to evaluate how economic developments are
impacting Indian Country. The limitations of the data available on Indian Country are due to
data collection and reporting issues, such as small sample size or large margins of error.39 At the
Federal Reserve Bank of Minneapolis, the Center for Indian Country Development collects data
and conducts economic research and analysis to help resolve the critical need for accurate and
timely data. One of the steps they have taken includes publishing a labor market data tool, which
presents estimates of the labor force participation rate, employment-to-population ratio, and
unemployment rate for the AI/AN population in the U.S.40
The Center for Indian Country Development also focuses on applied research and
engagement in Indian Country to support long term economic prosperity and inclusion. Recent
research has centered on the role tribal enterprises play in economic opportunity and how tax
revenues in Indian Country can help improve the economic infrastructure and financial inclusion
for tribal communities. Through policy webinars and its upcoming inaugural research summit,
the Center is working alongside tribal leaders to leverage data and research to improve the
economic well-being of Indian Country.
The Reserve Banks play a unique and important role in increasing our understanding of
local needs and regional issues, and in the Federal Reserve Districts with large Native American
populations and stakeholders, our Banks are very engaged with Indian Country activities. We
welcome the diverse perspectives of Native Americans, from serving on our boards and advisory
councils to joining us as full-time employees, to better inform our decisionmaking. Tawney
Brunsch, the CEO of Lakota Funds, a Native CDFI, is the current Vice Chair of the Board's
Community Advisory Council, which offers diverse perspectives on the financial services needs
of communities, with a focus on lower- to moderate-income neighborhoods.41
Earlier today, the Federal Reserve announced we had joined the Central Bank Network
for Indigenous Inclusion (Network) alongside the Reserve Bank of New Zealand/Te Pūtea
Matua, the Bank of Canada, and the Reserve Bank of Australia. The mission of the Network is
to foster ongoing dialogue and raise awareness of Indigenous economic and financial issues,
share knowledge and best practices, and promote engagement and education on Indigenous
economy and history, in partnership with Indigenous Peoples. It is a welcome opportunity for us
to better understand how each central bank is working to improve financial inclusion for and
with Indigenous Peoples. We look forward to learning from our Indigenous partners and central
bank members in the Network.
Conclusion
In closing, I want to affirm that it is important to us at the Federal Reserve to deepen our
understanding of tribal nations and strengthen our relationships with Native communities. We
welcome opportunities such as today's conversation to learn from you as tribal leaders about the
economic issues that are most pressing for your citizens and communities. Today's discussion is
part of an ongoing conversation we hope to continue that will help us better reflect the economic
experiences of Native Americans.