There is a reason we continue to see a multitude of Native American lenders starting new lending shops every month, it comes down to math. The costs of doing business is very low, basically all a new start-up needs is a telephone number, a decent looking website and at least one person to answer the phone. Beyond that there are not too many costs.
None of the tribal lenders actually operate a physical bricks and mortar store, instead they are 100% an online business model. With this very small barrier to entry into the field it's no wonder why companies keep popping up all the time. And if their business doesn't materialize (which for at least half
Another factor that helps a new tribal lending entity getting into business is that they are (mostly) exempt from state and federal lending laws. Now this does appear to be changing somewhat as we have multiple court cases moving through state and federal courts, and some of those rulings have been in favor of the state regulators who want to control the lending practices at these Native American firms. In the past there were absolutely no laws that could impact a Native American tribe and how they conducted their business, but now we have some states that are imposing lending (and interest rate) limits to the customers in their state.
In the end this is going to be a mild problem for the tribes, and it may not be a problem at all if the United States Supreme Court favors the tribes. Historically, the strong tendency has been for the U.S. Congress and the U.S. Supreme Court to decide in favor of the sovereign nature of the tribes, at least in the last 50 years it has been that way.
The problem with trying to stop tribal lenders from issuing new loans, and for new tribal lenders to keep stepping into the fray, is that the profits from this type of business are just to amazing for the tribes to avoid. There are tribal leaders who will say that they know the lending operations are not very moral, and there are plenty of tribes that will not engage in this type of business, but in the end there is just too much of a need on the reservations (the proper terminology these days is federally recognized tribal lands) for them to let the money go by and not jump into the business.
This is the key problem...
On one hand you have some of the poorest communities in the United States in the tribal communities. There are very few jobs, or opportunities, there is just no good way to make money on the tribal lands. On the other hand (and at the same time) we have this new loan business, which is relatively free from regulations, and that has a very tiny cost to operate, which has the potential to generate millions of dollars in interest income.
The immense demand for cash combined with the very strong possibilities of making good money with this business creates a situation where tribal lending is going to be here to stay. State governments, regulators, the Supreme Court, they can all debate and make decisions but when all the dust settles it is very hard to envision the tribes walking away from lending.
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