An Oklahoma tribe is fighting for its right to offer Connecticut consumers payday loans, reports the Hartford Courant—ironically arguing that state restrictions on its offerings of high-rate, short-term loans are financially damaging.
Last year, Connecticut's Department of Banking issued cease-and-desist orders to two online lenders owned by the Oklahoma-based Otoe-Missouria tribe for offering small, short-term loans with annual percentage rates as high as 448.76 percent. That's far in excess of the state's 12 percent cap on such loans. Earlier this year, the state almost imposed fines totaling $1.5 million on the two tribe businesses, Great Plains Lending LLC and Clear Creek Lending LLC, and tribe chairman John Shotton.
The tribe has filed an appeal with the state of Connecticut, and last month, Shotten filed a federal rights civil lawsuit against state banking regulators.
Now, in support of the tribe, the Courant reports, a nonprofit conservative group called the Institute for Liberty has launched a web site and Twitter campaign and put up at least one billboard with messages accusing Governor Dannel P. Malloy "of being party to a regulatory action that deprives an impoverished tribe of revenue." Campaign messages pair photos of Native American children with phrases including, "Gov. Malloy, Don't take away my daddy's job," and "Gov. Malloy, Don't take away my future."
Institute president Andrew Langer told the Courant: "It's the governor's state. He's the governor, and the buck stops with him." Langer declined to identify his funders, but told the paper he is not being paid by the tribe or any of its financial partners.
It's not the first time tribes have argued in court that that tribe-owned payday lending businesses, like tribal governments, have sovereign immunity—meaning state regulators lack authority to regulate them. In 2013, the Otoe-Missouria, along with the Michigan-based Lac Vieux Desert Band of Lake Superior Chippewa Indians, filed a federal lawsuit against New York state in response to a state campaign against payday lenders. The tribes dropped the lawsuit last fall, The Wall Street Journal reported, saying the legal battle "consumed considerable resources."
Seventeen states and the District of Columbia have enacted double-digit caps on payday loans, according to the Center for Responsible Lending. Consumer advocates say working with Native American tribes is only the most recent tactic payday lenders are using to get around those caps and other state usury laws.