Banking on broken promises

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The U.S. banking industry reports another quarter of record profits - $23.4 billion, a 7.8-percent increase over the figure from three months earlier, and a 23-percent hike over the figure for the same quarter last year.

The latest quarterly profits, extrapolated over the course of a year, would place the U.S. banking industry within the top economic powers in the world economy, right between the entire nations of Ireland and Singapore and ahead of many others. Clearly, U.S. banks are enjoying a bonanza beyond any historical precedent, a direct result of the mergers several years ago that Indian country helped to make possible.

Nations Bank and Bank of America were among the bank heavyweights petitioning regulators several years ago to complete the largest bank merger ever up to that time. Indian country faced a crucial choice: either cooperate with the banks despite our misgivings about their good intentions, or challenge the merger and seriously inconvenience some tough customers who would know how to play "hardball" if they were provoked.

First Nations Development Institute had done the homework. More than 1.3 million Indian people stood to be affected in the 22 states touched by the merger - among them Oklahoma, Arizona, Washington, Oregon, New Mexico, California and Alaska. Our survey showed that most of the Indian people within service areas of the merged banks' branches had never dealt with either Nations Bank or Bank of America. The survey also showed that Indians had no confidence in the willingness or ability of large banks to serve Indian people, or to become familiar with reservation markets.

All that amounted to evidence that Nations Bank and Bank of America had neglected Native American markets. Thirty-four tribes and Native organizations were prepared to put forth their best efforts and resources to improve banking services in Indian country.

Was the next step to file an official complaint against the merger? Or maybe a lawsuit, given various fine points of federal law on banking?

But Nations and Bank of America were making nice, no question there. Through meetings and task force initiatives, they came up with a "Rural Initiative 2010" that included Indian country to the tune of tens of millions of dollars in lending. And the banks' information management department went to work on many fronts to insinuate that those in favor of filing a challenge were radical agitators, slightly outside the realm of reasonable dealings; while those committed to the banks' offerings were somehow more adept, more strategic, more committed to sensible resolution.

By the day of decision in Indian country, the "reasonable dealings" faction was all for believing we could work with the banks to get good things for Indian country from the merger process. After all, the banks had committed publicly to big-dollar lending over time, as well as to a high-profile process of financial-products development geared toward native communities (or "markets" as their lingo has it). What's more, the clinching point was that allies inside the bank were committed to financial services for Indian country and would work to hold the merged entity to its promises.

So the banks got what they wanted: accelerated regulatory approval of their merger. The efficiencies resulting from a spate of such mergers have been a direct contributor to the towering profits recorded by U.S. banks even in our times of less-than-stellar performance for the overall economy.

Indian country has not made out so well. For a while, the merged Bank of America had so much on its plate that Indian country could feel grateful for mere neglect. But once the details of the merger began to get sorted out, the new bank drove out the employees who had staked their flag to an Indian mast within the company, dropped any pretense of a "Rural Initiative 2010" that would begin to bring Indians into the mainstream of financial services, and began making good-guy grants to a scatter of applauding recipients.

The relevance is much larger than simply to note that Indian country has been shafted again by the nation's most powerful financial interests, grisly as that may be. The greater relevance is that Indian country again served as the "miner's canary," the early victim of evil times to come. Even as Nations and Bank of America and their asleep-at-the-wheel regulators demonstrated that, in the end, they will place any false interpretation that serves them on any deal they have to make before they get their way, so the banking industry as a whole was busy refining its false definitions of "risk," "value" and "competition," so as to drive up the appearance of "profits." By the time banks and their regulators were finished, they had joined corporate and political America in institutionalizing a financial system of phony deals based on false valuation.

From Indian country to Enron, from Argentina to Brazil, from household investors to career employees to retirement pensioners, others have been left to pay for these self-serving definitions.