Skip to main content

Credit Unions-Native American pilot set

Developing a stronger relationship between credit unions and tribal housing authorities and reservation business leaders to bolster American Indian housing is the goal of a pilot program sponsored by the National Credit Union Foundation, the National American Indian Housing Council and the Enterprise Foundation, with funding from the Ford Foundation.

It will focus on but not be limited to affordable housing, and be put together this fall with training for credit union managers and networking for American Indian housing officials and businessmen possibly starting in the spring.

Jane DeMarines, communications director of the council, said impetus for the program came from her strong belief in cooperative efforts. She is a former official of the National Cooperative Bank here.

The cooperative nature of credit unions should be very compatible with the cooperative nature of tribalism, she said. "It's a logical thing to pursue. Indian country has a dearth of financial institutions."

NCUF is looking for pilot sites for the pilot, DeMarines said, while the council and Enterprise will be involved in the training and networking.

Pat Brownell, executive director of NCUF, a Credit Union National Association affiliate, will coordinate the credit union side of the pilot. She said the Washington state credit union affiliate did a feasibility study on Native American lending, and she feels the more CUNA works to connect credit unions with individual communities, "the better it will be."

The biggest benefit of the pilot will be to get tribes and CUs interested and "really, put them in the same room" to talk about lending challenges, needed services and how to provide them.

Will credit unions prove compatible to American Indian people? "Absolutely," she said. "The credit union charter is to reach out to people that don't have access to financial services."

Scroll to Continue

Read More

The original proposal identified Alaska, California, New Mexico, Minnesota/Wisconsin, Washington/Oregon and Oklahoma as potential sites.

The idea is to find interested credit unions near concentrations of reservations so one institution can reach multiple tribes. A small fee will be charged for the training in tribal structures such housing authorities and economic development departments, and the unique land status of reservation land (held "in trust" by the federal government for tribes). This makes mortgage lending harder because only improvements can secure a loan.

Tribal housing officials and businessmen in turn will learn about credit union mortgage and small business lending. DeMarines said the focus will be on expanded credit services for tribes with existing credit unions, with a possible byproduct of tribes developing their own credit unions farther down the road.

George McCarthy, program officer of the Ford Foundation, told the annual convention of NAIHC in Albuquerque the foundation was involved in the pilot, which would center on three states. The amount of funding has not been announced, although reportedly it has been approved.

In the original proposal, the three sponsors cite high unemployment (14 percent), poverty (25 percent ) and substandard housing (40 percent) as reasons to concentrate on increased financial services to American Indians on reservations.

There are fewer than 10 credit unions chartered by tribal entities around the country, including Sisseton-Wahpeton Federal Credit Union, Agency Village, S.D., (Sisseton-Wahpeton Sioux); First American Credit Union, Window Rock, Ariz., (Navajo); South Metro Federal Credit Union, Prior Lake, Minn., (Shakopee Mdewakanton Dakota), and Hocak Federal Credit Union, Black River Falls, Wis. (HoChunk).

Muscogee (Okla.) Federal Credit Union, while not chartered by a tribe, has actively sought out business and members from the nearby Cherokee Nation. Similarly, Alaska Federal Credit Union, Anchorage, and two smaller Alaskan credit unions participate in a mortgage program with the Cook Inlet Regional Authority, an Alaska Native corporation.

One startup, Turtle Mountain Federal Credit Union in Belcourt, N.D., affiliated with the Turtle Mountain Band of Chippewa, experienced poor loan quality and high delinquency rates and was shuttered by the federal credit union regulator, the National Credit Union Administration reported.

Advocates of American Indian participation in credit unions cite the large degree of local control, their non-profit status and the habit of plowing back earnings into subsidizing loan rates and boosting deposit rates as elements that would strike chords with American Indian cultures.