Following 12 years of Republican presidential administrations that
certainly didn't forget about Indians, but did occasionally make them feel
like afterthoughts in federal budgetary and consultation processes, a
democratic president was almost bound to look like an improvement to tribal
But William Jefferson Clinton did more than look good by tribes. Under his
administration, tribes turned a corner in terms of national economic
participation, trust funds reform, government-to-government relations and
housing. In all cases, tribes and their allies got the ball rolling on
their issues, and a reviving economy tended to cancel political resistance
to high-priced reforms. Bill Clinton and his appointees provided fertile
soil for Native initiatives and by the time Clinton's tenure ended in 2000,
Indian country had regained a high ground in the national political life
that only radical action had ever led them to before.
Among the most important of Clinton's Indian-specific initiatives went
under the sobriquet "democratization of credit," which stood for an array
of efforts to bring more Americans, including conventionally "unbanked"
Americans, into mainstream financial channels. Tribal casino earnings had
begun to highlight reservations as unserved financial markets, and the
Northern Cheyenne community group Native Action had won a major ruling from
the Federal Reserve to the effect that its reservation had been "red-lined"
by lenders - that is, the bank's lending area stopped at reservation
borders. Following that decision, the first of its kind in the Fed's
institutional history, Indian Country Today followed up with a series of
investigative articles proving similar misconduct by banks in South Dakota
and Nebraska, the Navajo Nation began a long effort to bring more banking
services to its own vast lands, First Nations Development Institute
expanded its culturally appropriate economic development model to include
conventional financial literacy and homeownership training, and a number of
Native organizations began to build on the role of bank credit in private
sector business enterprise.
These efforts from within Indian country were significant and impressive in
their own right but the Clinton administration and its stellar appointees
took them to another level. Attorney General Janet Reno proceeded to
investigate banks in reservation border towns, and filed high-profile
charges against two of them for non-compliance with federal laws on
lending. Comptroller of the Currency Eugene Ludwig prevailed on banks the
OCC regulated to serve Indian country, and the direct pressure worked
Almost overnight it seemed, the message had gone out that banks could not
ignore tribes in their service areas, not even small banks in
out-of-the-way places, because the Clinton administration would enforce the
law against them if they did.
All of this opened real floodgates to economic development loan capital in
some places, as at Northern Cheyenne for instance. In other places, it led
to an emphasis on bank services, as Indian communities long isolated from
them began to accept credit-worthiness as an asset.
But credit-worthiness is the key to conventional banking; banks are not in
business to make risky loans. A Clinton priority, the need for nonprofit
financial institutions that would make small low-interest loans to
borrowers that could not meet the criteria for loans from a conventional
bank, became a leading theme in the "democratization of credit." By 1994,
the Community Development Banking and Financial Institutions Act had become
law. It authorized a CDFI Fund study of barriers to credit in Indian
country. After bad management in the early going almost sank the CDFI Fund
itself, the study remained on the back burner. It would never have been
done without the last-minute advocacy of Clinton appointees, from Treasury
Secretary Robert Reuben on down, and the Native program within the CDFI
Fund would never have gotten off the ground.
Clinton's program for the "democratization of credit," though not limited
to Indian country, will be seen in time as a crucial addition to casino
revenues in creating a private sector economy on reservations.