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Tribal guide to bank ownership updated

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WASHINGTON - The Office of the Comptroller of the Currency has just updated its guide tribes may start or acquire a national bank.

While Comptroller of the Currency John Hawke said, "Our hope is that this guide will facilitate tribal decisions to strengthen their communities through tribal ownership of a national bank," many tribes may well balk at the requirement for a waiver of sovereign immunity.

While OCC , a federal regulator of banks, specifically recognizes Indian nation sovereignty and says it will deal with Indian nations on a government-to-government basis, the federal banking regulator also says that to be able to enforce the safety and soundness of the national bank system, " OCC and other federal banking regulators have taken the position that tribes proposing to establish or acquire a bank must agree not to raise a claim of tribal sovereign immunity as a defense to any regulatory or enforcement action."

OCC originally published its guide in the late 1990s. It released the updated version at a September meeting on Indian economic development in Phoenix. "The revised guide contains expanded policy and procedural discussions and additional reference materials, as well as resource contacts," according to OCC.

The 93-page guide spells out for tribes the different types of financial institutions and charters they may consider: state or national bank, state or national savings institution, state or national credit union.

It also points out that a non-bank, such as a loan fund or a community development corporation, may be better suited for some tribes than a bank.

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The regulator shows some attention to the nuances of sovereignty when it points out that is a tribe wants to charter a bank without federal deposit insurance, it must submit to state regulation - a long-running bone of contention for many tribes and in many industries other than banking.

Tribes can own national banks through four different methods, the manual says: chartering a new one, acquiring an existing one, acquiring a controlling percentage of stock in an existing one, or converting another type of institution into a national bank.

Acquiring "community development" bank status may be a good option for tribes, since there are incentives for these types of institutions, which must work in low-to-moderate income areas. Minority-owned banks also can receive special benefits.

The manual points out that there is nothing to bar a gaming tribe from also owning a bank. However, banks cannot be used directly in gaming activity.

A discussion of branching power has some application to sovereignty as well; OCC said it generally follows state rules in granting branches. However, the regulator also points out circumstances under which mobile branches are allowed, and notes that limited-purpose offices would not trigger any branching restrictions.

The agency said there are currently six national banks owned by tribes: Borrego Springs (Calif.) Bank; Woodlands National Bank, Hinckley, Minn.; People's National Bank, Seneca, Mo.; Native American Bank, Browning, Mont; First National Bank & Trust Co., Shawnee, Okla.; and Canyon National Bank, Palm Springs, Calif.

The guide, which also details how to go about applying for a national bank charter, is available for download at the OCC's web site -