In a twist of political irony, the Consumer Financial Protection Bureau (CFPB), an agency conceived by Senator Elizabeth Warren (D-MA), now faces accusations of unfairly targeting Native American tribes with a new regulation.
This rule, critics argue, is not only arbitrary but also infringes on tribal sovereignty.
In the November elections, the Native American vote was predominantly in favor of Donald Trump. However, merely six days before Trump's inauguration in January, the CFPB introduced a regulation that tribal leaders argue is not only illegal but also detrimental to the burgeoning financial services industry within Indian territories.
According to RedState, at least four tribes have requested the withdrawal of this rule, citing it as an infringement on tribal sovereignty. They also pointed out that the tribes were not consulted before the implementation of this rule, a fact that contradicts President Joe Biden's November 2022 promise to enhance tribal consultations.
As the online lending industry expands within tribal territories, some tribes have established their own financial regulatory agencies to oversee these businesses. These tribes, as quasi-autonomous entities, are entitled to engage in business ventures such as casinos, tax-free tobacco, and now financial services. However, the CFPB seems to have a different perspective on the matter.
On January 13, the CFPB introduced a proposed rule that would prevent financial institutions from including provisions in contracts that would allow customers to "waive substantive consumer legal rights" under federal and state laws to sue. Currently, a company and a customer can mutually agree to a contract based on the laws of a specific state or country.
Louis Taylor, chairman of the Lac Courte Oreilles Tribal Governing Board, argued that as sovereign entities with their own governments, Native American tribes are uniquely impacted by federal regulations.
Taylor wrote to the CFPB, Our Tribe is at a loss to understand why no consultation whatsoever took place with tribal governments in relation to the proposed rule. This is particularly troubling given that the parts of the proposed rule appear to seek the imposition of state law and the enforcement of state law upon sovereign Indian nations. After hundreds of years of fighting against attempted state government encroachments, our tribe and others simply cannot let such an attack on tribal sovereignty stand.
In essence, the new regulation limits the "choice of law" practice, which allows parties in a financial agreement to decide which jurisdiction will govern the agreement. This could potentially include the tribal government.
Tribal governments, which have minimal to no tax base and limited taxation abilities, depend on enterprise for income. The CFPB's recent actions appear to be an attempt to limit such enterprises. Critics argue that the CFPB did not consult with tribal leaders before implementing this rule.
Native American tribes have grappled with poverty for generations, and enterprise is their only escape route. The question arises: why is the CFPB imposing restrictions on such enterprises? Critics argue that this is typical of an unaccountable bureaucracy, which tends to enforce new rules and regulations with enthusiasm.
Many argue that the CFPB, an agency that arguably should never have been established, has no constitutional justification for its existence. There is no evidence that it has benefited American citizens or the American economy. The irony that Senator Warren's brainchild is now allegedly harming Native Americans is not lost on observers.
The call for the dissolution of the CFPB is growing louder. Critics argue that until it is disbanded, such issues will persist. The agency's recent actions have sparked a debate about the balance between consumer protection and respect for tribal sovereignty, a debate that is likely to continue in the coming months.
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