CFPB’s Suit Against Four Tribally-Owned Lending Entities Another Troubling Action from Controversial Agency

On Thursday, April 27th, the Consumer Financial Protection Bureau (CFPB) filed a complaint in the U.S. District Court for the Northern District of Illinois alleging violations of the Truth in Lending Act (TILA) and Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (CFP Act) against four separate lending operations owned by the Habematolel Pomo of Upper Lake Indian Tribe. The alleged violations relate to a failure to properly disclose loan interest rates to consumers and the purported violation of state usury and licensing laws. Although the Tribe and its lending operations alleged to have committed these infractions are not members of this organization, NAFSA is deeply troubled the CFPB continues to exceed its regulatory authority, with respect to both tribally-owned enterprises and its clear intent to unlawfully regulate interest rates.

The CFP Act clearly prohibits federal interest rate regulation. Section 5517 reads:

“(o)No authority to impose usury limit

No provision of this title  shall be construed as conferring authority on the Bureau to establish a usury limit applicable to an extension of credit offered or made by a covered person to a consumer, unless explicitly authorized by law.”

In its complaint, the CFPB argues that the lending operations’ refusal to procure state licenses or adhere to state interest rate caps – both unnecessary due to the sovereign status of the tribe and its economic subunit lending operations – constitutes an unfair and abusive act or practice under the CFP Act. This is clearly an attempt by an unaccountable federal agency to exceed its statutory authority. The effect of these actions is to trample on the clear rights of a sovereign Indian nation.

NAFSA is committed to the promotion of responsible and sustainable financial solutions, while also defending the sovereign rights of tribal nations to self-determine economic policies that bring prosperity and hope to Indian Country. The CFPB’s actions against the Upper Lake tribe are in direct conflict with our mission.