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Adoption of Model Transactions Act Can Aid Economic Development on Indian Reservations

Minneapolis, November 10, 2011

Adoption of Model Transactions Act Can Aid Economic Development on Indian Reservations
One important way to encourage economic development in Indian Country is to resolve the legal issues that frequently hinder credit access for small businesses on reservations, according to Susan Woodrow, Community Development Advisor for the Federal Reserve Bank of Minneapolis, in testimony before the U.S. Committee on Banking, Housing, and Urban Affairs.

Because business transactions in tribal jurisdictions are not necessarily governed by state law, lenders often face uncertain rules and higher risk doing business in Native communities when tribes do not have a developed legal infrastructure governing commercial activity, Woodrow testified. Consequently, loans and other business deals are made at higher costs or not made at all, she said.

“To address this, the Federal Reserve Bank of Minneapolis has provided substantial assistance to tribes across the country that choose to adopt the Uniform Law Commission’s Model Tribal Secured Transactions Act, a comprehensive template law substantially similar to state law but specifically tailored for tribal environments,” Woodrow said. “We have also helped facilitate several state-tribal compacts that enable tribes that have adopted the model act to utilize these states’ UCC filings systems for the filing of liens under tribal law. These arrangements complete the tribes’ secured transactions systems in a manner that offers certainty and reliability for lenders and borrowers, while at the same time preserving tribal sovereignty and jurisdiction.”

The Minneapolis Federal Reserve Bank’s Ninth District includes more than 40 Indian reservations. For more information on the Bank’s work in Indian Country, see Woodrow’s complete statement and the Indian Country Currents web page.