PINE RIDGE RESERVATION, SOUTH DAKOTA -- A proposed federal credit union is banking on the estimated 40,000-strong community of the Pine Ridge Reservation to create a viable, as well as sustainable, economic climate for the ambitious venture. However, within an economy stagnated by rampant poverty, high unemployment and unfettered greed and corruption in high places, the project faces seemingly insurmountable odds. For the past three years, the Kyle-based Lakota Funds, which purports to be the first certified Native American Community Development Financial Institution to be situated on a reservation, has been in the process of establishing a much-needed banking-oriented institution in Kyle. The project is currently referred to as the proposed Lakota Federal Credit Union and is headed by Lakota Funds’ executive director, Tawney Brunsch. Lakota Funds provides Oglala Lakota tribal members with start-up business loans and has been serving the reservation since 1986. Its continuous mission is to lead an “economic resurgence of the Oglala Lakota Oyate on the Pine Ridge Reservation through culturally appropriate strategies reigniting the traditional Lakota spirit of productivity, commerce, and trade,” as delineated on its website. To that end, the CDFI claims on its website to have “helped thousands of artists and aspiring entrepreneurs, created over 1,000 permanent jobs, and helped establish hundreds of businesses” via a loan portfolio that now exceeds $4.4 million with a maximum loan size of $200,000. CDFI’s are developed and at least initially funded through the Capacity Building Initiative of the U.S. Department of the Treasury’s CDFI Fund in economically distressed communities throughout the nation, as indicated on the CDFI Fund’s website. “The credit union does need to be built. We have a location for it,” said Brunsch, who is Oglala Lakota. “It will be located on the first floor of Lakota Trade Center (Kyle) so that part has been determined,” she said. The Lakota Trade Center, a 12,000-square-foot small business incubator and tribal business information center, was developed by Lakota Funds in 1997, according to Lakota Funds’ website. The center currently houses the offices of Lakota Funds. “What determines whether or not the credit union will exist is whether or not we get the charter from the (National Credit Union Administration),” Brunsch said. “The NCUA is the equivalent of the (Federal Deposit Insurance Corporation).” Both independent federal agencies insure monetary deposit accounts up to specified maximum amounts, with the difference between the two being the NCUA insures and further oversees credit union activities, while the FDIC insures and monitors the activities of banks. The NCUA protects individual credit union accounts up to $250,000 and additionally covers share-draft, or share and draft, accounts, which are specific to credit unions and do not exist at banks, according to gobankingrates.com. Share-draft accounts are collectively owned by and accessible to all credit union members as savings accounts to which membership dividends are generally paid and on which checks can be drawn. However, the proposed Lakota Federal Credit Union will not initially offer a checking account option to members. Additionally, the $250,000 insurance limit applies to total deposits at one institution, with additional coverage available from the National Credit Union Share Insurance Fund in some cases, also according to gobankingrates.com. This insurance on the part of NCUA is critical, said Brunsch. If an NCUA-insured financial institution goes broke for whatever reason, the depositor is guaranteed their money back, she said. “The charter basically consists of us submitting – (the NCUA doesn’t) really have a formal application – it’s basically we are submitting a full business plan describing all activities of the proposed credit union, which includes the location, how it will be staffed, our commitments for deposit, the capital that we’ve got raised and then all of the services that we’ll be offering,” she said. “A credit union is the same as a bank except they serve members only,” she added. In order to be a member, you have to fit into NCUA’s criteria, and the criteria are the same as our field of membership that’s already been approved for our proposed credit union, said Brunsch. Membership will be composed of anyone who lives, works, worships or attends school on the Pine Ridge Reservation or is part of an organization or association located on or serving the Pine Ridge Reservation, she said. “When the NCUA approved that for us … that says to me they believe in the need here.” These broad NCUA-approved membership specifications are set up to be all-inclusive, encompassing tribal and non-tribal members alike, indicated Brunsch. “We’ll have a $5 minimum opening deposit – $5 in the savings account, and then you get the same services that they offer at a bank only it’s usually much better interest rates on your savings accounts and much lower interest rates on your loans,” Brunsch said. Securing the federally-backed charter is the final step in fully establishing the proposed Lakota Federal Credit Union on the reservation. Brunsch expects the process to be fully completed within the next three to six months. According to Brunsch, establishment funding for the proposed credit union will come in the form of commitments for deposit from Lakota Funds as the sponsor, as well as from other already established credit unions in the area including Black Hills, Highmark and Sentinel federal credit unions. Other organizations on the Pine Ridge Reservation – including Mazaska Owecaso Otipi Financial, of which Brunsch serves as a member of the board of directors – have also made commitments for deposit, Brunsch indicated. Located in Pine Ridge Village, Mazaska Owecaso Otipi Financial is another CDFI and provides community members with home loans. “Honestly, we could’ve went much further in collecting commitments of deposit, but we’ve collected enough where (we have) cash flow,” said Brunsch. NCUA has further designated the proposed credit union as “low-income,” with respect to its targeted primary membership base being located on the impoverished Pine Ridge Reservation, according to Brunsch. This potentially detractive and misperceived status will serve to enhance the attract ability and viability, as well as reach, of the undertaking. “But what that means for us – that’s a big bonus for us, too, because that means that anybody who doesn’t fit that normal field-of-membership criteria could live in New Hampshire or Texas or Hawaii, and they can still open up an account and make a deposit,” Brunsch said. “And, understand, the importance of us having more deposits is that we’ll have more money to lend out and to serve the members (on the Pine Ridge Reservation),” she said. Lakota Funds is also currently in the process of writing a proposal to secure grant funding through NCUA for a mobile teller unit to assist in opening up new member accounts with the proposed Lakota Federal Credit Union and provide other related services throughout the reservation, said Brunsch. A mobile teller unit is crucial to the success of the proposed credit union – with its planned centralized location in Kyle – due to the vastness of the Pine Ridge Reservation and the associated issues that many residents have with distance isolation and transportation. The reservation covers approximately 3,500 square miles of government-allocated land. “So, understand, with technology these days, it’s basically just a laptop is all you need to open up accounts and make transfers,” Brunsch said. “We can come to the different districts without actually having a designated office space, which makes it much more viable since we don’t have to wait for the money to build the location first,” she said. In the past, there have been unsuccessful attempts to establish credit unions on the Pine Ridge Reservation, but this will be the first federally insured credit union on the reservation, according to Brunsch. On at least two separate occasions within the last decade, I Bank, a former ancillary division of payday lender Red D Cash of Rapid City, attempted to establish itself as a small depository lender on the reservation, much along the lines of a credit union. The non-federally secured enterprise, however, was met with staunch resistance by the nonconsecutive, six-term John Yellow Bird Steele administration, according to some community members. President Steele reportedly referred to I Bank as a “predatory lender” and refused to allow Oglala Sioux Tribe employees to set up nominal savings accounts and secure small, short-term loans through the institution. Steele’s opposition and supposed dictatorial qualities combined to quash the successful, long-term establishment of I Bank. Calls to Steele were not returned. Red D Cash is privately owned and operated by tribal members. With backing from the federal government, the proposed Lakota Federal Credit Union is destined to be fail-safe, indicated Brunsch. “This is serious stuff when (a credit union) is federally assured for up to $250,000. (The NCUA wants) to make sure that you are actually viable – I mean going to be around for a long time before they issue the charter, and so it is all for your and the credit union’s best interest, for the potential membership,” Brunsch said. “They can’t be having people deposit their money in an institution that could go broke,” she said. Brunsch is slated to be the chief executive officer of the proposed credit union with Whitney O’Rourke, who is also a current Lakota Funds employee, set to hold the combined position of branch manager, teller and loan officer. O’Rourke is a tribal member. The proposed Lakota Federal Credit Union will change the economic landscape of the Pine Ridge Reservation for the better, said Brunsch. Elsie Meeks, South Dakota state director of Rural Development for the U.S. Department of Agriculture, shares Brunsch’s optimism. “I think it’s a great move on (Lakota Funds’) part and, I think, very important for the reservation,” said Meeks, who is Oglala Lakota and resides on a ranch near Kyle. According to biographical information contained on the USDA’s Rural Development website, Meeks was previously involved in developing and managing Lakota Funds for a period of 20 years as its chairwoman. Presently, however, her administrative position within the state’s Rural Development office is not tied to the Lakota Funds-proposed Lakota Federal Credit Union. “We don’t have an involvement with that,” Meeks said. “The Lakota Funds has been a recipient of numerous Rural Development programs but not in connection with the credit union,” she said. Additionally, just prior to her appointment as state director of Rural Development by the Obama Administration in 2009, Meeks served as the president and CEO of First Nations Oweesta Corp., a Native American economic development entity based in Longmont, Colo., that once had a field office in Rapid City. The corporation is an affiliate of First Nations Development Institute, which is also headquartered in Longmont. Lakota Funds is also completely independent of both economic development entities, said Meeks. There appears to be only a personal connection – in the form of Meeks’ biographical history – between Rural Development, Lakota Funds and the affiliated First Nations Oweesta Corp. and First Nations Development Institute. Rural Development has a lot of confidence in Brunsch as the lead in the proposed credit union, indicated Meeks. “She brings a lot of knowledge and credibility to this (project) so I have great hopes for it. I’m looking forward to investing in it myself, personally,” she said. Brunsch’s experience will help ensure the success of the proposed credit union, Meeks said. “I think there will be challenges, as always, but I think under Tawney’s leadership – I have a lot of hope for that.” In emphasizing the importance of the proposed Lakota Federal Credit Union on the Pine Ridge Reservation, U.S. Senate Banking Committee Chairman Tim Johnson (D-SD), a longtime proponent of improving quality-of-life conditions not only for his Native American constituents within South Dakota but for Native peoples across the country, referenced a Washington committee hearing from last November in which Native economic leaders provided testimony regarding opportunities and challenges within Indian country. “At a recent hearing I held in the Senate Banking Committee, witnesses highlighted the need to expand access to credit and financial services in Indian country. That access will help businesses and entrepreneurs secure the capital they need to grow and create jobs and help Native families save for the future. Lakota Funds has a long history of promoting business development and financial literacy throughout the reservation, and I applaud their work on this new initiative,” Johnson said in an email. Johnson also serves as a member of the Senate Committee on Indian Affairs. Some tribal citizens who oppose the proposed credit union say that its establishment on the reservation will further allow the federal government unencumbered access to the personal information of potential members, particularly those employed within the tribe’s administration. Such access might be a means of monitoring the tribe’s finances, which often seem to be in disarray, and keeping them in check, according to these tribal members. Other tribal members clearly see a need for the proposed credit union, as well as other financial institutions, on the economically disadvantaged Pine Ridge Reservation. “It would be beneficial for any type of bank to land its business somewhere on Pine Ridge,” said tribal and community member Jeffrey Whalen. “This has been attempted too many times and, normally, the banking initiative or proposal stays in the planning stages and never gets to the implementation stage,” he said. “This is because most folks who attempt to establish a bank here do not have the capital. Thus, failure occurs in the development phase.” According to Whalen, RainDancer Resources Management Group, which is apparently owned and operated by non-tribal member Raycen Raines, is looking to develop and establish a central bank on the reservation. Whalen is involved in the ongoing process. “As opposed to Lakota Funds, we have $20 million in hand and are working through the fine details to get this thing up and running. If everything goes properly, we expect to start providing service in around 14 months or so,” he said. However, the management group is currently experiencing a legal blockade. On Dec. 22, a hearing was scheduled in OST court following Judge Frederick Cedar Face’s issuance of a temporary restraining order against the group on behalf of the Black Hills Treaty Council, according to Whalen’s column in last week’s edition of Native Sun News. The restraining order was issued to prevent RainDancer Resources Management Group from “bringing economic development to the tribe,” with the subsequent hearing being postponed at the last minute by Cedar Face until Jan. 18 due to “expected’ inclement weather” on the original hearing date of Dec. 22, also according to Whalen’s column. Whalen contrasted the highly populated reservation’s financial institution shortage with comparably populated Rapid City’s increased banking options and emphasized the primary economic downfalls of this shortage on the reservation. “Rapid City hosts more than several banks in the city, so there is a need for placement of three, four, five or even ten banks on Pine Ridge,” he said. “We now use Rushville, Gordon, Chadron, Hot Springs and Rapid City for our banking services, which kills us because of the travel distance and because we are supporting someone else’s economy.” “In 2005, residents of Shannon County – which lies entirely within the Pine Ridge Reservation – had a combined income of $230 million and gross business receipts of only $40 million, meaning $190 million left our reservation that year. This anomaly occurs year after year, so in answering the question of the need for banking on Pine Ridge – yes, the need is here and the money is here, but the money keeps getting shifted off the reservation where it does not do our economy any good,” he said. “I wish the Lakota Funds success and hope they can achieve their goals in establishing and operating this venture,” Whalen concluded.
(Contact Jesse Abernathy at email@example.com)
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