The roots of exploitation

I decided to write my first blog post on War Pony Express to elaborate on our topic of discussion. The post was going to be only about predatory lending to Native Americans. Then I decided the topic requires a more in-depth discussion of how exactly that transgression is able to happen.

Being in the auto industry, I know that all contracts are legal, regardless of how the transactions are presented before signing. I want to discuss what happens before a buyer signs his/her name on a contract.

Native Americans living on reservations don’t have the same financial opportunities and education as those living elsewhere. As the graduate of a reservation high school in South Dakota, I can tell you there isn’t much emphasis on teaching financial independence and aptitude in most reservation schools. With the lack education in that area, the only other place a person can pick up that type of knowledge is as an employee.

With high unemployment rates and few available jobs on reservations, few people have the chance to learn financial skills while working. Few jobs also mean little money for tribes to build self-sustaining economic infrastructure that most communities have. Thus, the capitalistic wheel that turns America’s economic engine doesn’t turn in the country’s most needy places.

So now we have an environment in which a Native American who grew up on the reservation has no experience with larger financial transactions involving interest rates or any other repayment obligation. As a result, they turn to the people they deem experts: sales consultants, financial representatives, mortgage lenders and others. If these “experts” aren’t transparent in their transactions, it can lead to predatory lending.

If people are unable to completely understand the contracts they are signing, they are ripe for exploitation. An example would be a person who takes an auto loan with a higher interest rate, not because her credit history allows for it, but because she assumes the dealership is looking out for her best interest, so she doesn’t do any shopping to make sure she is getting a competitive interest rate. That is the type of disadvantage that exists today within Native American communities.

Rich Abourezk