A joint governmental agreement that allows the Leech Lake Band of Ojibwe to use the state's financial filing system will hopefully eliminate a roadblock to economic success on the reservation.
The Minnesota Secretary of State and the Leech Lake band of Ojibwe signed the agreement Friday, and marks a significant milestone for American Indians in Minnesota.
Without the basic structures of an economy in place, such as a financial record system, many American Indian tribes struggle to build internal economies on reservations.
That makes banks nervous.
"I'm looking forward to being able to talk about this day as history day, as an historic day, and have it be a point where people say, 'Oh yeah, that's when many good things began to happen,' " Secretary of State Mark Ritchie said.
The Federal Reserve Bank of Minneapolis considers the agreement a foundational step to improving economies on American Indian reservations and the surrounding areas. The Minneapolis Fed's community engagement manager, Susan Woodrow, said Leech Lake and other American Indian governments don't have commercial laws to keep track of financial transactions.
Without such laws, Woodrow said, lenders were confused and uncertain that loans with tribal members would be properly recorded.
"The lending environment is murky," she said. "If the tribe doesn't have a secure transactions law, does the state's law apply? Well, maybe, but we're not sure. There's just a tremendous amount of uncertainty."
It's expensive for American Indian governments to set up a records system that essentially combines the qualities of a database, a search engine, and an immense filing cabinet, Woodrow said. But state governments have those systems that banks are familiar with and consider dependable.
A joint governmental agreement that allows an American Indian nation to partner with a state government to share a filing system seemed the best solution, she said.
Woodrow worked for four years with the national Uniform Law Commission to draft legislation that would legalize such an arrangement. By 2005 they had proposed secure transactions laws American Indian governments could customize to their own specifications.
The Crow Nation of Montana was the first to pass the laws and set up the system.
However, it is still early to gauge the effect these agreements have, Woodrow said.
In fall 2008, the Leech Lake Band of Ojibwe heard about the secure transactions law at an economic conference and decided to investigate. Last year, the band approved the law and paved the way for the agreement with the state.
Wally Storbakken, the band's economic development director, said it's taken a long time for a partnership like this to happen, in part because of federal laws that restricted the agreements states could make with American Indian nations. Another factor was people's fear of giving up part of their band's sovereignty.
"Times have changed. And we as sovereign people are not about to be taken advantage of, which is probably what the federal government was looking at when it initially prohibited its citizens or states from dealing with Indians," Storbakken said. "They were trying in their way to protect us as Indians."
But since the U.S. government signed treaties with tribes, American Indians have become participants in the larger society, and understand economics.
"We see where there are barriers and we know we can take them down and not open ourselves up to potential harm," Storbakken said. "That's what we're doing here."
Leech Lake is now the third American Indian nation to become a partner with a state government, and the first in Minnesota. Other tribes in Minnesota will follow, but it may take some time, said Madonna Peltier Yawaki, co-chair of the Minnesota Indian Business Alliance.
"I think that's the story of Indian country, tribes wherever they are, is that change takes time and good change makes a difference for our future forever."
The agreement signed at the state capitol today will allow Indians to realize their economic potential for the first time, Yawaki said.
EDITOR'S NOTE: An earlier version of this story misspelled Minneapolis Federal Reserve Bank community engagement manager Susan Woodrow's last name. The current version is correct.