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Source: United States Federal Reserve

Good afternoon and thank you to President Fawn Sharp and Kevin Allis of the National Congress of American Indians (NCAI) for inviting me to join your discussion.1 As the oldest and largest American Indian and Alaska Native organization serving the broad interests of tribal governments and communities, your voice is vitally important on economic issues affecting Indian Country.2 We appreciate your engagement on our work to reform the Community Reinvestment Act (CRA) regulations to better address credit and investment needs in Indian Country.

Two years ago, I had the pleasure of visiting with the Thunder Valley Community Development Corporation on the Pine Ridge Reservation of South Dakota. We toured the major housing, small business, and community development mixed-use project, which was under construction. Despite the importance of the Thunder Valley project to the community, banks were not among the funders listed for this important project. Their absence underscores the broader challenge underserved communities such as the Pine Ridge Reservation face when they are included in only one bank’s CRA assessment area. I thought about this challenge frequently as we worked on the Board’s proposal to reform CRA.

We recognize the importance of engaging with Indian Country to inform research and policymaking at the Federal Reserve. The Center for Indian Country Development (CICD) at the Federal Reserve Bank of Minneapolis is a key resource across the Federal Reserve System in fulfilling our responsibility to Indian Country.3 The CICD is led by Casey Lozar, who is an enrolled member of the Confederated Salish and Kootenai Tribes, and the CICD’s Native staff have deep expertise in community and economic development in Indian Country. I greatly value the research and thought leadership of the CICD, as well as their input on policy decisions regarding Indian Country and work to deepen our engagement with tribal communities.

The COVID-19 Pandemic
The COVID-19 pandemic is bringing hardship to all our communities, and the health of tribal communities is suffering disproportionately. Hospitalization rates for Native Americans are 4.3 times the rate for Whites, adjusting for age, according to the Centers for Disease Control and Prevention.4 We are thinking about those in Indian Country who have lost loved ones and those who are struggling with the virus.

The COVID-19 pandemic is also causing significant economic hardship in Indian Country, affecting the many small businesses that are the backbone of tribal economies.5 Indian Country faces significant challenges associated with “various data collection and reporting issues, such as small sample size or large margins of error,” which are sometimes referred to by the term Asterisk Nation.6 This lack of data makes it challenging to evaluate how economic developments are impacting Indian Country. To assess the real-time economic impacts of COVID-19 on Indian Country’s economic experience in the COVID-19 conversation, the Federal Reserve Bank of Minneapolis conducted a series of pulse surveys with tribal governments, tribally owned enterprises, and tribal member businesses, as well as hosted meetings with tribal leaders and national organizations.7 The surveys found that two-thirds of businesses in Indian Country saw a revenue reduction of at least 20 percent, and one in six businesses reported losing all of their revenue due to the pandemic.8 Tribal governments have experienced similar revenue declines, with over half of tribal government respondents anticipating continued declines of more than 20 percent over the next six months. Despite this, over 60 percent of tribal small businesses reported they had not laid off or furloughed workers.9 Maintaining these employee/employer relationships will be critical for Indian Country economic recovery, but cash-strapped small businesses are finding it increasingly challenging to maintain payrolls as the pandemic continues. Only 20 percent of tribal small businesses reported they had enough cash on hand to maintain operations beyond a three-month period.

Emergency lending programs aimed at providing pandemic relief, such as the Paycheck Protection Program (PPP) and our Main Street Lending Program, provide critical support to small businesses, so it was extremely important to make sure they were accessible to tribal enterprises. Valuable feedback from tribal leaders and lending institutions led us to change requirements in the Main Street program to allow tribally owned enterprises to participate in Main Street lending while still continuing to provide distributions back to their tribal governments. Similarly, we expanded the PPP Liquidity Facility to include non-depository community development financial institutions (CDFIs) because of their ability to reach minority small business owners, including those in Indian Country.

Financial Access
The COVID-19 pandemic has exacerbated an already challenging landscape for financial access in Indian Country, where Native minority depository institutions (MDIs), credit unions, and CDFIs are making exceptional efforts to serve Native Americans on and off tribal lands. In 2018, the Board worked with the CICD to convene Native American financial institutions on the Flathead Indian Reservation in Montana and discuss how best to collaborate to maximize the impact for their communities. We remain committed to helping these vital financial institutions provide critical financial services in their communities.

Despite the significant efforts of Native banks, CDFIs, and credit unions, for many Native Americans, banking and credit access remain challenging. Over 16 percent of American Indians and Alaska Natives were unbanked in 2019, and survey research finds that only one in three Native American respondents have a strong or very strong relationship with lenders. One reason for these low levels of banking relationships is a lack of proximate bank branches. Majority-Native American counties, on average, have only 3 bank branches, which is

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