Native American populations are ‘invisible’ to banks. That needs to change

    Attendees shop for jewelry at a vendor's stand during the three-day Seminole Tribal Fair and Pow Wow.

    Analysis by Nicole Goodkind, CNN


    A version of this story first appeared in CNN Business’ Before the Bell newsletter.

    New York (CNN) —  Growing up on the Rosebud Indian Reservation in South Dakota, Dawson Her Many Horses was rich in culture. But he and his family lacked many other critical resources.

    “When I was a kid we had an outhouse, our home was heated by a wood-burning stove,” he told CNN. “I understand what it’s like to live in a rural community without financial resources.”

    That connection has motivated Her Many Horses to advocate for Native American and Alaskan Native communities throughout his career in finance. He currently serves as head of Native American banking for Wells Fargo and in July the bank announced he would become a managing director.

    Her Many Horses, a member of the Rosebud Sioux Tribe of South Dakota, is one of the first enrolled tribal members to be promoted to managing director at a major US bank, according to a statement from Wells Fargo.

    “I’ve made most of my career decisions based on how I can be a better advocate and champion for tribal communities,” he told CNN. “So for me personally, just the fact that I grew up on a reservation and that I still have family there keeps me grounded. It reminds me of why I do this work.”

    Before the Bell spoke with Her Many Horses about why Native American populations face a generational wealth gap, a lack of economic data about tribal communities and increasing investment at an institutional level.

    Banks should want to do more work with tribal communities, said Her Many Horses, simply because it’s good for business: Wells Fargo has banking relationships with one out of three federally recognized tribes in the United States, with approximately $3.4 billion in credit commitments and $4.1 billion in deposits.

    This interview has been edited for length and clarity.

    Before the Bell: What do investors need to know about investing in Native American and Alaskan Native communities?

    Dawson Her Many Horses: Native American and Alaskan Native communities are more than an ethnic group or racial category. Tribal members, like myself, are also members of Native nations. Tribes are considered governments, they’re like states and have a legal status as sovereigns, like states. There are 574 Federally recognized tribes in the United States. And there are business implications to that.

    The businesses that tribes own also oftentimes have and retain some of the characteristics of a government. A lot of people know that tribes have casinos — those casino businesses are run like a legal entity related or owned by the tribal government. So what that does is that creates some complexity.

    And I think that’s what leads to the third issue, which is the lack of capital and data that leads to underinvestment in tribal communities. We’re invisible largely because there is very little research or reporting on business opportunities in these communities. No one is writing about the businesses that tribes are in, how big they are, their complexity or the amount of jobs they create.

    Tribal casinos contribute about 45% of all casino revenue in the US. The National League Gaming Commission, which is the regulator for Native American casinos, publishes a yearly report on gross gaming revenues for casinos. In August they said tribal casinos generated $41 billion in revenue, which is huge. I think it’s something that most people probably don’t recognize.

    So is it a lack of knowledge that’s stopping institutional-level investment in these communities?

    There’s some nuance to working with tribes and I think sometimes people may not understand how to kind of navigate that nuance. I was talking about tribes as governments that run casinos, for example. As a banker, part of my role is to help our credit folks and our underwriters understand some of those legal nuances so that they can get comfortable lending to these potential borrowers.

    It’s the same with potential investors, they may not understand and see these nuances. At Wells Fargo I’m an advocate, I help educate people so they can understand the opportunity. But if a company doesn’t have that in-house expertise, if they don’t have that champion with an understanding of these nuances, that’s going to be a deterrent. Yeah. That will inhibit the flow of capital and investment in tribal communities.

    How do we change that?

    First of all, we need more economic data. And then we need to bring the different stakeholders together. Ultimately, we don’t own the data. But we’re like an organization that uses data. So when we talk with policymakers and with tribal leaders and tribal organizations we say ‘the private sector uses data to make decisions about investments, where they want to move capital and how they want to leverage resources.’ If we want more capital to flow into tribal communities, we need to think about a way to share data that protects the confidentiality of individual tribes and all the revenue that their businesses own, but also show at the national level what the opportunity is.

    There was a report published in 2017 that found tribal housing needs exceed $33 billion. That’s more than what Wells Fargo can do, or what Bank of America or even the Federal Government can do. We need more investor capital to come in and support these tribal housing projects. That’s why data is important. When we can show how profitable tribal businesses are and tribal governments, investors can start to see that these are legitimate borrowers. They feel comfortable investing in their projects, and feel comfortable putting capital in these projects where there’s huge need, like housing, education or health care.

    Is this something that regional banks play a larger role in? And has that changed since the banking crisis earlier this year?

    The large national banks have always been involved in some way. They were involved because of casinos. All of these big banks have teams that focus on that industry. That’s been the entry point for a lot of financial institutions. Native American Finance has grown and become more understood by bankers, and as bankers leave one institution and go to others they take that knowledge with them.

    But regional banks have really stepped up to serve tribes and their regions. What they’ve done is they’ve made it more competitive. When I put my tribal member hat on, I think that’s great. We need competition in the tribal community. That means more benefits, lower rates, better structures and more options for tribes that have been historically underserved.

    The challenge now is what the impact of the collapse of Silicon Valley Bank and what that crisis will be. Most of the regional banks that work with tribes are in a good space. But no one is immune to what’s going on. Some tribes are starting to feel the impact of that, we’ve heard rumblings of regional bank partners not being able to support deals with tribes. In one case, Wells Fargo was able to step in when a regional bank wasn’t able to honor the commitment they made to a client that we’re working with.

    You said that casinos were an entry point for banks to work with tribal authorities. What other opportunities are there?

    A lot of tribes are looking at government contracting because there is a Federal preference for tribes in that bidding process. They’re thinking about real estate, not necessarily commercial real estate, but the kind of real estate that supports the supply chain: Warehouses and storage facilities — things that support the movement of goods around the country.

    Native populations are underbanked when compared to the rest of the country. How does this play into a generational wealth gap and how does that get bridged?

    Part of the solution is just talking about it. We’re naming it. When you look at some of the research that gets done, Native American and Alaskan Native households are almost always the most underbanked. We’re trying to understand why.

    Native American communities are very rural and there’s a lack of infrastructure. Tribes, don’t have access to broadband and Wi-Fi in the same way that communities in New York City do. As you think about the evolution of banking and banking services in the US, this move towards online, that has an impact. A lot of Native households don’t have access to smartphones. There aren’t cell towers that provide service, there’s no 5G network there. That’s part of the reason.

    What are some of the largest misconceptions you see about investing with tribes?

    People like to focus on what I call the ‘poverty porn’ aspects of Native American and Alaskan Native communities. Things like unemployment rates. But if we can increase the data we’re getting, we can change the narrative and move away from this deficit model.

    We can focus on opportunity. Tribes are the largest employers in areas of South Dakota, Alaska and Oklahoma. Alaska regional corporations are among the biggest companies in that state. We have an opportunity to talk about tribal communities in a way that’s positive and shows how we contribute.

    My hope is that if we can get more data around this, we can encourage more banks to think about not only investing capital, but maybe even putting branches in some of these areas. I’m hoping that we can jumpstart the flow of capital and support of individual tribal members. And then we’ll start to see all the things that flow from that – more mortgages, more small businesses and bigger, more robust and healthier tribal economies.