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Pre-CFPB Federal Regulation of Payday Lending. The Looming Battle Over CFPB Authority

Pre-CFPB Federal Regulation of Payday Lending. The Looming Battle Over CFPB Authority

The level of immunity is governed mainly because of the Supreme Court’s choice in California v. Cabazon Band of Mission Indians, Blue Springs same day payday loan 480 U.S. 202 (1987). Principles of tribal resistance have already been addressed extensively in previous articles and won’t be belabored right here. In brief summary, state and regional legislation could be put on on-reservation tasks of tribes and tribal users just under not a lot of circumstances generally speaking inapplicable to lending that is tribal.

The appellate courts of California and Colorado were confronted with the assertion that tribal sovereign immunity prevents the use of state-court discovery methods to determine whether a tribe-affiliated Internet payday lender had a sufficient nexus with the tribe to qualify for sovereign immunity and, secondarily, to pursue discovery of the alleged sham relationship between the TLE and its financial backer as recent examples of these principles. Relying in each situation on the Supreme Court’s dedication that tribal sovereign resistance stops compelled creation of information to help a situation in investigating violations of and enforcing its legislation, each of those courts denied significant breakthrough.

Sovereign immunity is applicable not just to tribes on their own but in addition to entities which can be considered “arms” for the tribe, such as tribally chartered TLEs.

Due to the fact resistance of TLEs is considerably beyond cavil, the “action” in litigation within the tribal model has shifted through the tribes and their “arms” to non-tribal financiers, servicers, aiders, and abettors. Discovery associated with the information on the economic relationships between TLEs and their financiers happens to be a key goal of these state-court procedures by regulators, considering that the non-tribal “money lovers” associated with the TLEs probably cannot assert immunity that is tribal. The risk that is principal such financiers is recharacterization because the “true” loan provider in another of these plans.