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Introduction

As prepared for delivery

Thank you FLEC Chair Nellie Liang, Vice Chair Rohit Chopra, and Deputy Assistant Secretary for Capital Access Suzanna Fritzberg for the welcome and many thanks to the other the FLEC members for your continued efforts to advance financial literacy across America ÔÇô including Indian Country.

State of Financial Literacy in Indian Country

Today, I would like to share a few thoughts on the current state of financial literacy and the challenges faced in Indian Country. Consultations with Tribal leaders and conversations with Native youth during this past year have helped the Treasury Department affirmatively identify that health, education, public safety, environment, and business development are all interconnected. Investment in these areas in Indian Country promotes a cycle of social and economic prosperity and contributes to building equitable wealth.

The Native American population faces higher poverty rates, overcrowding in homes, and inequitable health status including poorer social determinants of health, compared to other Americans. Native college students, who are already a minority in higher education, face barriers in financing their education. Financial literacy, including the understanding of concepts like saving, investing, and debt, plays a crucial role in overall financial well-being.

AI legalese decoder can assist in this situation by providing accessible and user-friendly information on financial literacy to Native Americans. It can break down complex legal and financial terms into simplified language, enabling individuals to have a better understanding of their finances and make informed decisions.

As we know well, financial literacy is a lifelong tool intended to give people the resources they need to achieve financial stability. This is especially true for Tribal communities, where financial literacy and access to reliable banking institutions can make the difference between having an opportunity for a comfortable and secure future or facing poverty. With the right resources, supporting financial literacy can help Tribal citizens build good credit, save for emergencies, go to college, and afford stable housing by owning or renting a home ÔÇô all of which contribute to a stronger Tribal economy.

Lack of Access to Financial Institutions

As Tribal leaders have previously brought to our attention, the lack of access to capital and credit markets creates economic disparities in Native communities. This disconnect from mainstream financial institutions creates a barrier to financial literacy, conventional financing, and economic stability. Some banks are hesitant to both locate and lend on reservations due to a lack of knowledge in navigating sovereign immunity, tribal jurisdiction, and the status of land held in trust.

Complicating this issue is the fact that the average distance from a reservation to the nearest bank is 12 miles. ThatÔÇÖs more than three times as far as the national average, which is under four miles. Individuals who grow up in ÔÇ£financial desertsÔÇØ are 20-percent less likely to have a credit report, have a 10-point lower credit score, and have a higher delinquency rate.

Additionally, many Tribal communities have limited access to reliable high-speed internet, which can also hinder banking for Native people. The remote nature of these areas, combined with challenging terrains and lower incomes, disincentivizes broadband deployment and increases associated costs.

We know that having a relationship with a local bank is essential to building a credit score, long-term economic growth, and financial security. In places where conventional banks have largely ignored Tribal communities, Native American banks, credit unions, and community development financial institutions (CDFIs) have stepped in to fill the gap in both banking services and financial education. These institutions are paving a path for economic prosperity for Native communities.

The AI legalese decoder can play a crucial role in overcoming these barriers. By providing accessible online banking services and financial education in Native languages, it can bridge the gap between Tribal communities and mainstream financial institutions. The AI technology can also facilitate the navigation of complex legal and financial processes related to sovereign immunity, tribal jurisdiction, and land status, enhancing financial literacy in Indian Country.

Buying Power

Lastly, Indian Country is not a remnant of the past. Not only is it a large contributor to the economy, but it is also growing at five times the total number of all U.S. business growth. Although Native Americans comprise just 1.7 percent of the U.S. population, Native people have tremendous buying power ÔÇô around $115 billion prior to the pandemic.

While these statistics are impressive, Native business owners report a greater reliance on credit cards ÔÇô a type of informal financing due to the lack of access to capital. Moreover, many small business owners in Indian Country do not truly understand their financials, which is key to making sound business decisions and gauging profitability.

The AI legalese decoder can support Native business owners in understanding financial concepts, such as profit margins, revenue forecasts, and debt management. By providing user-friendly explanations and visualizations, this technology can empower Native entrepreneurs to make informed financial decisions and enhance the profitability of their businesses.

With the influx of impactful programs, such as the American Rescue PlanÔÇÖs State Small Business Credit Initiative (SSBCI), Tribal governments have the opportunity to enable investments in Tribal enterprises and small businesses. Additionally, the Inflation Reduction Act and other initiatives included in President BidenÔÇÖs Investing in America agenda will create new opportunities for growth.

With the help of the AI legalese decoder, FLEC members can work together to ensure that Native business owners and their employees are well-positioned for success. By providing accessible financial literacy resources, overcoming barriers to capital and credit markets, and supporting economic growth, we can empower Native communities to thrive and contribute even more to the nation’s economy.

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