After the 'New Buffalo:' Tribal Wealth Management
When Indian gaming first came to the fore after the passage of IGRA, many hailed it as the "new buffalo," a new all-inclusive source of sustenance upon which an Indian nation's economy might be based. While the new buffalo shows no signs of extinction, growing to become a nearly $16 billion industry in 2003, there are signs of predation, as states' appetites continue to grow and non-Indian commercial gaming has begun crowding the range. In addition, for the Indian nations, there are questions about what comes next. It doesn't pay to breed more buffalo, as the herd will reach natural limits, even as the casinos become resorts and add golf courses, hotels and other attractions. So what is the next phase of American Indian economic development?
Answer: Tribal wealth management - which is the subject of an inaugural conference at the Seminole Nation's Hard Rock Casino Resort in Tampa on Nov. 15 - 17. The conference had its genesis in a comment from an Indian leader, who, upon declining to attend a conference about issuing tribal bonds, said, "We already know how to do that; where is the conference that tells you what to do after you have the money?"
Indian nations have begun to diversify their investments, to invest in fellow Native projects, to engage in sophisticated money management techniques, to design legal and financial structures to preserve and enhance tribal wealth and to take other steps taken by wealthy persons and groups to maintain their capital over the generations. Led in many cases by the same visionary leaders who made the most of the advent of Indian gaming, taking on states in compact negotiations and the courts and creating a new GNP for their nations, many tribes now compete with the largest American corporations for the attention of topflight money managers and financial theorists.
In doing so, they have not, however, forgotten the many social concerns that first impelled the drive for economic development. They have carefully created minor trust programs to ensure the stability of those funds. They have invested in cross-tribal enterprises, aimed at lifting the tide for all the nations, not just those in key gaming markets. They have also sought to enhance their sovereignty and self-sufficiency by creating institutions on Indian land, such as banks, credit unions, CDFIs and other entities, so that Indian people can not only access such services, but be the service providers themselves. Such efforts have not been without controversy, and tribes have both taken on and negotiated with bank regulators, the federal treasury, the IRS and others, though in the end both the Indian nations and the regulators have the common goal of sound, safe money.
The Cobell litigation shows the perils of entrusting the management of Indian assets even to a trustee, and Indian nations need to be sophisticated not only in what they do, but with whom they do it. As one American Indian entrepreneur recently said, "some of them look at us as new, dumb money." Indian nations need to be judicious in choosing advisors, need to interview multiple candidates, need to consider paying for advice on a flat-fee basis so there is no commission at stake and need to write contracts that make it clear that advisors cannot, and represent that they do not, have any divided loyalties.
Another issue for Indian nations to keep in mind, with due respect to my own legal profession, is that lawyers work with the law, not with the money. Because Indian peoples' lives are so tied up in and by the law, from Chief Justice Marshall on down, Indian leaders often make their first call about any issue to a lawyer. No other business would make the first phone call about an investment opportunity or a market strategy to a lawyer; they would call the business people, the MBAs, the marketers, the finance team. Indian people need to get out of the lawyer mode and get deeper into the business model. There will of course always be legal questions, but they should be questions about how to accomplish goals, not questions about the goals themselves and whether or not to start down the path toward them.
No nation can survive without an economy. Some small states that are part of the United Nations, some smaller than many Indian tribes, make their money selling their unique postage stamps. Indian nations, due to their sovereignty, do not have to stoop to that level, and can instead run diversified businesses free of taxes and burdensome state laws. But they must take care to run their businesses well and to husband and wisely spend their profits so that their gains do not disappear like the buffalo. As many have done, they should invest in their human capital, their people, through education, health, safe housing and other services. And they must be careful guardians, much more careful than their alleged trustee has ever been, of their new and growing assets.
So after the gold rush, after the new buffalo have run their course and Indian nations once again control vast resources, let us hope the same vision and drive that has thus far guided the nations to great success will continue, and that their leaders will have the strength and perseverance to solidify those gains and hold them fast for all the generations to come. As co-chair of the Tribal Wealth Management Conference, I invite you all to join us on the Seminole Nation's lands, to listen and to decide, each nation for itself, what the paths are in order to reap what has been sown and to keep what has been gained.