Since 2011 when Benjamin M Lawsky took over as New York State’s top financial regulator, he has aggressively pursued companies that do not follow industry practices. One of the industries Mr. Lawsky is pursuing is the payday loan industry.
Two Indian tribes will argue in Federal District Court that Mr. Lawsky overstepped his jurisdictional boundaries. Mr. Lawsky is planning to eliminate online business who offer loans with high interest rates.
The Indian tribes are fighting back and one of the tribes company name is Western Sky. They have sued Benjamin Lawsky, claiming that sovereign protects them from regulations in all states, even where payday loans are illegal.
“This is a straightforward case that is about the real world importance of Native American sovereign rights,” said David Bernick, the lawyer representing the tribes. “Since Lawsky has ignored hundreds of years of precedent, he has left tribes with only one clear path: go to the courts to protect a bedrock principle of the law.”
There are a growing number of regulators across the USA cracking down on payday lending. Mr. Lawsky sent letters in August to 35 lenders that are online — 11 with ties to American Indian tribes — asking them to “cease and desist” from offering short term loans with interest rates that in some cases exceed 500 percent annually. Letters were also sent to more than 100 banks, notifying them of his investigation and asking for their cooperation in his effort to eradicate the loans.
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