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Aboriginal lenders left out of federal bank subsidies
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Alan Park of the Tribal Wi-Chi-Way-Win Capitol Corp.
OTTAWA - A Winnipeg-based aboriginal financial group is demanding equal treatment from a federal program which gives non-aboriginal banks money to guarantee loans made to First Nations businesses.
The Tribal Wi-Chi-Way-Win Capital Corporation has asked a federal court to review the Loan Loss Reserve Program, alleging it was created without consulting First Nations and puts aboriginal lenders at a disadvantage.
"It’s a double standard," said TWCC CEO Alan Park, who held a news conference on Parliament Hill this morning to draw attention to the situation.
The Loan Loss Reserve program was announced by Ottawa as a pilot project in December 2008. Five financial institutions were chosen out of 22 invited to apply. None of the 57 aboriginal financial institutions in Canada was issued an invitation, said Park.
The winners include Assiniboine Credit Union in Manitoba, which was given $2.8 million from Ottawa to help cover losses it might incur in lending money to aboriginal businesses.
TWCC filed an application for a judicial review in federal court last month. Park says the aboriginal financial institutions began because traditional banks weren’t interested in lending to First Nations. Now that aboriginal lenders have proven it is a lucrative market, non-aboriginal lenders want in and they’ve been handed federal subsidies to do so.
"We’ve been doing these loans for 20 years," said Park. "It just defies logic the government wouldn’t include us."
Indian Affairs Minister Chuck Strahl said the minister was unavailable to comment because he was attending a cabinet retreat all day. In a written statement, his spokeswoman, Nina Chiarelli, said the government is committed to addressing barriers that impede investment by the private sector in First Nations.
"To this end, the Loan Loss Reserve program was designed to encourage loans where the business proposal is strong but securing financing could be difficult or limited because of the Indian Act," wrote Chiarelli. "The LLR program is complementary to the Aboriginal Financial Institutions, not in competition, and another concrete measure that our government hopes will expand Aboriginal participation in Canada’s economy."
Park says in the last two decades aboriginal lenders have provided more than 35,000 loans worth $1.4 billion to aboriginal businesses. He said the businesses have had a success rate of 58 per cent.
He fears aboriginal lenders will not be able to compete with non-aboriginal lenders getting subsidies because the subsidies will allow those lenders to offer lower interest rates.
Park said if the subsidies ever dry up, the non-aboriginal lenders will lose interest and the aboriginal lenders will have been put out of business, leaving First Nations Canadians to suffer.
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