Several western bankers have pledged to improve the access of Navajo Indian Reservation residents to financial services, particularly home loans.
Representatives of banks, the Federal Home Loan Bank System, the Navajo Nation, and nonprofit organizations agreed to take 50 steps in the next year to help Navajos get credit. At a meeting held Sunday in Aneth, Utah, they also pledged to finance at least as many homes as there were people in attendance: 52.
Such meager ambitions underscore the administrative as well as economic obstacles to community banking on Indian reservations, which are treated as sovereign countries.
"There's a double dimension to this," said Stephen M. Studdert, chairman of a Salt Lake City-based housing committee of the Federal Home Loan Bank of Seattle, which organized the meeting as a follow-up to a June 1994 forum.
"One, there's an extraordinary need, and secondly, there's a very large and completely untapped market for housing finance providers."
The Navajos, the country's largest tribe, live in Arizona, New Mexico, and Utah, and face hardships common to most reservations. About 14,000 Navajo families are homeless, Mr. Studdert said, and half of Navajo homes do not have electricity; 70% of the homes lack running water.
Although lenders face several challenges in lending to reservation residents, "None of them are insurmountable," said Harris H. Simmons, president and chief executive of Salt Lake City-based Zions First National Bank. "They just take time to learn and to become comfortable with."
For instance, lenders need to become familiar with a tribe's legal system, because the tribe owns the land on which the homes are built.
In addition, many Navajos don't have established credit histories, Mr. Studdert said.
However, participants saw several ways to improve credit access.
Mr. Simmons' bank announced that it would open a branch Nov. 1 in Montezuma Creek. It will be the sixth branch on the Navajo reservation and the first in Utah.
Today, the three banking offices closest to residents in Montezuma Creek are 40, 60, and 85 miles away.
The new office will be staffed part time by a Native American and will offer 24-hour access to automated teller machines and phone links to the bank.
"We don't expect to make a lot of money doing it," Mr. Simmons said. "I think making credit available is fundamental to seeing economies develop and seeing standards of living improve."
First National Bank of Farmington, N.M., already has a branch on the reservation in its state and Norwest Corp. has opened four branches in Arizona in the last year.
Other parts of the agreement include the Navajo government's approval of legislation necessary to participate in a Department of Housing and Urban Development mortgage loan guarantee program.
Organizers said they hope to see their efforts reproduced elsewhere. "If it proves successful, there's no reason why it can't be replicated all across the country on other Indian trust lands and involving many other financial institutions," Mr. Studdert said.
