With a recent Justice Department lawsuit focusing attention on the issue, a regulator has produced a video showing how to lend to Native Americans on Indian reservations.

"Lending in Indian Country: Cultural and Legal Issues" was released last week by the Federal Reserve Bank of Minneapolis. The goal of the five-video set, which includes a manual, is to teach banks how to make loans on reservations and how to settle disputes with reservation residents who default.

The videos should help compliance officers make sense of the rules governing loans on reservations. That can be difficult because tribal regulations override some state and federal laws. Thus, banks often have trouble foreclosing on a home or repossessing a car when a reservation borrower fails to make payments.

In the video, Mark A. Jarboe, a partner in the Minneapolis law firm of Dorsey & Whitney, explains that banks can make lending much easier simply by consulting with tribal officials who know the rules.

"It's basically a case of needing to get people to talk with one another more," Mr. Jarboe says in the video.

To help bankers do that, the manual lists names, phone and fax numbers, and addresses of tribal courts and chairmen nationwide.

The Justice Department has brought two suits against banks in recent years alleging lending bias against Native Americans. In April, the agency sued First National Bank of Gordon, Neb., for allegedly charging Native Americans higher interest rates than other equally qualified applicants. The case is pending.

In November 1993, the agency sued Blackpipe State Bank in Martin, S.D., for refusing to accept as collateral property on reservations. In January 1994, the bank agreed to expand its services to reservations, market its products to Native Americans, reduce interest rates and finance charges on existing loans, and create a $125,000 fund to compensate rejected applicants.

There's more to the videos than helping banks stay away from lawsuits, according to James L. West, president of West Ratcliff & Co., an Albuquerque investment firm. Banks can make money and score points with regulators by lending on reservations, he says in the video.

"The primary reason we feel banks should have an interest in lending in Indian country is because they feel they can make a profit there," Mr. West said.

The set costs $145. Call 800-553-9656, extension 2290, for more information.

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