Tribal Games

Should Indian tribes be able to sell tax-free bonds to finance development?

That’s what’s being pushed in Congress right now. They want the House Ways and Means Committee to allow them to sell bonds to finance golf courses, hotels, and other enterprises. At present, tribes can only issue tax-free bonds to fund essential government functions, like roads and sewers. States can issue bonds to support businesses, so why not Indian tribes?

One reason is bankruptcy. Municipalities and other government entities have a clear bankruptcy regime—it’s called Chapter 9. But tribal governments aren’t subject to US bankruptcy laws. When the Foxwoods mega-casino defaulted on its debt, it never went into bankruptcy, because the tribes are sovereign. That’s why they have their own traffic laws and police.

Until Congress sorts out how bonds will be treated if a business fails, they’d better not treat them like States. Because one of the ways people succeed in investing is by knowing what will happen if they fail.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2013-05-07T08:47:56+00:00 May 7th, 2013|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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