35 years ago, Citibank made South Dakota the home of its credit card operations, due to landmark usury legislation. Douglas J. Hajek tells the story.

This month marks the 35th Anniversary of South Dakota’s landmark usury legislation that made our state the home of Citibank’s credit card operations. That bill (HB 1046) was introduced on the first day of the 1980 session, and —- with broad statewide support —- by February 6 it had passed both houses.

Contrary to many reports from the East Coast media at the time, our new law exempting banks from usury limits was not inspired by Citibank. Rather, it was a response to the urgency of providing credit to farmers and small businesses when usury limits were making it highly unprofitable for banks to make loans. But this change did coincide —- unknowingly to South Dakota at the time —- with New York’s unwillingness to provide any usury relief to its banks whose cost of money greatly exceeded the interest they could charge on their credit card portfolios. On the last day of the historic 1980 session, at Governor Janklow’s urging, legislation inviting Citibank to South Dakota was introduced, passed and signed into law.

Since 1980, South Dakota has reaped many benefits from the financial services industry: thousands of jobs, bank franchise taxes, unclaimed property receipts, charitable contributions, and support of our state and its communities in a multitude of ways. And while our state does not bow to it, South Dakota has steadily supported the industry that has given so much back in return.

Now, with a long record of success, our state boasts a talent-rich financial services workforce, technology, high capacity and reliable overnight delivery services, support services, reasonable taxes, smart regulation, and a sound state fiscal position. These attributes assure financial service companies an attractive, stable, predictable environment that is critical to success. And while in many cases its presence can be traced to the financial services industry, this environment —- together with the expertise and infrastructure supporting it —- also makes South Dakota an ideal location for a range of companies that do business on a nationwide basis.

All of this bodes well for the future of South Dakota, and its ability to attract industry and the talented people needed to support it.


Hajek presented on this topic on the campus of South Dakota State University Wednesday, February 18, 2014 at 7 p.m. in the Performing Arts Center.  The presentation was co-sponsored by the Dykhouse Scholar Program in Money, Banking and Regulation and the SDSU Division of Economics and Management.   No registration required.  Admission free.

Davenport, Evans, Hurwitz & Smith, LLP, located in Sioux Falls, South Dakota, is one of the State’s largest law firms. The firm’s attorneys provide business and litigation counsel to individuals and corporate clients in a variety of practice areas. For more information about Davenport Evans, visit www.dehs.com.