Last November, the Mashantucket Pequot Tribal Nation in Connecticut failed to make $7 million of a scheduled $21.25 million payment on a $500 million debt. The collateral on the deal was their Foxwoods Resort Casino. If they had been a normal business owner, they would have gone into a default, and creditors could have gone after the casino.

But the Mashantuckets aren’t a normal business owner. They’re an Indian tribe, with the rights of a sovereign nation. Legally, the creditors couldn’t take the property or force the tribe to pay. Standard & Poor’s lowered the tribe’s credit rating to D, and Moody’s followed. But with the casino pulling in $700 million in profits a year, even during the downturn, it’s not like they had an immediate need to borrow more money.

In fact, Michael Thomas, the tribe’s council chairman at the time, acknowledged the tribe had the money to pay. But with 2009 marking the first time Indian casino profits dropped from the previous year, making the payment would have meant that tribal members would have gotten smaller payments — something he refused to do, even though some tribal members were getting $120,000 a year in payments.

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