In this adapted excerpt from the recently published book The House That Family Money Built, Richmond Law’s Allison Tait explores how changes to South Dakota law helped reshape the way money moves in America. She shows how rules that made it easier for banks to charge high interest rates also helped wealthy families protect and pass down their fortunes. Tait’s book looks broadly at how the law affects families across the economic spectrum and helps explain the systems that shape wealth across generations.
Reserve your spot for the book launch on Oct. 19 in the Richmond Law Moot Courtroom.
Citibank Day
Two Regulations, Two Celebrations
In June 1981, the city of Sioux Falls, South Dakota, celebrated the first-ever “Citibank Day.”1 There were festivities. There were speeches. The governor was there. What they were celebrating, although it wasn’t noted on any engraved invitation, was the successful elimination of the state’s usury laws and subsequent success in getting Citibank to relocate in Sioux Falls.
Three years earlier, the United States Supreme Court had decided a case that began with a disgruntled bank in Minnesota. A competitor bank in Nebraska was winning Minnesota clients with better terms and conditions, which the Minnesota bank couldn’t match because of its home state’s usury laws. With its decision in Marquette National Bank v. First of Omaha, the court permitted banks to export the interest rate laws of their home state nationwide, launching an interstate competition that would transform the geography of American financial life. The decision created an immediate incentive: If a bank could pick its home state, it could pick the highest possible interest rate and then export it across the country. The financial frontier had been formally opened, and states with small populations, responsive legislatures, and few competing industries quickly jumped on the opportunity. South Dakota and its governor at the time, William “Wild Bill” Janklow, moved first.
Two years after the first Citibank Day, in 1983, the same governor, “Wild Bill” Janklow, made a second move. Working with the state legislature, he pushed through the abolition of the Rule Against Perpetuities, a centuries-old common law limit on how long a private trust could last. The rule, which had originated in England in the late 17th century, was meant to prevent the accumulation of hereditary wealth across unlimited generations and ensure that family fortunes eventually returned into circulation. English judges had spent centuries refining it, and all American states adopted some version of it, but Janklow eliminated South Dakota’s rule in a single legislative session.
South Dakota trust companies celebrated, declaring that the days of offshore trusts were over: “[A] top rated trust state like South Dakota is extremely advantageous. … Offshore asset protection has lost a lot of momentum.”2 And trust companies invented new trust products with names meant to appeal to their target audience: dynasty trusts, legacy trusts, and a “bloodline trust.” One company even boldly marketed a “Have Your Cake and Eat It Too” Trust (HYCET Trust®). One writer commented: “A rule created by English judges after centuries of consideration was erased. … Aristocracy was back in the game.”3
Two Interlocking Parts of the Same Machine
These two moves — the ability to export usurious rates and the abolition of the Rule Against Perpetuities — seem, at first glance, like unrelated acts of deregulation. One concerned consumer credit. The other concerned estate planning. They operated in different legal domains, served different constituencies, and attracted different kinds of attention. But they were, in reality, the same move, the same machine. Both decisions were made in the name of attracting the financial services industry to a small state, and both acts enabled fringe banking to set up shop in a state with an ever-evolving set of permissive rules. Both developments worked spectacularly on those terms, co-producing a legal architecture with the same financial circuitry: obligations flowing out and profit flowing in.
On one side: Fringe lenders (payday loan companies, fee-harvesting credit card issuers, title lenders) relocated their headquarters to South Dakota and states like it, then fanned out across the country. They moved branches into moderately low-income communities, targeted majority-Black areas at three times the per-capita rate of white neighborhoods, clustered near Native American reservations, and relied heavily on immigrant communities as clientele. These lenders routinely sited their operations on Indigenous land to claim tribal immunity from state usury laws, partnering with tribes in exchange for a fraction of the profits. Fringe bankers built constellations of predatory lending that stretched across the national map, connecting pockets of poverty to central headquarters through a profit-seeking, hub-and-spoke structure of corporate ownership.
On the other side: Fringe lenders (boutique trust and wealth management companies) set up in the same small states and marketed themselves to a global clientele of ultra-wealthy families who never needed to set foot in the state to benefit from its laws. A South Dakota trust company advertised a full suite of products for “international families” — a “South Dakota Non-Resident Alien Domestic Dynasty Trust,” a “South Dakota Pre-Immigration Domestic Trust” — and reminded prospective clients that “all the benefits of South Dakota can be enjoyed by families across the country and globally without the necessity of having the family reside in the state.”4 After the U.S. Congress passed international tax compliance rules in 2010 that made traditional offshore havens riskier, these domestic micro-jurisdictions stepped into the gap, marketing themselves as “the onshore alternative for offshore trusts.” South Dakota was the new Cayman Islands and, as one industry commentator remarked, “[t]hat giant sucking sound you hear? It is the sound of money rushing to the USA.”5
What We Learn about the House of Family Money
The most memorable thing about the South Dakota story, however, is not the scale of transformation, although an influx of $355 billion in trust assets and the construction of a credit card industry are, by any measure, significant outcomes. What stands out are the lessons we learn about family money and how it travels through households.
The first lesson, almost too predictable, is that families on the low-income end of the family money spectrum have been and continue to be subject to an entirely different set of rules than families on the high-wealth end. Although the legal logic of deregulation was the engine for both sets of rules, the rules themselves worked differently for different populations. For low-income borrowers, deregulation meant exposure to rates that would have been illegal a decade earlier, to lenders who located their branches with demographic precision, and to a credit system that registered histories of exclusion as individual risk and charged accordingly. For high-wealth families, deregulation meant insulation from creditors, taxation, and the traditional obligations that attached to wealth when it passed between generations.
“Families on the low-income end of the family money spectrum have been and continue to be subject to an entirely different set of rules than families on the high-wealth end.”
The second lesson is one of “distorted reflectivity.” While legal treatment is materially different for the populations, the populations at either end of the wealth spectrum resemble one another. Both manage their money on the fringes of conventional banking. Both rely on specialized financial institutions that locate away from Main Street, in jurisdictions chosen for their regulatory distance from oversight. Both are geographically concentrated in ways that are easily mapped. The low-income borrower and the dynasty trust beneficiary may have more in common with each other, structurally, than either one has with the mortgage-paying middle.
The reflection is, however, distorted, and what looks like similarity is actually inversion. The fringe institutions serving low-income communities extract wealth from families by compressing time horizons and converting future income into present debt. The fringe institutions serving high-wealth families do the opposite. They extend time horizons, convert present wealth into future inheritance, and protect fortunes from the claims of creditors, spouses, and governments. A mirror reflection may exist, but it is a funhouse mirror.
The third lesson circles back to the beginning: Rules governing poverty and wealth are two parts of a machine that has extraction as its goal. The vast disparity in wealth between families and individuals is not an unintended consequence of an equitable system, but the result of a legally sanctioned set of extractive practices that operate within deep grooves carved out by past forms of oppression and hierarchy. This wealth disparity is part of a planned economy, but one that was planned long ago in order to allow an economic elite to capitalize on the debt of others. The house of family money is built from specific legal decisions, according to blueprints designed long ago, creating one set of rules for families with wealth and another for families without it. Both families have a stake in Citibank Day, whether they receive an invitation or not. ■
Edited and condensed excerpt from The House That Family Money Built by Allison Tait (University of California Press, Sept. 2026)
1 Sean H. Vanatta, Citibank, Credit Cards, and the Local Politics of National Consumer Finance, 1968-1991, 90 Bus. Hist. Rev. 57, 57 (2015); see also Interview by Lowell Bergman with Bill Janklow, Former Gov. of South Dakota from 1979 to 1987 and from 1994 to 2003. (Aug. 24, 2004)
2 Domestic Asset Protection Trust, S.D. Trust Co. (last visited Oct. 3, 2024)
3 See Oliver Bullough, The Great American Tax Haven: Why the Super-Rich Love South Dakota, Guardian (Nov. 14, 2019, 1:00 AM)
4 Why South Dakota, S.D. Trust Co. (last visited Oct. 3, 2024)
5 Oliver Bullough, Moneyland 255 (2018)