Gov. Phil Murphy today signed an executive order establishing a public bank implementation board. The goal of the board is to establish a plan to create a state public bank in New Jersey.
Commissioner of Banking and Insurance, Marlene Caride, will chair the board, which will be comprised of 14 members.
“Over the course of the coming year, the public bank implementation board will undertake a comprehensive review of all aspects of how such an institution can exist within our current financial system,” Murphy said.
“This board will conduct the research necessary to determine the path forward for a public bank designed to provide access to capital that will allow us to improve our infrastructure, revitalize our communities, to assist small businesses, and provide residents with access to higher education loan financing,” Caride added. “The goal is to make New Jersey’s taxpayer dollars work for the people of this state, and that will be our guiding principle.”
North Dakota’s Bank of North Dakota (BND), which was established in 1919, is currently the only government-owned general-service bank in the Unites States. New Jersey’s public bank would become the second such institution, and the first in 100 years.
“The bank will expand access to capital that is greatly needed to address New Jersey’s most pressing and unmet needs in its underserved communities,” said Phyllis Salowe-Kaye, executive director, New Jersey Citizen Action. “There are many socially beneficial projects that don’t have adequate funding, including upgrades to public infrastructure, expanding affordable housing and neighborhood revitalization, reducing student loan debt, and providing micro loans for small businesses.”
A public bank could play a role in getting such projects funded.
However, in a press release, Senator Anthony M. Bucco criticized the creation of a state-run bank, calling it “a looming catastrophe for Garden State taxpayers.”
“There would be a substantial risk of default on high-risk loans, with the cost falling on taxpayers since the state bank would not be FDIC insured,” Bucco said. “The truth of the matter is that new agencies run by the state have a history of falling short. This poses too great of a potential liability for New Jersey families who already struggle with taxes.”
Bucco added that, “many worthwhile loans that deserve state support are already being made by existing institutions, including the New Jersey Economic Development Authority and the Higher Education Student Assistance Authority.”
NJBankers Executive Vice President and Director of Government Relations, Michael Affuso, told New Jersey Business magazine that in a meeting with the leadership team of the Bank of North Dakota, a major takeaway was that if New Jersey was to create a state bank, it has to be free of political influence.
“It’s more of a question of means than ends. … In my opinion we can collaboratively get to the ends,” Affuso said. “… I just don’t really know if creating a state agency is the best plan.”
The public bank implementation board will hold its first meeting within 30 days.
The board members are as follows:
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