Keeping a 2017 campaign promise Governor Murphy signed Executive Order No. 91 on Wednesday creating a Public Bank Implementation Board. The Board is tasked with developing an implementation plan for a public bank within one year. The private bank would hold the millions of taxpayer funds that are normally kept in commercial banks and use them for low-interest loans to small businesses, student loans, affordable housing and infrastructure projects that may not qualify for traditional funding. Murphy signed the order at a ceremony at New Jersey Citizens Action’s offices in Newark. New Jersey Citizens Action has been pushing the idea of a public bank for years.
The new board will be led by Marlene Caride who serves as Murphy’s commissioner of Banking and Insurance. Members of the board include members of Murphy’s administration: State Treasurer Liz Muoio, Lt. Governor Sheila Oliver and the Governor’s Chief Counsel Matt Platkin. Four public members were appointed by Murphy: Willam Rodgers a professor of public policy at Rutgers University, Joan Bartl, a co-director of Banking on New Jersey (a group that has advocated for a public bank), Phyllis Salowe-Kaye, Executive Director of the progressive group New Jersey Citizen Action and Sean Spiller Vice President of the New Jersey Education Association (the state’s largest teachers union).
Interestingly none of the board members come from the banking industry, business lobby or even New Jersey’s business community.
Michael Egenton Executive Vice President of the New Jersey Chamber of Commerce was concerned about the absence of a representative from the banking industry on the board saying Wednesday “I would say respectively, put someone from the banking institutions. Have somebody their for their voice to be heard”.
State Senator Tony Bucco (R, Morris) said a public bank is risky and unnecessary calling it a “looming catastrophe” for taxpayers “Governor Murphy needs to focus on New Jersey’s high property taxes and underfunded schools, rather than launch this bottomless money pit that will no doubt be run by politically connected folks” Bucco said. “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. 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 continued.
State Assemblywoman Holly Schepisi (R, Bergen) criticized Murphy for naming Derrick Green (a Political Consultant Murphy paid $2 million and later hired into a $140,000 per year job in state government) to the board after a campaign finance scandal . “His recent public corruption and fraud allegations should be of great concern. Governor Murphy is once again intentionally ignoring significant issues involving someone within his administration, and doing so conspicuously. It is a disturbing trend” Schepisi said.
Murphy defended his public bank plan saying “Leveraging state resources to provide greater access to capital for our communities, small businesses, municipalities, and students is an important component of building a financially inclusive New Jersey”.
North Dakota is the only other state that has a bank owned and operated by state government.
The plan could face challenges in the State Legislature as many lawmakers, including Democrats have expressed concern. The plan will also face opposition in the business community and from taxpayer advocacy groups. Many have said that a public bank will take business away from the state’s banking industry and create opportunities for corruption and political influence.
Have you had enough yet New Jersey?
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