By Phyllis Salowe-Kaye and Beverly Brown Ruggia
As we emerge from the economic fallout of the pandemic, it’s clear that New Jersey needs its own state-owned bank.
On April 5, the Public Bank Implementation Board created by the Murphy administration in 2019 will be hold a public hearing about how a public bank can help improve the lives of countless New Jersey residents.
New Jersey Citizen Action (NJCA), who is a public council member, urges all New Jerseyans to attend this virtual audience and help advance the Governor’s vision.
The NJCA and our allies have long advocated for a bank that would address market failures that exacerbate long-standing inequalities in the world of finance, widen the racial wealth gap, and perpetuate the inefficient use of public money.
The COVID-19 pandemic has only deepened these social, economic and racial inequalities. We support Governor Murphy’s vision of a public bank that will expand access to below-market capital for creditworthy and socially beneficial projects, including those that support small business lending, community development for housing affordable, lower cost student loans and infrastructure. finance.
New Jersey would not be the first state to set up a public bank. The Bank of North Dakota has been in business for just over 100 years. As a wholesale bank, a bank for other banks, it provides loan guarantees and buys interest for community banks and state credit unions. It also makes direct private loans, such as student loans, and acts as a bank for government deposits.
While the Bank of North Dakota has successfully served its state and local banks, New Jersey can do even better. Our vision is a public bank that meets the needs of our state and our times in our own way.
A public bank in the state of New Jersey can become an essential tool to counter the shocks caused directly by the pandemic and any future natural or economic disasters. It should also serve to address the historical inequalities described above that are specific to New Jersey.
A New Jersey public bank should not simply be a retail bank that provides products and services directly to consumers or small businesses. It must be a wholesale bank that augments the capacity of existing public finance programs and local banks, especially for underserved populations and communities of color.
It should engage in partnerships with existing public and private financial institutions to provide capital at below market rates and act as an insurer against losses while continuing to prudently manage its own financial risk.
Through these actions, the public bank will be able to support local authorities in terms of public infrastructure. It will complement and enhance the work of the New Jersey Economic Development Authority, Mortgage and Finance Authority, and Higher Education Student Aid Authority by providing additional capital and lower costs for small business loans and affordable housing, and lowering student debt rates in education.
As a wholesale bank, it will also help strengthen community banks, credit unions and community development financial institutions that provide essential retail banking services to individuals and small businesses in underserved communities.
Governor Murphy helped champion and spur the momentum of a growing national public banking movement. Other states and a few cities have taken significant steps to establish public banks.
Massachusetts, New York and Washington are part of the states who have bills moving slowly through their legislatures with ever-increasing support. Philadelphia passed a law this year to establish an economic development fund as the first step in establishing a public bank there.
But Governor Murphy is the most senior state official in the United States to have proposed the creation of a state-owned bank and instructed our board to continue its work even within the limitations imposed by a global pandemic.
New Jersey remains at the forefront of the national public banking movement as it continues to grow. Raise your voice and join the statewide movement to create a public bank that will serve all New Jerseyans and help fix our state’s systemic economic failures.
We urge everyone to register and speak at our council’s public hearing from 4 p.m. to 6 p.m. on April 5.
Phyllis Salowe-Kaye is President and Beverly Brown Ruggia is Director of the Financial Justice Program of New Jersey Citizen Action, a statewide advocacy and empowerment organization that advances social, racial and economic justice for all.
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