wealth inequality

You can make your voice heard for a New Jersey public bank | Opinion

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By Phyllis Salowe-Kaye and Beverly Brown Ruggia

As we emerge from the pandemic’s economic fallout, it’s clear that New Jersey needs its own state public bank.

On April 5th, the Public Bank Implementation Board created by the Murphy administration in 2019 will hold a public hearing on how a public bank can help improve the lives of countless New Jerseyans.

New Jersey Citizen Action (NJCA), which is a public member of the board, urges all New Jerseyans to attend this virtual hearing and help move the governor’s vision forward.

NJCA and our allies have long advocated for a bank that would address market failures that exacerbate longstanding inequalities in the world of finance, widen the racial wealth gap, and perpetuate the inefficient use of public money.

The COVID-19 pandemic only made these social, economic, and racial inequities worse. We support Gov. Murphy’s vision of a public bank that will expand access to below-market-rate capital for creditworthy and socially beneficial projects, including those that support small business lending, community development for affordable housing, lower-cost student lending, and infrastructure finance.

New Jersey would not be the first state to implement a public bank. The Bank of North Dakota has been in operation for just over 100 years. As a wholesale bank, a bank for other banks, it provides loan guarantees and buys down interest for the state’s community banks and credit unions. It also provides some direct private loans, such as student loans, and acts as the bank for state 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 serves the needs of our state and our time in our way.

A New Jersey state public bank can become a vital tool to counteract the shocks brought on directly by the pandemic and any future natural or economic disasters. It should also serve to address the historic inequalities described above that are specific to New Jersey.

A New Jersey public bank should not just be a retail bank that provides products and services directly to consumers or small businesses. It must be a wholesale bank that increases the capacity of existing public finance programs and local banking, particularly 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 to act as an insurer against loss while continuing to prudently manage its own financial risk.

Through these actions, the public bank will be able to support local jurisdictions with respect to public infrastructure. It will complement and enhance the work of New Jersey’s Economic Development Authority, Home Mortgage, and Finance Authority, and Higher Education Student Assistance Authority by making available additional and lower-cost capital for small business loans and affordable housing, and by reducing rates on higher education student debt.

As a wholesale bank, it will also help strengthen community banks, credit unions, and Community Development Financial Institutions that provide critical retail relationship banking to individuals, and small businesses in underserved communities.

Gov. Murphy has helped champion and boost momentum for a growing national public banking movement. Other states and a few cities have taken significant action toward creating public banks.

Massachusetts, New York and Washington are among the states that have bills inching through their legislatures with ever-growing support. Philadelphia passed legislation this year to establish an economic development fund as a first step in creating a public bank there.

But Gov. Murphy is the highest-ranking state official in the United States to propose the establishment of a state public bank and charged our board with continuing its work even under the limitations imposed by a global pandemic.

New Jersey remains in the forefront of the national public bank movement as it continues to grow. Make your voice heard and join the statewide movement to create a public bank that will serve all the people in New Jersey and help correct the systemic economic failures in our state.

We urge everyone to sign up and speak up at our board’s public hearing from 4 to 6 p.m. on April 5.

Phyllis Salowe-Kaye is president and Beverly Brown Ruggia is the financial justice program director of New Jersey Citizen Action, a statewide advocacy and empowerment organization that advances social, racial and economic justice for all.

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