A board tasked with overseeing the development and implementation of the long-anticipated New Jersey public bank submitted its final recommendations to Gov. Phil Murphy Feb. 6.

The Public Bank Implementation Board was created by Murphy via Executive Order No. 91 in November 2019. Helmed by New Jersey Department of Banking and Insurance acting Commissioner Justin Zimmerman, the group unanimously approved its report Jan. 30 before submitting it to Murphy Tuesday.

“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,” Murphy said when he signed the EO. “With the creation of this implementation board, I am proud to take the first step toward ensuring that our taxpayer dollars are invested here in New Jersey.”

The core mission of the public bank should be to work through and with existing financial institutions as much as possible, the report states.

According to the recommendations, the public bank should:

• Be developed as a state-funded and partially state-controlled community development bank that is designed to play multiple roles in accelerating the investment of impactful capital in underserved communities;
• Operate independently from state agencies and be structured as a private entity that is overseen by a combination of appointees, private sector representation, and community members;
• Not operate at a profit initially, and instead rely on capital supplied by state and philanthropic investors in an effort to maximize the social beneficial impact of its investments and below-market lending;
• Over time, be required to leverage state funds to attract private capital and reduce its reliance on state funding;
• Not be a depository institution, but seek funding from a diverse range of investors and non-depository investment vehicles to avoid regulations that could reduce the chance to fulfill its mission.

The report was compiled by Next Street, an independent mission-driven advisory firm, using guidance and input from the board. It is available available here.

 ‘An exciting step forward’

“Treasury has been proud to be a part of the Public Bank Implementation Board and of the hard work that led to the development of the recommendations now being made,” said State Treasurer Elizabeth Maher Muoio, member of the implementation board. “The public bank has been a vision of Gov. Murphy’s since the earliest days of the administration, and this is an exciting step toward seeing that vision become reality.”

“The board has provided Gov.  Murphy with a blueprint that will enable him to significantly improve the lives of New Jersey residents while prompting national discourse with elected officials, government administrators and the public on the concept of public banking,” said Phyllis Salowe-Kaye, executive director of the Communities First Initiative, former executive director of NJ Citizen Action, and an implementation board member. “The recommendations we have provided him with are exactly the kind of alternative finance mechanisms that are needed in low- and moderate-income communities across New Jersey.”

“On behalf of the board, I thank Gov. Murphy for his confidence in the members and our work,” Zimmerman added. “I also want to extend my appreciation and gratitude to the entire board membership for their dedication and hard work to advance the governor’s innovative initiative that will benefit residents across our state.”

Time to act

The recommendations were applauded by New Jersey Citizen Action.

“The board’s recommendations provide Gov. Murphy with a vital step towards establishing a public bank, which could be of immense help to New Jersey’s low-and-moderate income families and communities of color. The bank would invest public money and help attract private financing to address New Jersey’s most pressing socio-economic needs, including but not limited to affordable housing, public infrastructure, microlending for main street New Jersey, and our state’s student loan crisis,” said Beverly Brown Ruggia, financial justice program director for NJCA, in a statement.

“These needs have not been adequately met by the private or public sector, resulting in decades of social, racial, and economic inequity in too many communities,” the statement continued. “We urge Gov. Murphy to act on these recommendations as soon as possible.”