New Jersey Gov. Phil Murphy (D) on Wednesday signed an executive order taking the first step toward establishing the state-owned bank he campaigned on creating in 2017, according to NJ.com.
Murphy’s Wednesday order provided for the 14-member board for the proposed bank, which would be the first such institution in a century and, Murphy said, would invest millions in state deposits back into Garden State communities.
“I still believe in the ability of public banks owned by the people of New Jersey to be a force for good in helping small businesses succeed, in providing student loans at affordable rates and opening lines of credit to municipalities needing long-term infrastructure and affordable housing,” Murphy said before signing the order at an event in Newark.
“It’s a mechanism to recapture a portion of the capital that has been invested outside of this country. Let’s bring the money home and invest here in our state,” said Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action.
The board will be chaired by Marlene Caride, the state commissioner of banking and insurance, but the appointment of Derrick Green to the board has raised eyebrows and drawn criticism from Republican lawmakers, who cite his involvement in a financial scandal relating to his work in Bermuda.
Critics have also argued the bank would hurt local banks and be vulnerable to political influence, according to NJ.com.
“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 [Federal Deposit Insurance Corporation] insured. The truth of the matter is that new agencies run by the State have a history of falling short,” state Sen. Anthony Bucco (R) said in a statement.
“This poses too great of a potential liability for New Jersey families who already struggle with taxes," he added.