By Les Leopold
Over 800 days ago, Gov. Phil Murphy issued Executive Order 91 authorizing the creation of a public bank implementation board. At his press conference in Newark on Nov. 12, 2019, he said, “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.”
Sadly, today we are further away from implementing such a bank than when he made that pledge.
The board has been captured by bureaucratic and private banking interests that do not want our tax dollars invested there. Except for two brave souls, his implementation board is wedded to the status quo, which relies on private banking to fulfill New Jersey’s financial needs.
As a former banker, the governor knows that more than $13.2 billion of our tax money is being loaned by the state of New Jersey Cash Management Fund to big banks and corporations, who in turn profit by moving our money all over the world.
At the same time, our local, county and state government agencies currently borrow billions from private banks and through municipal bonds arranged by Wall Street firms, who profit yet again from us.
To short-circuit this perverse cycle, the governor has proposed lending our tax dollars directly to our own state and local agencies via a public bank. In addition, as in the Public Bank of North Dakota, it also could partner with local private banks to make badly needed loans for small businesses, affordable housing as well as provide a pool of capital for low-interest student loans.
But from the very beginning, the governor’s own implementation board has nixed the North Dakota model where tax dollars go directly into the public bank, which can direct them to important public policy goals. Other more modest “starter” public bank models were proposed and then dismissed along with a plan to purchase a small private bank to obtain its charter and then convert it to a public bank. The common denominator is simple — the vast majority of board members do not want a public bank of any kind that upsets the status quo that is based entirely on borrowing money through private banks.
But the implementation board must do something, doesn’t it? Well, it’s about to put out a $250,000 request for a proposal to create a business plan — one which, barring massive public pressure, will avoid any and all efforts to ensure “that our tax dollars are invested here in New Jersey.” Instead, it will call for a revolving fund supported by donations and/or low-interest loans from private philanthropic organizations that then will be loaned at low rates to support affordable housing and the like.
One could easily imagine that large private banks through their charitable arms also could pony up for this non-threatening program. Certainly, the good work of such a fund could seamlessly become an additional program within a real public bank, but a public bank it is not and never will be.
The governor now has two options: 1. He can pretend this philanthropic option somehow marks the first step toward a public bank, and then call it a day. This might slip by given how little access the public currently has to the board’s deliberations. Or 2. He can give the job of creating a real public bank plan to those who actually believe in it.
We have no shortage of public banking expertise or useful models. But what is lacking is the will to create the Public Bank of New Jersey. What is lacking is the will to challenge the governor’s own bureaucracies. And what is lacking, most of all is the will to challenge the total domination of New Jersey finance by Wall Street and the private banking establishment.
Many of us still cling to the belief that Governor Murphy wants a real public bank. If so, he has the power, right now, to formulate a business plan to make it a reality. But does he have the will?
After 800 days, New Jersey taxpayers deserve an answer.
Les Leopold is the executive director of The Labor Institute, which designs educational programs for trade unions and immigrant worker centers. He lives and works in Montclair.
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