Public Banks: a 'Force for Good' or a 'Catastrophe'?

• Author: Lays, Julie

New Jersey soon will join North Dakota as the only states in the banking business. New Jersey Governor Phil Murphy (D) signed an executive order in November creating a Public Bank Implementation Board that will lay plans for a public bank for the state. He called it "a force for good in helping small businesses succeed, in providing student loans at affordable rates, and in opening lines of credit to municipalities needing long-term infrastructure and affordable housing," according to nj.com.

Once the 14-member board publicly releases its plan, the bank could begin receiving millions of dollars in state deposits previously held by commercial banks. Supporters see it as a way to invest more money back into local communities. The bank will make some of its money available to community banks for small-business loans, small-scale infrastructure projects and student loans. Bank profits will be pumped back into the state budget.

Opponents argue the bank will compete with established local institutions that are already providing these services and would be vulnerable to political influence.

"The creation of a state-run bank is a looming catastrophe for Garden State taxpayers," New Jersey Senator Anthony Bucco...