Implementation Board gives final recommendations on creation of New Jersey Public Bank

The New Jersey Public Bank Implementation Board, chaired by New Jersey Department of Banking & Insurance acting Commissioner Justin Zimmerman, on Tuesday gave its final recommendations on the development of a New Jersey public bank to Gov. Phil Murphy.

The board unanimously approved the report Jan. 30.

“The board is proud to provide this report to guide New Jersey’s work in creating a public bank,” Zimmerman said. “On behalf of the board, I thank Gov. (Phil) Murphy for his confidence in the members and our work. 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.”

The creation of a socially motivated public financial vehicle will act as a multiplier for public financing and expand the number of solutions to the state’s most pressing social and economic problems.

“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,” State Treasurer Elizabeth Maher Muoio, a member of the New Jersey Public Bank Implementation Board, said. “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.”

Among the report’s recommendations are:

  • The bank should be state-funded and partially state-controlled;
  • It should be structured as a private entity and overseen by a combination of state, private and community appointees;
  • It should operate independently of existing state agencies;
  • It should not operate at a profit initially, and should rely instead on patient capital;
  • It should be required to leverage state funds to attract private capital;
  • It should not be a depository institution; and
  • Its core mission should be to work through and with existing financial institutions as much as possible, neither competing with nor replicating existing efforts.

“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,” Phyllis Salowe-Kaye, current executive director of the Communities First Initiative, former executive director of NJ Citizen Action, and a member of the New Jersey Public Bank Implementation Board, said.

“Gov. Murphy has taken a giant step in delivering on a promise he made before he was even elected. 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,” she added.

Prior to creating this report, the board recommended an initial entity to address areas in need of investment through a temporary financing structure.

This suggestion resulted in the creation of the New Jersey Social Impact Investment Fund, which Murphy first proposed in his Fiscal Year 2024 budget and subsequently created when he signed bill S3977/A5670 into law, in June 2023, along with a $20 million appropriation for seed funding to address three market gaps in impact capital.

The SIIF will deploy below-market-rate capital for critical investments in affordable housing, infrastructure and early childhood education facilities and will be managed by a private fund manager that will blend public and private investment.

The state engaged Next Street, an independent mission-driven advisory firm, to create the report with guidance and input from the Public Bank Implementation Board.