Gov.-elect Phil Murphy often told a story on the campaign trail about how, as a relative newcomer to statewide politics, few people in New Jersey had even heard of him before he jumped into this year’s governor’s race. After his victory last week, the same could be said about one of Murphy’s core fiscal-policy proposals — a plan to launch a state-run public bank in New Jersey.
The type of financial institution envisioned by Murphy would take state-government funds now deposited in accounts with large commercial banks, including those based overseas, and use them to back low-interest loans that would serve the public’s interest in New Jersey, including student debt, infrastructure investments, and small-business lending.
Only one other state in the country, North Dakota, currently operates such an institution, meaning Murphy now has a chance to set off a national revival for state banks, an idea that had its heyday nearly 200 years ago but has been rediscovered amid an era of corporate greed and rising income inequality.
Pot and the public bank
The public bank has a tie-in to another Murphy campaign promise, which is legalizing and taxing the sale of marijuana in New Jersey. That’s because federal regulations make it hard for banks in states where marijuana has been legalized to work with cannabis businesses since the feds still consider it to be illegal. A state-run bank could hold the tax revenues generated by those sales if the substance is legalized.
The leaders of New Jersey’s public-banking movement were giddy as they watched election returns during Murphy’s victory party in Asbury Park, and they’re predicting big things now that the issue has the state’s new governor-elect as its champion. Also watching closely from the sidelines is the state’s commercial banking community as it now waits to see