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Public Bank In NJ Is 'Bad Idea,' Essex County Accountants Say

Gov. Phil Murphy wants to create a taxpayer-funded bank that would lend money to "socially beneficial" projects.

Patch —December 4, 2019

By Eric Kiefer, Patch National Staff

ESSEX COUNTY, NJ — Hundreds of accountants from a CPA group in Essex County have given a thumbs-down to the idea of creating a public bank in New Jersey, the organization reported Wednesday.

Last month, Gov. Phil Murphy — a former executive with Goldman Sachs — signed an executive order that laid the foundation for a public bank in New Jersey within a year.

The taxpayer-funded bank would lend money at "below market rates" to help support "socially beneficial" projects such as public infrastructure or affordable housing. It could also help to pay down debts from small businesses and student loans. Any profits would funnel back into the state's fund.

"If some of the profit that currently goes to Wall Street can make it to Main Street instead, we should do the work necessary to set this up and help New Jersey," said Sean Spiller, a Montclair town councilor who was named to a 14-member public bank task force.

"Done right, a state bank has tremendous potential to make capital work for working people and not just for the wealthy investing class," Spiller said.

However, on Dec. 4, the Roseland-based New Jersey Society of CPAs (NJCPA) said that hundreds of its members don't agree.

According to the group, 85 percent of the 489 members surveyed "do not like the idea of having a public bank in New Jersey."

The NJCPA wrote:

"Survey respondents who opposed the concept noted that credit unions, which provide similar borrowing opportunities, are already available throughout the state. They also cited their distaste for having state government in the banking industry, where taxpayers could be forced to subsidize such an enterprise. Respondents also believed the state government's full attention needs to focus on fixing the pension and health benefit obligations that plague the state currently."

The NJCPA said 10 percent of the respondents were in favor of a public bank, noting that it could attract younger people into the state to start businesses. It could also help millennials and Generation Z to obtain loans for businesses or housing, they said.

The NJCPA counts more than 14,000 members among its ranks.

SUPPORT FOR A PUBLIC BANK IN NEW JERSEY

Supporters of a state public bank have claimed it could help to level the playing field between people who already have money to invest and people who don't.

Several politicians, state officials and activists have offered praise for the idea.

Lt. Governor Sheila Oliver — "Public banks can help lower debt costs for local governments while generating revenues and spurring job and economic growth and I'm excited that Governor Murphy is signing an Executive Order to move this forward in New Jersey. We welcome the opportunity to help lower taxes for residents in our communities while investing in the common good with loan affordability for education, infrastructure and small businesses growth."

Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action — "A public bank would expand access to capital that is needed to address New Jersey's most pressing and unmet needs in our state's most under-served communities. There are many socially beneficial projects that don't have adequate funding, including upgrades to public infrastructure, expanding affordable housing and neighborhood revitalization, reducing student loan debt, and providing micro-loans for small businesses."

Patrick Morrissy, vice chair of New Jersey Community Capital — "To me, the Governor's State Bank vision is bold and innovative and yet its goal is simple. Let's direct the lowest cost capital to the state's greatest challenges. While we're at it lets partner with our Community Development Financial Institutions who are already filling the credit and investment gap in affordable housing, small business development, and urban revitalization."

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