Senate President Sweeney Opposes Public Bank Proposal

State Senate President Stephen Sweeney (D-3) said Wednesday that he has no intention to support the public-owned state bank proposed by Governor Phil Murphy. As Senate president, he controls what bills are posted for a vote in the upper chamber rendering a bill dead on arrival without his support, or at least consent. 

“I have been against the state bank from day one,” Sweeney said during a panel discussion at the League of Municipalities annual convention in Atlantic City. “I don’t think it’s a good idea. I think it’s dangerous,” he added. “I told the governor I would listen. But when that was first announced a while ago, I said, ‘If it were really good idea it would have more states following [North Dakota’s] lead.’”

Established in 1919, the Bank of North Dakota is currently the only government-owned general-service bank in the nation though California enacted legislation last month, the Public Banking Act (AB 857), to allow up to ten counties and municipalities in the state to establish banking institutions.

Murphy signed Executive Order 91 last week creating a Public Bank Implementation Board. The board is tasked with developing an implementation plan for a public bank. He signed the executive order in a public ceremony at the Newark offices of NJ Citizen Action, the leading advocate for a public bank. 

The 14-member board will be chaired by NJ Department of Banking & Insurance Commissioner Marlene Caride with nine others from government members and four from the public. The board must hold its first meeting within thirty-days and submit its report to the governor within one-year. It must hold at least three public meetings.

There is no industry representation on the board.

Advocates of public banks say they can provide borrowers with fairer interest rates and fees, and other favorable terms because there’s no need to maximize shareholder profits. But others raise concerns that a public bank would take business away from the state’s community banks and not-for-profit, member-owned credit unions, as well as create new opportunities for undue political influence and corruption.

Opposition to the measure is bipartisan. “A state bank makes no sense at all,” Senate Republican Leader Tom Kean, Jr. (R-21) said during the panel discussion. Assembly Republican Leader Jon Bramnick (R-21) offered his reluctance as well adding “I think it would be a political bank. I’m not sure you want a bank making a loan based on politics.”