Public bank advocates in New Jersey and Michigan got a step closer to their goals recently, as lawmakers in both states introduced bills that would establish state-owned banks modeled after the Bank of North Dakota.
New Jersey Gov. Phil Murphy, a Democrat and former Goldman Sachs investment banker, made the state bank a key issue in his campaign platform. Democratic state senators Nia Gill and Richard Codey, both from Essex County, introduced a bill to advance that goal. Meanwhile, Republican and Democratic state lawmakers in Michigan co-sponsored a package of bills in the state house that would establish a public bank there.
“This is a fiscally responsible solution for taxpayers,” Michigan State Rep. Martin Howrylak, a Republican from Troy, said in a press release announcing the proposal. “As states are looking for ways to reduce spending, many are exploring the idea of a state-owned bank, similar to the Bank of North Dakota.”
The Bank of North Dakota is the only public bank currently operating in the United States.
In both proposals, state and local governments would have the option to deposit public money, typically taxes and fee revenues, into state-owned banks that would then lend that money out for public infrastructure projects, or business loans.
Both would also establish advisory boards, including members drawn from the private banking sector, to oversee those institutions. Michigan’s proposed state bank would have seven members on its advisory board, and the New Jersey proposal would require 13 members.
The four bills making up Michigan’s proposal have been referred to its House Committee on Regulatory Reform, while the New Jersey proposal is currently pending in the Senate Commerce Committee.