A bill that would incentivize banks to operate in underserved areas passed the state Senate Budget and Appropriations Committee today.
Sen. Sandra CunninghamD-Jersey City, sponsored the measure after the Bank of America shuttered its branch at the HUB on Martin Luther King Jr. Drive in the Greenville section of Jersey City.
Cunningham said without a bank branch, residents of that community are forced to rely on check cashing businesses, which there are no shortage of near the HUB, which charge exorbitant fees.
“This legislation will give banks a reason to stay in underserved areas to provide the critical banking services that should be available in all communities,” she said.
The bill, S-2286, would establish the Banking Development District Program within the state Department of Banking and Insurance. The program would create districts in communities with few or no bank branches. The bill would allow banks in such districts to hold state Treasury funds and municipalities could select those branches as a deposit, via resolution, measures which would help boost profitability, Cunningham said.
“Not only should we be promoting sound financial practices among all residents, but these new banks can create new job opportunities in the communities where they locate,” she said.
The Assembly passed the “Banking Development District Act” on May 20 with a 75-3 vote.
When the bank closed the underperforming Jersey City branch, bank officials said customers could instead use the Old Bergen location, about a half-mile away from the HUB or the branch at the Hudson Mall, about a mile away.