Gov. Phil Murphy believes the current banking crisis will have effects on U.S. monetary policy and the economy this year.
“My gut tells me this lessens the likelihood of the (Federal Reserve) not raising rates at all next week or lessen the scale of those rate increases,” Murphy said March 13 at an unrelated event held in Newark. “It also increases the chance the nation and, we are not immune to this, a tougher economy in the six to 12 months ahead. I am hoping for the best but prepared for the worst.”
Murphy’s comments were the first remarks the day after the state announced a $35 million support package for New Jersey entrepreneurs affected by the Silicon Valley Bank (SVB) crisis.
“Ensuring the success of New Jersey’s businesses is a vital component in building a stronger and fairer New Jersey economy,” said Murphy. “Now, more than ever, it is essential that our state supports companies that contribute to our economy, innovation ecosystem, and the dynamism of our cities….we are the first state to put such supports forward. I’m proud that can lead the pack in doing this.
The New Jersey Economic Development Authority (NJEDA) will open a series of programs, including NJEDA’s Angel Match Program. Murphy Administration officials said the programs will provide necessary financial support to those experiencing liquidity challenges in the aftermath of the SVB collapse. Funding opportunities will be designed to help companies meet payroll, pay rent, and continue day-to-day operations.
The SVB Crisis
The SVB Crisis began March 8 as it said it needed to raise $2.25 billion to shore up its balance sheet, with federal regulators shuttering the bank March 10, according to CNBC. Regulators seized its deposits as well. The shutdown is considered the largest U.S. banking failure since the 2008 financial crisis, and the second largest in U.S. history.
President Joe Biden said the Americans can be “rest assured” his administration is acting to ease uncertainties about the banking system, with a focus on protecting U.S. workers and small businesses. Biden said “the management of these banks will be fired. If the bank is taken over by FDIC, the people running the bank should not work there anymore.”
“During the Obama-Biden administration, we put in place tough requirements on banks like Silicon Valley Bank and Signature Bank, including the Dodd-Frank Law, to make sure the crisis we saw in 2008 would not happen again,” said Biden this morning. “Unfortunately, the last administration rolled back some of these requirements. I’m going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely that this kind of bank failure will happen again and to protect American jobs and small businesses.”
Angel Match Program
As for actions in the Garden States, Murphy said the programs being offered for New Jersey entrepreneurs impacted by the SVB collapse are aimed “to keep residents employed and support companies that are vital to our innovation ecosystem….Our goal is to ensure that every New Jersey company caught up in this mess is able to keep the lights on, meet payroll, pay rent, and continue their day-to-day operations.”
The Angel Match Program will be funded with $20 million and will aim to help early-stage businesses with bridge funding gaps as they scale operations and refine products.
The program will match up to $500,000 of direct investments, which can be used for product development, marketing, research and development, and other working capital needs. The Angel Match Program went live March 13.
The New Jersey Entrepreneur Support Program will be funded with $5 million to offer a guarantee to support repayment of an investor loan advanced for working capital purchases. The program was designed to encourage investors to support businesses within their portfolios during this liquidity crisis when investor support is crucial.
NJEDA will guarantee up to 80% for an eligible new loan or convertible note by a qualified investor into a New Jersey qualified business, not to exceed $200,000 per company. The New Jersey Entrepreneur Support Program will go live March 15.
Murphy said the $35 million allotment was just a start and that he would not be surprised if NJEDA has a meeting in the next couple of days to assess if more is needed.
Phil Murphy chased money for Goldman Sachs before he bought the governor’s office; he and his ilk profit too much off the penury and suffering of the middle class and poor; banks must be regulated (didn’t the pols learn anything from 2008 and 2009 crash ?). And the 1% like Phil Murphy must be taxed like they were in the 1950s.
“Gov. Phil Murphy believes the current banking crisis will have effects on U.S …” And again he’s absolutely rite!! AND; If’n thar’s any Bailout’s here, then let it come from All their Corporate’ own investment bank’s & from their many other Affiliates!! Now See; How easy is that!! From that Ole’ Adage,”Let the Ones whom Play, Pay.”!! It’s like this here, when people Fail to Pay Mortgage’s, then they get Fornclosed on by these Bank’s!! So; Let them too beware!! Cause, The Eye’s of America are upon you..//