NJ Banks Should Get Escrow Business in State Lawsuit Settlements

By Vin Gopal

Assemblywomen Luanne Peterpaul & Margie Donlon and State Senator Vin Gopal

The State Legislature must address the state’s financial difficulties and the need to keep taxes down every possible way we can. Right now, New Jersey has an historic opportunity to ensure that the proceeds from state lawsuit settlements generate the greatest possible value for residents, businesses, and communities.

One of the ways we can do this is by keeping these settlement funds, or at least some of them, within New Jersey’s banking system and administering them through a transparent framework. That would create an opportunity for New Jersey to multiply the economic impact of holding escrow funds for lawsuit settlements in New Jersey-based banks while maintaining the highest standards of accountability and oversight.

Currently, most state settlement agreements allow for both the defendant and the plaintiff to set up an Escrow Account with a mutually agreed upon bank. Often defendants and their lawyers, not the state, appoint large global banks such as JP Morgan, Wells Fargo, or German-based Deutsche Bank, which was recently selected as escrow agent for the 3M settlement in July 2025.

That’s why we are proposing legislation that requires New Jersey-based banks with the product capabilities, experience and size, be appointed Escrow Agent for pending and future settlements.

Why does this matter?

More deposits in local banks mean an increase in their ability to lend locally for affordable housing, community needs, small businesses, and regional companies. Larger banks doing business nationally and internationally may loan the money out of state if it is to their advantage. The legislation we are proposing lets New Jersey banks compete where some of these big banks that have an unfair advantage because of their heft and relationships.

We believe the largest prudent percentage of the escrow funds for pending and future settlements, at least 50 percent, should be held in qualified New Jersey banks that have the expertise to provide the necessary escrow services. This will ensure that New Jersey, not just out-of-state financial institutions, captures the financial, social, and economic benefits of its own settlements.

For example, the Chemours Company, DuPont de Nemours, Inc., and Corteva, Inc. announced a settlement last year to comprehensively resolve all pending environmental and other claims by the State of New Jersey, including claims related to PFAS (forever chemicals). The $875 million settlement calls for annual payments by wire transfer to an escrow account with a mutually agreed-upon bank over the next 24 years.

Another example, the NJ Department of Environmental Protection has reached a $49.5 million settlement with Pechiney Plastics Packaging Inc., Bristol-Myers Squibb Co., Citigroup Inc. and other companies. Bristol Myers Squibb would pay $1,279,000 and Pechiney Plastic Packaging would pay the remaining fines by wire transfer into an escrow account.

These are big numbers. Why shouldn’t New Jersey-based banks get the lion’s share of this escrow account business?

Under our proposal, larger banks would not be excluded from getting some of the work, rather it ensures New Jersey banks participate in a fair percentage.

Our proposal would make the legislative change necessary to ensure that New Jersey state settlement proceeds generate the greatest possible value for its residents, businesses, and communities. The proposal is pro-New Jersey, pro-business and pro-jobs.

As we address the challenges to the state 2027 budget over the next month, my Legislative District 11 partners, Assemblywomen Margie Donlon and Luanne Peterpaul, and I will continue to explore innovative ways to make our state more affordable and fairer for all residents and businesses. We are always happy to listen to your ideas and invite residents to reach out to us at at SenGopal@njleg.org, AswDonlon@njleg.org, AswPeterpaul@njleg.org, or (732) 704-3808.