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Illustration: Aïda Amer/Axios

Now in control of Congress, Democrats are looking to give the U.S. financial system a progressive overhaul, incoming Senate Banking Chairman Sherrod Brown said Friday. It will be a tall task.

What we're hearing: "This committee in the past has been about Wall Street," Brown told reporters. "As chair I’m going to make it about workers and their families and what matters to their lives."

  • "Under Senate Republicans we’ve had government intervention to put its thumb on the scale for corporations at every turn and their wealthy friends, and the free market for everyone else.
  • "We’re going to change that."

Why you'll hear about this again: Atop Brown's ambitious priority list — which also features sweeping action on climate change, housing assistance and racial justice — is a push for public banking that would create a system of government-administered bank accounts that are not profit-driven.

  • The accounts would be similar to those provided by the Federal Reserve for large banking institutions.

Watch this space: Democrats also will be looking to rewire the Fed's role in helping to underpin the economy in times of economic stress to perform monetary policy from the bottom up rather than the top down to reduce the inequality that has been a hallmark of the coronavirus recession.

  • Brown has been in consistent contact with expected incoming Treasury Secretary Janet Yellen, he told Axios, noting that she has "become a mentor and adviser."

Yes, but: Much of this agenda has already been proposed and rejected by congressional Republicans and may be a tough sell to moderate Democrats who will be needed with a slim majority in the House and a 50-50 Senate.

  • Further, representatives from the banking sector, who all declined to comment on the record, were generally dubious of Brown's ideas.
  • Many warned that putting more responsibilities for banking in government hands — or overburdening the Fed with them — could lead to a less efficient system that did more harm than good.

Be smart: "There are historical instances of one-tier systems where the central bank did everything," BIS general manager Agustín Carstens said in June 2019 speech.

  • "In the socialist economies before the fall of the Berlin Wall, the central bank was also the commercial bank. But we cannot hold up that system as an example of better customer service."
  • "Less dramatically, publicly owned banks in many economies are hardly paragons of efficient allocation of funds or of good service."

State of play: Still, the plan is already in motion.

  • Reps. Alexandria Ocasio-Cortez and Rashida Tlaib put forth similar legislation for public banking last year and Brown says he and House Financial Services Chair Maxine Waters will be "coordinating directly, consulting frequently, and I would be shocked if we aren’t going in the same direction on damn near everything."

The bottom line: "The unifying theme for progressive Democrats is that they want to flatten pricing. They want wealthier customers to really be subsidizing less wealthy people who are accessing financial services," Jaret Seiberg, financial services and housing policy analyst for Cowen Washington Research Group, said on the "Voices of Wall Street" podcast in October.

  • Additionally, "they want the government to be financing more financial services."

Go deeper

Dion Rabouin, author of Markets
Jan 29, 2021 - Economy & Business

Making sense of the GameStop circus

Illustration: Aïda Amer/Axios

It's probably fair to say that Thursday was one of the crazier days in the history of financial news.

What happened: Robinhood, which has become synonymous with retail trading and the parabolic rise of stocks like GameStop and Tesla, shut down the ability of its users to buy (but not to sell) some of the platform's most popular names.

Updated Jan 28, 2021 - Axios Events

Watch: The future of financial inclusion

On Thursday, January 28, Axios' Dan Primack hosted a conversation on financial inclusion in the global economy, featuring Sen. Tina Smith (D-Minn.) and Institute for Women's Policy Research CEO C. Nicole Mason.

Sen. Tina Smith discussed the impact of the COVID-19 pandemic, uneven access to technology, and the role of systemic racism in growing economic inequities.

  • On what she thinks will be the most effective way to move the needle on financial equity: "Raising the minimum wage to $15 an hour...is one of the biggest things that we can do to address the wage inequality and savings potential for people of color in this country."
  • On Democrats' economic goals going into the new administration: "Addressing this kind of discrimination in financial services and creating more opportunities for people of color to get access to banking services, loans, access to capital is a big priority for us as [Democrats] move into the majority."

C. Nicole Mason discussed how job losses during the pandemic reflect existing gender and racial inequities, as well as the disproportionate burden of childcare on women.

  • On the scale of job losses for women: "Since the start of the pandemic, women have exited the workforce at four times the rate of men, so about 11 million women since the start of the pandemic have lost their jobs or exited the workforce."
  • On childcare as an equity issue: "With the pandemic, the burden [of childcare] doubled and tripled...We need a national childcare infrastructure where we keep up childcare as a public good and people can access it regardless of their income or ability."

Axios co-founder and CEO Jim VandeHei hosted a View from the Top segment with Executive Vice President and Chief Executive Officer of Europe, Visa Charlotte Hogg, who discussed digital and financial inclusion as a component of economic equity during the pandemic.

  • "We have to think about inclusion as being digitally, financially included. [From] small businesses who are increasingly important in driving towards a more inclusive recovery and who need to be digitally enabled to participate in that, [to] consumers who for various reasons may be vulnerable."

Thank you Visa for sponsoring this event.

Pope Francis denounces European governments' migrant response

Pope Francis adresses refugees at the Reception and Identification Centre (RIC) in Mytilene on the island of Lesbos on Sunday. Photo: Louisa Gouliamaki/Pool/AFP via Getty Images

Pope Francis criticized European countries' response to migrants and asylum seekers during his visit to a refugee camp on the Greek island of Lesbos Sunday.

Why it matters: The pope said "migration is a humanitarian crisis that concerns everyone," but little had changed in the global response to displaced peoples since his first visit to Lesbos five years ago, per a transcript of his remarks. "Human lives, real people, are at stake. ... let us stop this shipwreck of civilization!"

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