Photo: Mark Makela/Getty Images

From local governments to sports leagues, a host of institutions have started taking real action to address systemic inequality in the wake of nationwide protests over police brutality and racism — and the Federal Reserve may not be immune.

Driving the news: Chair Jerome Powell chafed at a question during the Fed's latest policy meeting about the way the central bank's policies have contributed to wealth inequality — a longtime grievance of politicians and market watchers, but a subject rarely broached at Fed press conferences.

  • If the Fed pulled back its support for the economy because it was worried about its impact on equity prices, "What would happen to the people that we’re actually, legally supposed to be serving?" Powell huffed.

The backdrop: In his time as Fed chair, Powell has worked to change the image of the Federal Reserve from a clandestine vessel of Wall Street to a force to uplift all Americans.

  • He's made the Fed more visible with more press conferences and media appearances, started the national "Fed Listens" tour and created the first-ever Main Street Lending Program.

Yes, but: The striking dissonance between the fortunes of Wall Street and Main Street over the past two months has been a clear reminder of just how much the Fed has helped big banks and wealthy investors and how little it has provided directly to average Americans.

That could change. The Fed is slowly pushing the envelope on its special purpose vehicles so that they serve more functions that would typically require funding from elected officials.

  • The Fed's Main Street Lending Program and its Municipal Liquidity Facility will allow the Fed to get money to cities and states as well as medium-sized businesses, and the Fed recently has expanded eligibility for both.
  • That money can help avert layoffs for local government workers like teachers and firefighters and provide a lifeline to struggling business owners.

What we're hearing: "They’re not necessarily done yet," Vincent Reinhart, chief economist at Mellon who previously spent 20 years at the Fed, tells Axios.

  • The Fed could use the Main Street facility or a similar special purpose vehicle to get money to working families or small business owners through a series of packaged or collateralized loans from banks and get the same favorable lending terms and features.
  • "That’s not out of the question," Reinhart says. "They may go down that road."

A radical change at the Fed spurred by civil rights upheaval and designed to battle systemic inequality would not be unprecedented.

  • The Fed's dual mandate of price stability and full employment (the only central bank dual mandate on earth) is in part the result of Coretta Scott King's work on passing the landmark 1978 Full Employment and Balanced Growth Act, also known as the Humphrey-Hawkins Act.

What it means: The Humphrey-Hawkins Act "clarified the role that monetary policy can play in improving the employment picture and required the Fed to weigh the impact that its interest rate policy would have on the job market," a policy paper from the Center for Economic and Policy Research notes.

Go deeper: Coretta Scott King and the Fed's full employment mandate

Go deeper

The coronavirus recovery may be W-shaped

Illustration: Sarah Grillo/Axios

U.S. economic data has shown improvement in recent reports, starting with May's nonfarm payrolls report and including new home sales, various Fed manufacturing indexes and retail sales, all showing better-than-expected rebounds.

Why it matters: The momentum could reverse quickly if the coronavirus pandemic picks back up and policymakers drag their feet on renewing stimulus measures, experts say.

Larry Kudlow fights statistics on black-white wealth gap

Photo: "Axios on HBO"

White House economic adviser Larry Kudlow says he believes the wealth gap between black and white people has narrowed, and questioned statistics that show the gap now is as wide as it was in the 1960s.

Why it matters: In an interview with "Axios on HBO," President Trump's top economic adviser told Axios' Jonathan Swan that different measures of wealth suggest there has been progress — meaning the advice Trump is getting is out of sync with the conclusion of recent studies.

Updated Jun 19, 2020 - Axios Events

Watch: A conversation to commemorate Juneteenth

On Friday, June 19, Axios' markets reporter Dion Rabouin hosted a discussion on the history of Juneteenth and the current nationwide protests against police violence, featuring former Obama advisor Valerie Jarrett, Houston Mayor Sylvester Turner, BET founder Robert Johnson and activist DeRay Mckesson.

Robert Johnson discussed the history of Juneteenth and his advocacy around reparations.

  • On reparations and race relations: "Reparations is a demand on the part of African-Americans that we be made whole for the wealth that was stolen from slaves over a 300 year period...My position is that white America should recognize the debt and black Americans should be proud to accept the atonement."
  • How slavery laid the foundation for racial income inequality: "It is no secret that the net income of a white family is $170,000 on average. The net income of a black family is $17,000. That 10-fold disparity can be traced directly back to the wealth transfer that started with slave labor."

Mayor Sylvester Turner focused on policy decisions around policing in Houston, and responded to calls for defunding the police.

  • On his decision to increase police funding: "We need policing. [People] are asking for good policing. They're asking for a policing system that's accountable. They're also going beyond that...They want to be investing in communities and neighborhoods that have been overlooked and under invested in for decades."

Valerie Jarrett discussed the ongoing demonstrations around the country and the upcoming election in November.

  • On the importance of civil rights during this political moment: "We need a robust civil rights deciding how you want to vote, you should say, are the people who are in office actually worrying about the civil rights of all Americans and not just some Americans?"
  • On how to make cultural progress: "It's not good enough to just say, 'Look, I'm not a racist.' What you have to say is: 'What am I going to do to help change our culture, to make it better?' There's something that we can all do individually. There's certainly something the business community can do."

DeRay Mckesson highlighted how the present moment invites people to reimagine the concept of safety.

  • "The question is not police, no police. The question is like, how do I stay safe and what does safety look like? The police are not the best answer to that. The police aren't the only answer to that. And the police shouldn't be the answer that we fund when we think of that question."

Thank you Bank of America for sponsoring this event.