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Photo: Axios screenshot

Rep. Ro Khanna (D-Calif.) laid out a few specific policies he and some of Congress' other leading progressives are likely to demand when the next U.S. Congress begins its term.

The big picture: Khanna wants Congress to deliver more direct aid to Americans in the form of $2,000 monthly checks and to provide $1 trillion over 10 years in loans and grants to small businesses but is also taking aim at the Fed, arguing that the central bank has gone astray of its original intent to help small businesses and community banks.

  • "It's a quirk of our system that the Fed has chosen only to lend to financial institutions or large corporations," Khanna told me during Axios' Recovery and Resilience After COVID-19 event Wednesday.
  • "They could easily distribute that money [to small businesses]. In my view, that was the original intention of the Fed and Congress should clarify that."

And it's not just a matter of chastising the Fed, Khanna says. "We need to give the Fed more explicit authority to [reexamine] how they have been lending and make sure lending isn't concentrated just to financial institutions and large corporations, that they're using their regional banks to be regional economic development banks considering rural and minority communities."

Why it matters: Khanna (D-Calif.) sits on the House budget committee and the committee on oversight and reform and is seen as something of a leading voice for progressive Democrats.

  • His view that the Fed needs to change the way it operates is one that is gaining traction among popular and powerful members of Congress.

Between the lines: Khanna's calls for the Fed to reorient its lending structure as a way to counter the trend of growing wealth inequality echoes San Francisco Fed president Mary Daly who in December called for the Fed to "think outside of the traditional banking box."

  • "This could mean developing firmer partnerships with Community Development Financial Institutions and other nonprofit or small-dollar lenders."

Why you'll hear about this again: "The concentration of capital is part of what has left communities behind," Khanna said.

Go deeper

Janet Yellen plays down debt, tax hike concerns in confirmation hearing

Treasury Secretary nominee Janet Yellen at an event in December. Photo: Alex Wong via Getty Images

Janet Yellen, Biden's pick to lead the Treasury Department, pushed back against two key concerns from Republican senators at her confirmation hearing on Tuesday: the country's debt and the incoming administration's plans to eventually raise taxes.

Driving the news: Yellen — who's expected to win confirmation — said spending big now will prevent the U.S. from having to dig out of a deeper hole later. She also said the Biden administration's priority right now is coronavirus relief, not raising taxes.

Dion Rabouin, author of Markets
30 mins ago - Economy & Business

First glimpse of the Biden market

Photo: Jonathan Ernst-Pool/Getty Images

Investors made clear what companies they think will be winners and which will be losers in President Joe Biden's economy on Wednesday, selling out of gun makers, pot purveyors, private prison operators and payday lenders, and buying up gambling, gaming, beer stocks and Big Tech.

What happened: Private prison operator CoreCivic and private prison REIT Geo fell by 7.8% and 4.1%, respectively, while marijuana ETF MJ dropped 2% and payday lenders World Acceptance and EZCorp each fell by more than 1%.

Mike Allen, author of AM
1 hour ago - Politics & Policy

Biden-Harris, Day 1: What mattered most

President Joe Biden and first lady Dr. Jill Biden arrive at the North Portico of the White House. Photo: Alex Brandon-Pool/Getty Images

The Axios experts help you sort significance from symbolism. Here are the six Day 1 actions by President Biden that matter most.

Driving the news: Today, on his first full day, Biden translates his promise of a stronger federal response to the pandemic into action — starting with 10 executive orders and other directives, Caitlin Owens writes.

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