The Federal Reserve on Thursday responded to the Trump administration’s inquiry into cost overruns in the central bank’s renovations of its Washington, D.C., headquarters amid its efforts to pressure the Fed into lowering interest rates.
The Fed’s renovations of its headquarters, the Marriner S. Eccles Building, and another building in the nation’s capital have experienced cost overruns, which pushed the estimated cost from about $1.9 billion before the COVID pandemic to $2.5 billion.
Trump allies have used the over-budget renovation project to open a new front in an effort to pressure Federal Reserve Chair Jerome Powell to cut interest rates. Last week, Office of Management and Budget (OMB) Director Russell Vought sent a letter to Powell asking about his testimony and the compliance of design elements with plans submitted to the National Capital Planning Commission (NCPC). It is also floated as a pretext to fire Powell for “cause.”
Powell responded Thursday, noting the Fed established a public website outlining the project, including its goals, cost drivers and specific features. That followed Powell’s testimony before the Senate Banking Committee last month, which critics suggested was misleading.
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The chairman noted that the Fed’s Board of Governors has overseen the project, while the central bank’s independent inspector general audited it in 2021. He also asked the IG to conduct a fresh review of the project this week.
“The project is large in scope because it involves the renovation of two historic buildings on the National Mall that were first constructed in the 1930s,” Powell explained. “Both buildings were in need of significant structural repairs and other updates to make the buildings safe, healthy and effective places to work, including the removal of asbestos and lead contamination, complete replacement of antiquated systems such as electrical, plumbing, heating, ventilation and air conditioning, as well as fire detection and suppression systems.”
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Under federal law, the central bank was granted authority over its buildings and their renovations, and Powell explained that the Fed “voluntarily submitted designs for the project and sought and received NCPC approval for designs in both 2020 and 2021.”
“Although the Board is not generally subject to the direction of NCPC with respect to its building projects, we voluntarily collaborated with the NCPC and benefitted from robust and collaborative engagement with the commission in earlier stages of the project,” he wrote.
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Powell also addressed specific questions raised by Vought in his letter, some of which were addressed on the project information page the Fed posted on its website.
He noted that, at the 1951 Constitution Avenue building, the ground-level front lawn is the roof of the underground parking garage, which was referred to as a “garden terrace” in one of the plans submitted in 2021. Other references to “vegetated roofs” are referring to green roofs used to manage stormwater runoff and increase building longevity at federal buildings based on General Services Administration guidance.
Powell said there “are no VIP dining rooms being constructed as part of the project” and that the Eccles building has “historic multi-use rooms on the 4th floor that are used as conference rooms and for mealtime meetings” that are “being renovated and preserved.”
Vought’s letter also inquired about VIP elevators, and Powell replied that there “are no special, private, or VIP elevators being constructed as part of the project.”
The chairman explained that both buildings were originally built with marble in their facades and stonework. The renovations salvaged the original marble to be reinstalled and will use domestic marble sourced from Georgia in areas where the original was damaged or necessary to comply with historic preservation guidelines.
Additionally, Powell noted that while initial designs included new water features at the Constitution Avenue building, those have been eliminated, while original fountains at the Eccles building are being restored.
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