A Trump administration official is demanding answers from Federal Reserve Chair Jerome Powell over the central bank’s renovations project amid the president’s pressure on the Fed chair to cut interest rates.
Office of Management and Budget (OMB) Director Russell Vought sent a letter to Powell on Thursday saying that President Donald Trump is “extremely troubled by your management of the Federal Reserve System.”
Vought wrote that the Fed has “plowed ahead with an ostentatious overhaul” of the central bank’s headquarters and added, “Cost overruns aside (about $700 million and counting), the plans for this project called for rooftop terrace gardens, VIP dining rooms and elevators, water features, premium marble and much more.”
He went on to suggest that Powell’s recent testimony before Congress “raises serious questions about the project’s compliance with the National Capital Planning Act, which requires that projects like the Fed headquarters renovation be approved by the National Capital Planning Commission.”
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“Although minor deviations from approved plans may be inevitable, your testimony appears to reveal that the project is out of compliance with the approved plan with regard to major design elements,” Vought said. He then posed a series of questions about the status of the Fed’s renovation plans with respect to those submitted to the NCPC and requested a response within seven business days.
At a recent Senate Banking Committee hearing on monetary policy, Chairman Tim Scott, R-S.C., criticized the renovation project, citing the design elements that are the focus of Vought’s letter, saying in his opening remarks the renovations “feel more like they belong in the Palace of Versailles than a public institution.”
Powell was later asked about the project during the hearing and said the Fed “will provide a much more detailed response” and that “we do take seriously our responsibility as stewards of the public’s money, and the other thing I would start with is no one wants to do a major renovation of a historic building during their term in office. Much prefer to leave that to your successors, and this is a great example why – let alone two historic buildings.”
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“I would also say that the media reports that you accurately quoted – they’re misleading and inaccurate in many, many respects,” Powell said. “I would just point to there’s no VIP dining room, there’s no new marble – we took down the old marble, we’re putting it back up, we’ll have to use new marble where some of the old marble broke.”
“There’s no special elevators, there’s just old elevators that have been there. There are no new water features, there’s no beehives, and there’s no roof terrace gardens,” Powell said. “All of the sort of inflammatory things that the media carried are either not in the current plan or just inaccurate.”
“Notwithstanding that, the cost overruns are what they are,” Powell started to say before Scott cut him off, citing the panel’s five-minute rule for each senator’s questioning. The Senate Banking Committee said the Fed is organizing a staff briefing on the subject.
Trump has repeatedly threatened to fire Powell, who he appointed to the role in 2017, over the central bank not cutting interest rates according to his demands.
However, the Fed is an independent agency and the president lacks the legal authority to do so except in the case of a removal for cause. Powell’s critics have suggested the allegations he misled Congress could be grounds for removal.
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Trump was asked this week during a recent Cabinet meeting that was open to the press about allegations Powell lied to Congress, when he again called for Powell to step down so that he could replace him with a chair who would cut interest rates.
“Well, then he should resign immediately. We should get somebody in there that’s going to lower interest rates,” Trump replied. “It’s OK with me, I think he’s terrible.”
The Federal Reserve’s renovation of its two main office buildings was initially estimated to cost $1.9 billion in 2019, though the estimated cost rose to nearly $2.5 billion due to “significant increases” in the cost of wood, steel, cement and other construction materials per budget documents The Wall Street Journal cited in a 2023 report on the subject.
Federal law governing the Federal Reserve System gives the central bank the authority to build facilities for its use, as well as to maintain, enlarge or remodel those facilities – and also gives the Fed the sole control of those buildings and the space inside.
Funding used in the Fed’s operations is derived from the interest it generates managing the money supply, which allows it to be essentially self-funded without relying on annual appropriations from Congress like other agencies.
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