Trump administration feud escalates over Powell's handling of Federal Reserve's refurbishment efforts
The Federal Reserve's $2.5 billion renovation of its Washington, D.C. headquarters, including the historic Marriner S. Eccles Building, has become a subject of controversy due to significant cost overruns. Initially estimated to cost about $1.9 billion before the COVID-19 pandemic, the expenses escalated to $2.5 billion amid the renovation process.
This costly overrun has been leveraged by Trump administration allies as a means to pressure Federal Reserve Chair Jerome Powell to lower interest rates. Specifically, Russell Vought, Director of the Office of Management and Budget (OMB), sent a letter to Powell questioning his testimony and whether the design elements complied with plans submitted to the National Capital Planning Commission (NCPC).
In response, Powell highlighted that the Federal Reserve Board of Governors supervises the project, and an independent federal inspector general audited it in 2021. Further, Powell announced a fresh review by the inspector general to ensure transparency. The Fed also created a public website detailing the project's objectives, costs, and features to address concerns about the renovation's management and expenditure.
However, Vought has accused Jerome Powell of mismanaging the renovation and failing to comply with government oversight regulations. Trump, too, has expressed his disapproval, stating that spending $2.5 billion on a renovation is "disgraceful."
In a letter posted to social media on Thursday, Powell responded to Vought's accusations. He stated that great care has been taken to ensure the project is carefully overseen since its approval in 2017. Powell also clarified that upgrades reflected in official planning documents submitted to the NCPC in 2021 were later removed, but the Fed didn't need to resubmit paperwork because they weren't "substantial."
Powell further stated that the Fed is not generally subject to the direction of the National Capital Planning Commission. He also emphasised that the renovation and its financing have always had careful oversight from the central bank's board and its own watchdog.
This controversy intertwines budget concerns with political pressure on the Federal Reserve's monetary policy decisions, reflecting a broader struggle over the central bank's independence and transparency. This is a developing story and will be updated.
Powell presides over the Fed's monetary policy committee that has been holding interest rates at current levels all year, contrary to President Donald Trump's wishes for lower borrowing costs.
- The cost escalation of the Federal Reserve's headquarters renovation has become a matter of debate in the realm of politics, as Trump administration allies like Russell Vought have used it to pressure Federal Reserve Chair Jerome Powell to lower interest rates.
- The economy, policy-and-legislation, and general news have been impacted by the ongoing controversy surrounding the Federal Reserve's $2.5 billion renovation, as it raises questions about the central bank's independence and transparency.
- Despite the controversy and criticism from political figures like Donald Trump and Russell Vought, Federal Reserve Chair Jerome Powell maintains that the renovation project has been carefully overseen and compliant with regulations, stating that the Fed is not subject to the direction of the National Capital Planning Commission.
