Federal Reserve Chair Jerome Powell responded in a July 17 letter to a senior Trump administration official who last week accused the leader of the nation’s central bank of mismanaging its $2.5 billion Washington headquarters renovation project.
He suggested that Powell may have broken the law by not complying with government oversight regulations related to the facility’s ongoing $2.5 billion renovation.
“The President is extremely troubled by your management of the Federal Reserve System,” Vought wrote. “Instead of attempting to right the Fed’s fiscal ship, you have plowed ahead with an ostentatious overhaul of your Washington D.C. headquarters.”
The OMB director gave Powell seven business days to respond to the letter and said construction could be halted immediately.
The National Capital Planning Act requires construction projects for the federal government to be approved by the National Capital Planning Commission.
“Major systems in both buildings were obsolete and in need of replacement for health and safety reasons,” the website states. “They included plumbing, electrical, fire suppression, water connections, and HVAC. Some systems dated to the construction of the buildings in the 1930s.”
The central bank also denied that the plans include new water features, VIP elevators, and terrace rooftop gardens.
He said the project and its financing have always received careful oversight from the Federal Reserve’s board and its independent inspector general. Powell said the Fed is “not generally subject to the direction” of the National Capital Planning Commission, but that it “voluntarily collaborated” with the commission in the “earlier stages of the project.”
“We have taken great care to ensure the project is carefully overseen since it was first approved by the Board in 2017,” Powell wrote.
Powell added that upgrades that were included in the official planning documents approved by the commission in 2021 were later removed, but said the Fed did not have to submit new paperwork because the changes weren’t “substantial.”
He said the changes were instead “intended to simplify construction and reduce the likelihood of further delays and cost increases.”
“The Board does not regard any of these changes as warranting further review,” Powell wrote.
The Fed chair said both buildings needed “significant structural repairs and other updates to make the buildings safe, healthy, and effective places to work.”
Trump, Powell Diverge on Interest Rates
There have been weeks of back and forth between the White House and the Fed chair, with President Donald Trump routinely criticizing Powell for not lowering interest rates.Powell has said the lack of certainty over tariff-driven inflation has made the Fed delay lowering interest rates for now, since price impacts are expected to manifest weeks or months after tariffs settle into the markets.
The president wants lower interest rates to make borrowing less expensive, which juices the economy, and since interest payments on the national debt have exceeded $900 billion. This has led to uncertainty over whether Trump may make the unprecedented decision to fire Powell before his term ends next May.
The Trump administration has not outright accused Powell of fraud for his management of the renovation project.
However, Trump, Vought, and National Economic Council Director Kevin Hassett have discussed the construction endeavor when criticizing Powell.
During a July 13 interview with ABC News, Hassett was asked about Vought’s criticism of the renovation project and whether it was grounds for Trump to fire Powell.
“This is the most expensive project in D.C. history, $2.5 billion with a $700 million cost overrun,” Hassett said. “To put that in perspective, the cost overrun for this Federal Reserve project is about the same size as the second biggest building overhaul in American history, which was the FBI building. And so, the Fed has a lot to answer for.”
