The White House’s financial oversight has taken aim at Federal Reserve Chairman Jerome Powell regarding lavish upgrades to the central bank’s Washington, DC headquarters, suggesting that construction might need to be halted.
A letter acquired recently indicated that Russell T, the director of the Office of Management and Budget (OMB), is overseeing the renovation of the $2.5 billion Eccles building, which has already incurred a $700 million cost overrun, based on public records.
In April, it was revealed that the Fed was advocating for the renovation despite its growing financial losses. This drew criticism, with some likening central bank officials to French royalty aspiring to build a modern-day “Palais of Versailles.”
“The president is quite concerned about the management of the Federal Reserve,” Vought mentioned in his letter to Powell, noting that instead of correcting fiscal mismanagement, they opted for an extravagant overhaul of the headquarters.
This letter directly addressed Powell’s June 25 testimony to the Senate Banking Committee, in which he claimed the reports of the extravagant renovations were “misleading and inaccurate.”
Powell refuted claims of a VIP dining room, new marble features, or specialized elevators. “There are no new water features, no beehives, no roof terrace gardens,” he asserted during the hearing.
Contrarily, the OMB’s letter highlighted that the project indeed includes items like a rooftop terrace garden, a private dining area, elevators, and other high-end features.
In addition, the updated facility would provide an impressive 512 square feet of office space per employee.
Powell had previously described the 90-year-old Eccles building as “really unsafe,” insisting it required serious renovations that hadn’t been undertaken.
The previous work on the building included a roof replacement and system upgrades.
Vought’s letter claimed that the costly renovations might violate the National Capital Program Act (NCPA), which mandates federal developments in Washington to receive approval from the National Capital Planning Commission (NCPC).
Drawing from Powell’s statement, the letter implied that the project could deviate markedly from the NCPC’s previously approved plans.
“Your testimony suggests that the project has not adhered to key design elements approved,” Vought wrote.
This scenario could render the project outside the approved scope and, thereby, a violation of the NCPA, necessitating an immediate halt and new approvals from the NCPC.
Vought also described the renovations as being “a few digits” higher than comparable federal projects.
He requested details on whether the Fed had consulted the NCPC about any changes, along with a summary of communications with the commission regarding those adjustments.
“This administration takes this matter very seriously,” the letter concluded, urging a response from Powell within seven business days.
A Fed spokesperson refrained from further comment.
Coincidentally, the letter coincided with Trump’s criticism of Powell on his social media account, stating it’s “too late” for Powell to maintain his position at the central bank.
The president claimed that interest rates are “at least three points too high,” accusing Powell of compromising vital interest payments for the U.S. and asserting, “There’s no inflation. Companies are coming to America. Lower rates!”
Earlier this week, Trump intensified his verbal attacks on Powell, supporting investigations into whether he misled Congress about the $2.5 billion renovation of Fed headquarters.
“I’m fine. I think he’s terrible,” Trump commented to reporters at a White House cabinet meeting. “I call him ‘too late.’ He was quick to cut rates before the election, but now he’s lagging.”
The OMB reiterated that federal agencies are expected to consult the NCPC before embarking on such projects, citing OMB Circular A-11.
They requested confirmation from Powell that the renovations to the Federal Reserve align with plans previously approved by the NCPC.
The administration specifically inquired about details regarding the rooftop garden, private dining room, marble finishes, upgraded elevators, and water features.
In a statement, the Federal Reserve asserted that the renovation “consolidates most board staff into one campus, reduces off-site leases, and delivers modern, efficient workspaces for employees working on behalf of Americans.”
A report from early this year indicates that as of February, renovation costs could reach $2.4 billion, a jump from $1.9 billion two years ago.
This increase occurs as the Fed faces significant financial losses stemming from its monetary policies.
Though central banks generate revenue from bonds and associated services, profits have been elusive in recent years. Rising interest costs to combat inflation have severely impacted their financial standing.
The Fed claims it will manage these losses through accounting methods, ensuring that operational capabilities remain unaffected, but some lawmakers are scrutinizing the financial management’s framework.
