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In a bid to give its public attacks on Federal Reserve Chair Jerome Powell an official air, a top Trump administration official put accusations that Powell lied to Congress about an “ostentatious” $2.5 billion renovation of the Fed’s headquarters in writing Thursday.
Echoing recent accusations questioning Powell’s competence and integrity by FHFA Director Bill Pulte, Vice President J.D. Vance and the president himself, Office of Management and Budget Director Russell Vought posed 11 questions to Powell about the renovation project and gave him seven business days to answer.
“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.”
In publishing the letter on the social media site X, the OMB claimed Powell “slipped up” in his recent testimony to Congress, “and revealed he might also be violating the law. The Trump Administration is demanding answers, and we’re going to hold him accountable.”
As it has done when Powell was attacked in the past, the Federal Reserve Board — which operates independently from the executive branch — declined to comment.
The cost overruns of the project to overhaul the Fed’s main campus, anchored by the Marriner S. Eccles Federal Reserve Building, are no secret.
The Wall Street Journal ran a lengthy article in March 2023 detailing the “long-running project to overhaul three adjacent office buildings overlooking the National Mall into a state-of-the-art campus” serving “most of the 3,000 economists, lawyers and professionals who support the central bank’s” work.
The price tag for the project had swelled “to nearly $2.5 billion, up from an estimate of $1.9 billion in 2019 — an increase of about 34 percent,” the Journal reported at the time, due to “significant increases” in the cost of steel, cement, wood and other materials and design changes ordered by local planning officials.
Vought and other Trump administration officials have zeroed in on alleged features of the project to suggest taxpayer dollars are being wasted — such as a VIP dining room, Georgian white marble, water features, beehives and rooftop terrace gardens — detailed by The New York Post on April 27.
Powell’s June 25 testimony that the project does not include such features — made when he delivered the Fed’s Semiannual Monetary Policy Report to the Senate Banking Committee — are the basis of Pulte and Vought’s allegations that he lied to Congress.
Pulte, who heads Fannie Mae and Freddie Mac’s regulator, the Federal Housing Finance Agency, on July 2 called on Congress to investigate Powell for “political bias, and his deceptive Senate testimony, which is enough to be removed ‘for cause.’”
(The Federal Reserve Act of 1913 states that members of the Fed’s board of governors can only be removed before the end of their terms “for cause.”)
Vought suggested Thursday that if the ostentatious features are longer part of the project, then in that case the Fed may be out of compliance with the National Capital Planning Act, “which requires that projects like the Fed headquarters renovation be approved by the National Capital Planning Commission.”
Vought listed features he said were in the construction plan approved by the NCPC — including rooftop garden terraces, private dining rooms, marble features, a private elevator and water features — were still part of the project.
“Did you consult with NCPC in making any changes to the construction plan?” Vought asked Powell. “If so, please provide a summary of those communications, and whether the NCPC approved of any changes.”
The Trump administration has been frustrated that the Federal Reserve — which cut short-term interest rates by a full percentage point last year — has taken a cautious approach to additional rate cuts.
Powell has said policymakers need more time to assess the impacts of the Trump administration’s policies in areas including tariffs, immigration, taxes and regulation.
Although the Fed has direct control over short-term interest rates, mortgage rates are determined by investor demand for mortgage-backed securities (MBS), which fund most home loans. The last time the Fed cut rates, mortgage rates went up.
Powell was appointed Fed Chair by Trump in 2017 and reappointed by President Biden in 2022. His term is not set to end until May 2026, and he’s said he does not intend to step down before then.
Even after Powell is gone, the Trump administration’s attacks on him — and the person who is chosen as his successor — may create long lasting doubts about the Fed’s independence.
Trump could name a “shadow chair” as Powell’s replacement, and there would be “strong doubts about their integrity and what sort of ‘deal’ they have made to secure the position,” economist Dario Perkins wrote in a note Tuesday reported by CNBC.
“Suddenly all the talk is of the Fed ‘losing independence’ and of there being a new era of ‘fiscal dominance’ – not helped by the fact that Trump is explicitly linking his demand for lower rates to reducing debt-servicing costs,” Perkins said.
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