Powell defends $2.5 billion Fed renovation in a point-by-point response to the Trump administration

CNN

17 hours ago

Federal Reserve Chair Jerome Powell responded by letter Thursday to a senior Trump administration official who accused the head of the central bank of mismanaging an 'ostentatious overhaul' of its Washington, DC, headquarters.
Russell Vought, director of the Office of Management and Budget, suggested in a social media post last week that Powell had broken the law by failing to comply with government oversight regulations related to the Fed's ongoing $2.5 billion renovation, which includes the historic marble Marriner S. Eccles Building on the National Mall.
'The President is extremely troubled by your management of the Federal Reserve System,' Vought wrote in the letter he posted to social media last Thursday. 'Instead of attempting to right the Fed's fiscal ship, you have plowed ahead with an ostentatious overhaul of your Washington D.C. headquarters.'
He gave Powell 'seven business days' to respond to the July 10 letter.
Powell said in his response late Thursday that the renovation and its financing have always had careful oversight from the central bank's board and its own watchdog. He added that the Fed is 'not generally subject to the direction' of the National Capital Planning Commission, a body that oversees construction projects for the federal government. Powell said the Fed voluntarily opted to collaborate with the NCPC.
'We have taken great care to ensure the project is carefully overseen since it was first approved by the Board in 2017,' Powell wrote.
Additionally, Powell said upgrades that were reflected in official planning documents submitted to the NCPC in 2021 were later taken out, but the Fed didn't need to resubmit paperwork because they weren't 'substantial.'
The changes were instead 'intended to simplify construction and reduce the likelihood of further delays and cost increases,' Powell wrote. 'The Board does not regard any of these changes as warranting further review.'
In his letter, Powell noted that both buildings needed 'significant structural repairs and other updates… including the removal of asbestos and lead contamination, complete replacement of antiquated systems such as electrical, plumbing, heating, ventilation, and air conditioning, as well as fire detection and -2- suppression systems.'
The letter is similar to a FAQ posted on the Fed's website last week.
Vought is one of several officials in the Trump administration to criticize the rising costs of repair and renovation work on two major buildings in the Fed complex, seemingly as a pretext to justify firing the Fed chair.
Powell, who cannot be removed except 'for cause,' 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.
'When you spend $2.5 billion on, really, a renovation, I think it's really disgraceful,' Trump told reporters this week, adding that he believes it is 'sort of' a fireable offense. He clarified on Wednesday morning that it was 'highly unlikely' that he would fire Powell — 'unless he has to leave for fraud.'
Last month, Powell was asked about the central bank's renovation plans during his biannual testimony before Congress and pushed back on the assertion that he has overlooked the project's steep price tag to indulge in upscale design features.
'There's no VPI [sic] dining room. There's no new marble. We took down the old marble while putting it back up,' Powell said. 'There are no new water features. There's no beehives and there's no roof terrace gardens.'
Vought's July 10 letter accused Powell of lying in his testimony. In his response Thursday, Powell clarified that some features, including new water features, had been eliminated in the years since the initial design proposal.
'These changes were intended to simplify construction and reduce the likelihood of further delays and cost increases,' Powell wrote.
He clarified that while there are no 'roof terrace gardens,' a parking lot is being constructed under the building, meaning the ground-level front lawn will serve as a 'roof' for the parking structure. Marble sourced from Georgia would be used in places where the original marble structure was damaged, he said.
Still, the project's cost has increased compared to earlier plans, which estimated it would cost $1.9 billion.
A 2023 Fed budget document attributed some of the additional cost to 'significant increases in raw materials… higher labor costs, and changes in construction schedule expectations which lengthen use of leased space.'
The Fed has previously said materials and equipment for the project have been sourced from 32 states and Washington, D.C.
This story has been updated with additional developments.