Why Trump is looking for 'fraud' in US Fed office renovation

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2 days ago

The Trump administration is planning a visit to the Federal Reserve's Washington headquarters this week to review its $2.5 billion renovation project, according to a report by Semafor on Monday citing White House Deputy Chief of Staff James Blair.
Senate Banking Committee Chair Tim Scott is also in discussions to join the visit, the report said, citing a source familiar with the plans.
According to Reuters, President Trump has increasingly scrutinised the renovation, implying—without offering evidence—that the project could involve fraud. He has floated the renovation as a possible justification for removing Federal Reserve Chair Jerome Powell, a move he has been pushing as the central bank resists cutting interest rates.
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According to Blair, Powell recently informed the administration that the renovation's design plans had changed from previous proposals. 'We just want to know whether or not that's true,' Blair said.
The White House did not respond to Reuters' request for comment outside of normal business hours. The Federal Reserve also declined to comment, referring inquiries back to the officials quoted by Semafor.
Last week, Powell addressed concerns from a Trump administration official regarding possible cost overruns, explaining that the large-scale renovation involves significant safety upgrades and the removal of hazardous materials.
The renovation, estimated to cost between $2.5 and $2.7 billion, covers two historic buildings at the Fed's D.C. headquarters. Trump and his allies have criticized the project, with his former budget director, Russ Vought, calling it 'ostentatious.'
According to reports from Bloomberg and The New York Times last week, administration officials called for an on-site inspection of the renovations. Vought stated that the White House is collaborating with the National Capital Planning Commission to examine the renovation's execution and escalating costs. He also confirmed discussions were ongoing to involve Republican lawmakers and potentially William J Pulte, director of the Federal Housing Finance Agency, in the tour.
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Trump has not directly accused anyone of wrongdoing, but he has strongly implied that financial misconduct could be a factor in the project. In public remarks, he said it was 'highly unlikely' that he would remove Powell, unless fraud was discovered. He added that 'it's possible there's fraud involved with the $2.5, $2.7 billion renovation,' raising eyebrows about his true motive for spotlighting the Fed's construction efforts.
Though presidents have limited power to fire a sitting Fed chair due to the central bank's independence, Trump has reportedly been privately discussing Powell's removal with allies, including circulating a draft termination letter. Legal experts argue that fraud could potentially justify such an action, though no evidence of it has been presented.
Powell defends the renovation
In response to mounting political pressure, Powell issued a formal letter to Vought defending the renovation. He stated that the Fed had followed proper procedures and approvals for the project, which involves buildings from the 1930s that require extensive structural repairs. Powell dismissed claims of extravagance, noting that no unnecessary amenities, such as private elevators or luxurious dining rooms, were included in the final design.
Powell further emphasised that the Fed had voluntarily worked with the National Capital Planning Commission during the planning phase, even though the central bank is not generally subject to its authority. His letter repeated much of the content already available on the Fed's website and reiterated testimony he had provided during a June 25 congressional hearing, which administration officials have criticised as misleading.
Inflation and cost overruns?
Fed Governor Christopher Waller added a practical perspective, suggesting that part of the cost increase stems from inflation and broader economic conditions. He argued that construction projects across the country have faced similar overruns due to unforeseen spikes in costs since 2017, when early estimates were likely drawn.
Despite Waller's explanation, Trump-aligned figures have maintained their aggressive posture. Pulte, one of Powell's vocal critics, has accused the chair of giving deceptive testimony about the renovations, though he has not detailed specific falsehoods. Meanwhile, Republican Representative Anna Paulina Luna announced on social media that she would refer Powell to the Justice Department for investigation over potential perjury—a move that carries symbolic weight but no legal mandate.
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A convenient political opening?
Observers have noted the timing of Trump's interest in the renovation project. The Fed has held interest rates steady throughout the year, seeking to balance inflation control with labour market stability. Trump has been frustrated with the Fed's resistance to cutting rates, which he sees as vital to sustaining economic momentum during his campaign.
Some believe the president is using the renovation controversy as a political lever to pressure Powell into lowering borrowing costs. Trump has openly lashed out at the Fed chair in the past, reviving old jabs such as calling Powell 'Too Late' and pushing his demand on social media for immediate rate cuts, citing economic indicators like a recent drop in jobless claims.
Inspections, politics and independence
Vought has made clear that the White House wants to send its officials into the Fed building to 'go over' the renovation. He said the president has substantial concerns over Powell's management and that the administration is working closely with Republican members of Congress to investigate the situation. While no formal legal action has yet been taken, the heightened scrutiny is part of a broader campaign to challenge Powell's authority.
Despite the push from the White House, Powell has remained firm. He noted that the changes to the renovation plan were made to streamline construction and avoid further delays or cost increases. The central bank has committed to transparency and accountability, but has also stressed its statutory independence from political interference.
Underlying motives remain clear
Ultimately, the controversy surrounding the Fed's renovation appears to serve multiple purposes for Trump. It provides a plausible excuse to question Powell's leadership without confronting the legal limitations of removing a Fed chair outright. At the same time, it reinforces Trump's longstanding narrative that the Federal Reserve is obstructing his economic agenda.
While the suggestion of fraud has not been substantiated with hard evidence, it remains a rhetorical tool in Trump's arsenal. By drawing attention to the costly renovation, the president is leveraging public suspicion and government oversight mechanisms in a bid to shape monetary policy from the outside—a move that risks clashing with the norms of central bank independence.
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As political tension over interest rates continues to mount, the Fed's construction site may become yet another battleground in the ongoing struggle between the executive branch and the nation's monetary authority.