Cost of Fed building renovations called for review after White House criticism
WASHINGTON, DC — Federal Reserve Chairman Jerome Powell has requested an inspector general to review the cost of renovations to the central bank ’s headquarters , which White House officials have called “ostentatious.”
A spokesperson for the inspector general, an independent watchdog, confirmed the request and declined further comment. The request was first reported by Axios .
The Fed has been renovating two of its Washington office buildings for several years, with a current estimated cost of approximately $2.5 billion, $700 million more than originally estimated. The project was first approved by the Fed board in 2017.
Trump administration officials have pointed to the spending and some purported amenities in the renovated buildings to criticize Powell, whom the president has attacked for failing to cut interest rates.
Chairman Jerome Powell has grossly mismanaged the Fed. While continuing to run a deficit since FY23 (the first time in the Fed's history), the Fed is way over budget on the renovation of its headquarters.
Now up to $2.5 billion, roughly $700 million over its initial cost.… pic.twitter.com/lHK4cWlAvf
Russ Vought , the president's top budget adviser, said Thursday that President Donald Trump is "extremely concerned" about the "flashy renovation" and suggested it could be violating local building codes.
The letter represents a sharp escalation in the Trump administration's efforts to gain greater control over the Fed , an independent agency charged with pursuing stable prices and maximum employment. The central bank's independence is widely seen as crucial to achieving those goals.
Trump has repeatedly demanded that Powell cut interest rates , in part because he believes it will lower the government's borrowing costs.
In April, Trump threatened to fire Powell , though he later reversed himself after the stock market reacted sharply. The Supreme Court has since ruled that the president lacks the authority to remove the Fed chairman over a disagreement over interest rates.
The law governing the Fed says the institution's director can be fired "for cause," such as misconduct or neglect of duty. Powell's term ends in May 2026.
Vought's letter criticizes Powell's management of the Fed, suggesting the administration may be trying to build a case to remove him for cause.
“I still think it’s unlikely, but not impossible, that Trump will try to replace Powell before his term ends,” said Stephen Moore , a former Trump adviser and economist at the Heritage Foundation .
The letter also accuses the Fed of altering its construction plans without notifying a Washington planning commission , known as the National Capital Planning Commission , and potentially violating its rules. Trump recently appointed two close advisers to the commission.
Over the weekend, the Fed noted in a "frequently asked questions" post on its website about the construction project that it is "not subject to direction" from the commission and has only complied with its directives voluntarily. It also clarified that it is accountable to the Senate and the House of Representatives and is overseen by the independent inspector general, not the White House.
The Fed is not funded directly by taxpayer money and instead uses income from interest payments on its massive bond holdings and fees from banks to pay for its operations.
In the FAQ, the Fed explained that its higher project costs are due to rising costs for materials, labor, and equipment . Construction costs have generally risen in recent years as a result of the 2022-2023 inflation, the highest in four decades. The central bank also says it has discovered more asbestos than expected, and it has had to comply with height restrictions in Washington by building more underground, at a higher cost.
During a Senate hearing last month, Sen. Tim Scott , a South Carolina Republican and chairman of the banking committee, criticized the Fed for “lavish renovations” that he said included “rooftop terraces, custom elevators that open to VIP dining rooms, (and) white marble finishes.”
Powell, however, refuted that characterization: “There’s no VIP dining room. There’s no new marble. … There are no special elevators.” The Fed did change its construction plans in 2023, he added.
The Fed also clarified in its FAQs that the “garden terrace” mentioned in the 2021 planning documents is a “ground-level garden” above a parking garage that is used to “assist with stormwater management and increase building efficiency and roof longevity.”
Meanwhile, Trump attacked Powell again on Monday, saying she has been “terrible” and “doesn’t know what she’s doing.”
Powell has refrained from cutting interest rates, saying it's important to first see how Trump's tariffs affect inflation and economic growth.
The Fed's concern is that rate cuts could worsen inflation if its tariffs actually result in higher prices across the U.S. economy. There's also the possibility that tariffs could harm economic growth in ways that require rate cuts to limit job losses.
Trump and some of his officials have urged Powell to resign, although there is no indication that she will leave before her term ends in May.
“Absent revelations of related misconduct by the Fed chair—for which there is no evidence to date—that would lead to a collapse of support in the Senate, we are 100% confident Powell will not resign,” Krishna Guha , an analyst at investment bank Evercore ISI, wrote Monday.
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