Fed explains its mega-renovation project as Trump pressures Powell
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Construction on the Marriner S. Eccles Federal Reserve building in Washington, D.C., last month. Photo: Al Drago/Bloomberg via Getty Images
The Federal Reserve has offered key details of its expensive headquarters renovation project, which the Trump administration has invoked as potential grounds to try to fire Fed chair Jerome Powell.
Why it matters: The White House appears to be using cost overruns in the $2.5 billion project on the National Mall to build a case for dismissing Powell for cause, amid the president's unheeded demands for the Fed to cut interest rates.
Zoom out: The Fed asserts, in a new posting on its website Sunday evening, that many of the costs of the project are necessary to bring two nearly century-old buildings up to modern standards, and do not reflect exorbitant public expenditures.
- It further asserts that the Fed is not subject to direction from a Washington planning organization that the Trump administration appears to be seeking to use to pressure the central bank.
- It all is occurring against a backdrop of the president's open rage that Powell and the Fed are leaving interest rates steady rather than cutting them.
Driving the news: Top Trump economist Kevin Hassett suggested earlier on Sunday that the president might consider firing Powell over the building issue.
- Trump added fuel to the fire later.
- "Jerome Powell has been very bad for our country. We should have the lowest interest rates on Earth and we don't," he told reporters on Sunday, before adding: "And yet he is spending $2.5 billion rebuilding the Federal Reserve building."
- "He should quit," Trump said.
Catch up quick: The expanded FAQs — an earlier version of which were posted late Friday — address a key issue raised by Russell Vought, director of the Office of Management and Budget, in a letter sent to the Fed last week.
- Vought, who requested a response by the end of this week, is trying to gauge whether the Fed's renovations are out of step with plans approved by the National Capital Planning Commission (NCPC) in 2021 — and thus a violation of a law governing National Mall construction.
- Vought appears to be trying to catch Powell in a legal vise, suggesting that either he lied to Congress by stating last month that several high-end aspects of the projects' plans had been canceled, or that the Fed violated the National Capital Planning Act by changing those features without NCPC approval.
What they're saying: "[T]he Board generally is not subject to direction from the NCPC on its building projects," the Fed says in the update posted on Sunday.
- It adds that even if the Fed did answer to the NCPC, only substantial changes to design or project plans are required to be reviewed by the commission.
- The Fed said it did not believe the changes it made to its project would require "further review" from plans approved in 2021.
The intrigue: Powell told Congress last month that some controversial, high-end renovations — a private elevator leading to a private dining room and a rooftop gardens with beehives — included in the Republican attacks were taken out of context or were not part of the Fed's current plan.
- "Beginning in 2023, the Board made a small number of design changes to remove certain elements and added no new elements," the Fed said in its posted response.
- The Fed said that "rooftop spaces and new water features on the building grounds, were scaled back or eliminated as the project moved forward."
- It added that the Fed canceled a separate planned renovation of another building "in light of higher-than-expected construction costs."
The bottom line: In its FAQ, the Fed states that the project "will reduce costs over time by allowing the Board to consolidate most of its operations.
- "It involves a complete overhaul and modernization that preserves two historic buildings that have not been comprehensively renovated since their construction in the 1930s."
