Powell defends Fed renovation amid Trump criticism

Federal Reserve Chair Jerome Powell pushed back Thursday on GOP criticisms regarding renovation costs for two buildings in Washington, suggesting the upgrades are overdue.

“The project is large in scope because it involves the renovation of two historic buildings on the National Mall and that were first constructed in the 1930s," Powell wrote in a Thursday letter to Office of Management and Budget (OMB) Director Russell Vought. "While periodic work has been done to keep these buildings occupiable, neither building has seen a comprehensive renovation since they were first constructed."

“Both buildings were in need of significant structural repairs and other updates to make the buildings safe, healthy, and effective places to work, 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 suppression systems,” he added. 

Trump administration officials have hammered Powell in recent weeks over his refusal to lower interest rates amid tariff uncertainty. Vought, earlier this month, questioned the Fed chair's leadership while claiming the projects in question were mismanaged resulting in a tab “roughly $700 million over its initial cost.”

“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,” he wrote in a July 10 post on social platform X. 

“Now up to $2.5 billion, roughly $700 million over its initial cost,” the OMB director added. 

He also noted that the perceived discrepancies require "additional oversight" by his office and the National Capital Planning Commission (NCPC).

Powell countered the argument, saying the central bank already received feedback and approval from the NCPC on the project proposals submitted in 2020 and 2021.

“Although the Board is not generally subject to the direction of NCPC with respect to its building projects, we voluntarily collaborated with the NCPC and benefitted from robust and collaborative engagement with the commission in earlier stages of the project,” he wrote in his letter to Vought.

“The project is proceeding in accordance with the plan that the NCPC approved in September 2021. Since the plan's approval by the NCPC, the Board has made a small number of design changes to scale back or eliminate certain elements and has added no new elements," the Fed chief continued. "These changes were intended to simplify construction and reduce the likelihood of further delays and cost increases."

The back-and-forth comes as President Trump has threatened to "soon" fire Powell over his refusal to lower interest rates, with the idea floated that he could replace him with Treasury Secretary Scott Bessent.

However, some lawmakers have raised concerns with such a move, citing a potential impact on the markets.

“I do not believe a president, any president, has the authority to fire the Federal Reserve chair,” said Sen. John Kennedy (R-La.), a member of the Senate Banking Committee, which has jurisdiction over the Fed.

“I believe strongly in the independence of the Federal Reserve. Some countries in the world don’t have independent central banks," he continued. "Ask Turkey how that’s been working out for them. At one point Turkey had inflation at 30 percent."

Sen. Thom Tillis (R-N.C.), another member of the Banking Committee, has also warned that firing Powell would send a “shock wave” through the economy.

“It would be a colossal mistake,” he said.