Under fire by Trump over costs, Chair Powell seeks watchdog review of
Fed building overhaul
[July 15, 2025] By
CHRISTOPHER RUGABGER
WASHINGTON (AP) — Federal Reserve Chair Jerome Powell has asked an
inspector general to review the cost of the central bank's building
renovations that White House officials have attacked as “ostentatious.”
A spokesperson for the inspector general, an independent watchdog,
confirmed the request and declined further comment. The request was
previously reported by Axios.
The Fed has been renovating two of its office buildings in Washington
for several years at a current cost estimate of about $2.5 billion, $700
million more than originally expected. The project was first approved by
the Fed's governing board in 2017. Trump administration officials have
seized on the expense and some alleged amenities in the remodeled
buildings to extend their criticism of Powell, whom the president has
attacked for not reducing the Fed's short-term rate.
On Thursday, Russ Vought, the president's top budget advisor, said that
President Donald Trump is “extremely troubled" about the “ostentatious
overhaul" and suggested that it may be violating local building rules.
The letter represented a sharp escalation in the Trump administration's
efforts to gain greater control over the Fed, an independent agency
charged with seeking stable prices and maximum employment. Independence
from day-to-day politics has long been seen as a critical element in the
Fed's ability to achieve those goals.
Trump has repeatedly demanded that Powell cut the short-term interest
rate that the central bank controls, in part because the president
believes it will lower the government’s borrowing costs.
Trump in April threatened to fire Powell, though he later backed off
those threats after stock prices fell in response. The Supreme Court has
since signaled that the president doesn't have the authority to remove
the Fed chair over a disagreement about interest rates.
The law governing the Fed does say that the chair can be fired “for
cause,” such as wrongdoing by the chair or neglect of duty. Powell's
term as chair ends in May 2026.
Vought's letter criticizes Powell's management of the Fed, suggesting
that the administration could be trying to build a case to remove the
chair for cause.
“I still think it’s unlikely, but not impossible that Trump would try to
replace Powell before his term was up,” Stephen Moore, a former adviser
to Trump and an economist at the Heritage Foundation, said.
The letter also charges that the Fed altered its building plans without
notifying a Washington planning commission, known as the National
Capital Planning Commission, and may be in violation of its rules. Trump
recently has appointed two close aides to the commission.
Over the weekend, the Fed said in a post of “frequently asked questions”
on its website about the building project that it is “not subect to the
direction” of the commission and has only complied with its directives
voluntarily. The Fed also said that it is accountable to the Senate and
House of Representatives, and is also overseen by the independent
inspector general, not the White House.
The Fed is not directly funded by taxpayers and instead uses proceeds
from interest payments on its huge bond holdings and fees from banks to
pay for its operations.
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The Federal Reserve Board Building is seen as it undergoes
renovations, June 10, 2025, in Washington, DC. (Pablo Martinez
Monsivais, file)
 In the FAQ, the Fed said that the
higher costs for its project stem from rising costs for materials,
labor, and equipment. Construction costs generally have soared in
recent years as a result of the 2022-2023 inflation spike, the
largest in four decades. The central bank also says more asbestos
has been discovered than expected, and it has had to comply with
height restrictions in Washington by building more underground, at
greater expense.
During a Senate hearing last month, Sen. Tim Scott, a Republican
from South Carolina and chairman of the banking committee,
criticized the Fed for “lavish renovations” that he said included
“rooftop terraces, custom elevators that open into VIP dining rooms,
(and) white marble finishes.”
Powell, however, disputed that characterization: “There’s no VIP
dining room. There’s no new marble. ... There are no special
elevators.” The Fed did change its building plans in 2023, he added.
The Fed also said in the FAQs that a “garden terrace” that it
referenced in 2021 planning documents is a “ground-level front lawn”
on top of a parking garage that is used to “help with stormwater
management and to increase building efficiency and roof longevity.”
Meanwhile, Trump on Monday attacked Powell again, saying he has been
“terrible” and “doesn’t know what the hell he’s doing.”
Powell has held off on further reductions given Trump’s tariffs,
saying that Fed officials want to see how the import taxes influence
inflation and economic growth.
The Fed’s concern is that rate cuts on the scale discussed by Trump
could worsen inflation if, in fact, his tariffs result in higher
prices across the U.S. economy. There is also the possibility that
tariffs harm economic growth in ways that require rate cuts in order
to limit job losses.
Trump and some of his officials have urged Powell to resign, though
there is no indication he will leave before his term ends in May.
“Absent revelations of related misconduct by the Fed chair –- for
which there is zero evidence to date -– that led 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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AP White House Writer Josh Boak contributed to this story.
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