How Trump could use a building renovation to oust the Fed chair
[July 16, 2025]
WASHINGTON (AP) — President Donald Trump says he has finally found a way
to achieve his goal of removing Federal Reserve Chair Jerome Powell,
accusing him of mismanaging the U.S. central bank’s $2.5 billion
renovation project.
The push comes after a monthslong campaign by Trump to try to rid
himself of the politically independent central banker, who has resisted
the president's calls to slash interest rates out of concerns about the
administration's tariffs sparking higher levels of inflation.
The president indicated Tuesday that Powell’s handling of an extensive
renovation project on two Fed buildings in Washington could be grounds
to take the unprecedented and possibly legally dubious step of firing
him. “I think it sort of is,” Trump said.
“When you spend $2.5 billion on, really, a renovation, I think it’s
really disgraceful,” Trump said, adding that he never saw the Fed chair
as someone who needed a “palace.”
The project has been underway for years, going back to Trump’s first
term. But it only recently caught the White House’s attention. Trump
maintains that Fed rate cuts would lower the costs of government
borrowing, while Powell has warned that a premature rate cut could
worsen inflation and ultimately raise those borrowing costs.
The risk of the Fed losing its political independence could undermine
America’s financial markets, possibly leading to a meltdown in stocks
and investors charging a premium to lend to the U.S. economy.
Here’s what to know:
Ousting Powell risks setting off market panic
The Fed chair has been an obstacle in Trump's efforts to gain total
control over the executive branch.
Powell and his board have the dual mandate of maximizing employment and
keeping prices stable, a task that can require them to make politically
unpopular moves such as raising interest rates to hold inflation in
check. The general theory is that keeping the Fed free from the
influence of the White House — other than for nominations of Fed
officials — allows it to fulfill its mission based on what the economy
needs, instead of what a politician wants.
An attempt to remove Powell from his job before his term ends in May
2026 would undercut the Fed’s long-standing independence from day-to-day
politics and could lead to higher inflation, higher interest rates and a
weaker economy.
The Supreme Court recently signaled that the president can’t fire Powell
simply because Trump disagrees with him on interest rates. But legally
he could do so “for cause,” such as misconduct or dereliction of duty.
Trump's workaround appears to be that Powell misrepresented the
renovation project in congressional testimony and that the cost is
excessive, thus meriting his dismissal.
The Fed's main headquarters is over 90 years old
The Fed says its main headquarters, known as the Marriner S. Eccles
building, was in dire need of an upgrade because its electrical,
plumbing and HVAC systems, among others, are nearly obsolete and some
date back to the building's construction in the 1930s.
The renovation will also remove asbestos, lead and other hazardous
elements and update the building with modern electrical and
communications systems. The H-shaped building, named after a former Fed
chair in the 1930s and ‘40s, is located near some of Washington’s
highest-profile monuments and has references to classical architecture
and marble in the facades and stonework. The central bank is also
renovating a building next door that it acquired in 2018.
The Fed says there has been periodic maintenance to the structures but
adds that this is the first “comprehensive renovation.”
The renovation costs have ballooned over the years
Trump administration officials have criticized the Fed over the
project's expense, which has reached $2.5 billion, about $600 million
more than was originally budgeted.
Like a beleaguered homeowner facing spiraling costs for a remodeling
project, the Fed cites many reasons for the greater expense.
Construction costs, including for materials and labor, rose sharply
during the inflation spike in 2021 and 2022. More asbestos needed to be
removed than expected. Washington's local restrictions on building
heights forced it to build underground, which is pricier.
[to top of second column] |
Federal Reserve Board Chairman Jerome Powell listens during a Senate
Committee on Banking hearing, June 25, 2025, on Capitol Hill in
Washington. (AP Photo/Julia Demaree Nikhinson, File)
 In 2024, the Fed's board canceled
its planned renovations of a third building because of rising costs.
The Fed says the renovations will reduce costs “over time” because
it will be able to consolidate its roughly 3,000 Washington-based
employees into fewer buildings and will no longer need to rent as
much extra space as it does now.
White House budget director calls renovations ‘ostentatious’
Russ Vought, the administration's top budget adviser, wrote Powell a
letter last Thursday that said Trump is “extremely troubled” about
the Fed's “ostentatious overhaul” of its facilities.
The Fed's renovation plans call for “rooftop terrace gardens, VIP
private dining rooms and elevators, water features, premium marble,
and much more," Vought said in his letter.
Powell has disputed the claims, which were given wide circulation in
a paper issued by the Mercatus Center, a think tank at George Mason
University, in March 2025. The paper was written by Andrew Levin, an
economist at Dartmouth College and former Fed staffer.
“There’s no VIP dining room," Powell said last month during a Senate
Banking Committee hearing. “There’s no new marble. ... There are no
special elevators. There are no new water features. ... And there's
no roof terrace gardens.”
Some of those elements were removed from initial building plans
submitted in 2021, the Fed says.
But the White House also takes issue with the Fed reducing its
renovation costs
The Fed's changes to its building plans have opened it up to another
line of attack: White House officials suggest the Fed violated the
terms of the approval it received from a local planning commission
by changing its plans.
In its September 2021 approval of the project, the National Capital
Planning Commission said it “Commends” the Fed for “fully engaging
partner federal agencies.” But because the Fed changed its plans,
the administration is indicating it needed to go back to the
commission for a separate approval.
Essentially, White House officials are saying Powell is being
reckless with taxpayer money because of the cost of the renovation,
but they are also accusing him of acting unethically by scaling back
the project to save money.
James Blair, the White House deputy chief of staff whom Trump named
to the commission, said last Thursday in a post on X that Powell’s
June congressional testimony "leads me to conclude the project is
not in alignment with plans submitted to & approved by the National
Capital Planning Commission in 2021.”
Speaking last Thursday at the planning commission meeting, Blair
said he intends to tour the construction site, review materials from
the Fed on how the approved 2021 renovation plans have changed and
circulate a letter among his colleagues on the commission that would
go to Fed officials.
The Fed has asked for an independent review of the project
The central bank says, in a series of frequently asked questions on
its website, that it is "not subject to the direction” of the
commission and has only complied with its directives voluntarily.
Instead, the Fed said it is accountable to the Senate and House of
Representatives, and is also overseen by an independent inspector
general, not the White House. Powell has asked the inspector general
to review the costs of the renovation project.
All contents © copyright 2025 Associated Press. All rights reserved |
