White House Accuses Powell of Mismanagement Over Fed Renovation

In a surprising turn of events, the White House has directly accused Federal Reserve Chairman Jerome Powell of “gross mismanagement” in a “lavish” renovation project of the Fed headquarters. This escalation marks a new front in the already tense relationship between the Trump administration and the central bank.

Office of Management and Budget (OMB) Director Russell Vought accused Powell of “gross mismanagement of the Federal Reserve,” claiming the headquarters renovation project was over budget by $700 million. Vought, a close ally of President Trump, went so far as to say that the President is “extremely disturbed by your management of the Federal Reserve System.”

Details of the Controversial Renovation

According to Vought, the original renovation plans included extravagant features such as rooftop terrace gardens, VIP private dining rooms, exclusive elevators, water features, and extensive use of high-end marble. Vought claimed that similar renovations of other federal buildings cost orders of magnitude less, implying that Powell was “building an office for himself with taxpayer dollars.”

The total cost of the renovation of the Marriner Eccles Building in Washington D.C. is estimated at $2.5 billion, an amount that, according to Vought, is almost the equivalent of building the Palace of Versailles in today’s dollars. This figure raises questions about the Fed's priorities and its use of public funds. It's important to note that these costs often include significant infrastructure upgrades and safety systems, which may be necessary for older buildings like the Fed headquarters.

Background of the Trump-Fed Conflict

These accusations come in the context of ongoing disagreements between President Trump and the Federal Reserve over monetary policy. Trump has repeatedly criticized the central bank's decision to hold interest rates steady, often using derogatory terms to describe Powell.

In turn, the Fed has stated that it needs more clarity on the impact of Trump's trade war on U.S. inflation before it can consider cutting interest rates. Trump has also accused the Fed of causing the U.S. government to pay extra refinancing costs due to the lack of rate cuts.

Reactions and Other Criticisms

Criticism has not been limited to the White House. Republican members of Congress have also criticized the renovation costs, calling them “out of touch” at a time when many Americans are struggling financially.

Even Elon Musk, the CEO of Tesla, criticized the project's cost during a brief stint as head of Trump's self-proclaimed “Government Efficiency Department” (Doge).

The Fed's Response and Potential Ramifications

In an attempt to mitigate criticism, the Fed announced in May plans to cut staff by more than 10% to become a “responsible steward of public resources.”

Powell, for his part, has denied that media reports of the project's extravagance are accurate and claimed before Congress that many of the facilities listed in the original plans have been canceled. However, Bill Pulte, the director of the Federal Housing Finance Agency (FHFA) appointed by Trump, questioned Powell's testimony and called for his resignation.

Adding to the pressure, Vought has raised questions about the project's compliance with the National Capital Planning Act, calling on Powell to respond to specific questions within seven business days. These escalating accusations put Powell and the Federal Reserve under increasing pressure and raise questions about the future leadership of the central bank.