(VOR News) – Trump suggested Fed Chair Jerome Powell might be fired for mismanaging the $2.5 billion restoration project. Trump has threatened to fire Powell, but his fate is unknown.
Trump sought months to replace the politically independent central banker who resisted his interest rate cuts owing to tariffs causing inflation. Trump said Tuesday that Powell’s handling of a massive reconstruction project at two Washington Federal buildings could warrant his dismissal, an extraordinary and potentially illegal move.
“I believe it is somewhat accurate,” Trump remarked. He adds “I believe it is truly disgraceful to spend $2.5 billion on a renovation.” He disputed the Fed chief needed a “palace.”
The project began during Trump’s first term.
White House discovered it recently. Trump thinks Fed rate cuts will slash government borrowing costs, while Powell argues early cuts could raise inflation and rates.
Giving up political independence might hurt US stocks and hike interest rates.
Important info:
Powell’s exit may worry investors.
Fed chair has made it hard for Trump to take over.
Powell and his board must promote stable prices and employment, which may necessitate politically difficult inflation-fighting interest rate increases. The Fed can prioritize economics over politics by remaining independent of the White House (except for Fed nominees).
If Powell were fired before May 2026, inflation, interest rates, and the economy would worsen and the Fed’s independence from politics would be threatened.
A recent Supreme Court rule bars Trump from firing Powell over interest rate discrepancies. He can do so legally if there is “cause,” such as negligence or malfeasance.
Trump sacked Powell because congressional hearings misrepresented restoration and boosted costs.
The Federal Reserve headquarters is nearly 90 years old.
From the 1930s, the Marriner S. Eccles Federal Reserve Building needed electrical, plumbing, and HVAC modifications. The restoration process will remove asbestos, lead, and other hazards and create a new electrical and communication infrastructure.
The H-shaped edifice, named after a 1930s and 1940s Federal Reserve chair, is one of Washington’s most recognizable sights due to its classical architecture, marble, and masonry. An adjacent 2018 acquisition is being renovated by the central bank.
Following periodic maintenance, the Fed considers this the first “comprehensive renovation.”
Renovations cost more.
Trump administration officials slammed the Fed for the project’s $2.5 billion, $600 million above budget. The Fed lists reasons including a distressed homeowner facing greater remodeling costs. Building materials and labor prices climbed in 2021 and 2022 due to inflation.
We had to remove more asbestos than projected. Washington height restrictions made underground development more expensive. Rising costs delayed Fed third facility developments in 2024. Fed claims “gradual reduction” in spending by merging 3,000 Washington workers and renting less space.
The White House budget director labels the upgrades “ostentatious.” Powell was told by senior budget advisor Russ Vought that Trump is “extremely troubled” by the Fed’s “ostentatious overhaul” of facilities
Last Monday, Vought said the Fed refurbished “rooftop terrace gardens, VIP private dining rooms and elevators, water features, premium marble, and much more.”
A March 2025 Mercatus Center booklet distributed at George Mason University refutes the claims. The paper was written by Dartmouth College economist and former Fed employee Andrew Levin.
Powell told the Senate Banking Committee last month there is no VIP dining room. The marble is depleted. Unspecialized lifts. No new water features. Roof terrace gardens don’t exist.”
Fed claimed 2021 development procedures reduced such traits.
The White House concerns about Fed refurbishing cost cuts.
The White House claims the Fed changed construction plans without local planning commission consent.
NCPC commends Fed for “fully engaging partner federal agencies.” September 2021 assignment done. After the Fed changed course, the administration asked the commission.
Powell is accused by White House officials of unethically lowering the restoration to save money and mismanaging federal financing owing to its high cost.
Trump appointed White House deputy chief of staff James Blair to the commission. Blair wrote 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.”
Blair told the planning panel last Thursday he would inspect the building site, review Fed documentation on 2021 refurbishment plan adjustments, and notify Fed authorities to inform his colleagues.
Fed values independent project reviews.
Central bank is “not subject to the direction” of commission and freely accepts its directives, according to its website’s FAQs.
The Fed maintains its independent inspector general reports to the Senate and House, not the White House. Powell requested an IG renovation cost audit.
SOURCE: AP
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