Fed Chair Powell has issued a formal response to OMB Director Vought’s inquiries, defending the Fed headquarters renovation and requesting an inspector general review to ensure transparency.

Fed Chair Powell has issued a formal response to OMB Director Vought’s inquiries, defending the Fed headquarters renovation and requesting an inspector general review to ensure transparency.

Federal Reserve Chairman Jerome Powell has issued a formal response to Office of Management and Budget (OMB) Director Russell Vought's inquiries regarding the controversial $2.5 billion renovation project at the Federal Reserve Headquarters. Powell has defended the renovation and requested an inspector general review to ensure transparency.

In a letter to Senate Banking Committee Chair Tim Scott and top Democrat Elizabeth Warren, Powell acknowledged the concerns over the renovation costs and stated that he had asked the US central bank's inspector general to conduct a review into the project [2]. The letter comes amidst escalating criticism from the Trump administration and Republican lawmakers over the Fed's management and the renovation of its historic headquarters.

Powell addressed the concerns flagged by the Trump administration and Republican lawmakers, stating that some features such as VIP elevators or dining rooms had never been part of the project's scope. He also noted that other features, such as the new water features, had been removed from the original design and that changes to the original design were not substantial and did not add cost to the project [2].

The Fed has attributed the cost overruns to factors including higher-than-estimated materials and labor costs, as well as toxic contamination in the soil that was discovered during the rehabilitation of the nearly 100-year-old Marriner S. Eccles building and a neighboring property on Constitution Avenue [2]. Powell's letter to the senators emphasized the Fed's commitment to working collaboratively and cooperatively with Congress to address any concerns.

Vought, in his letter to Powell, had accused the Fed chair of "grossly mismanaging the Fed" and criticized the headquarters renovations for going over budget. The OMB director also suggested that the Fed may have breached the National Capital Planning Act by making unapproved changes to the renovation plans [1].

Powell's response to Vought's letter comes as the Trump administration has been at odds with Powell over his failure to lower interest rates and has speculated that the president is looking to use the headquarters fiasco as a reason to fire him. However, the Fed has denied any wrongdoing and asserts that the White House lacks legal authority over its facilities [1].

Constitutional scholar Peter Wallison, a senior fellow at the American Enterprise Institute, has stated that an error of this kind would not be grounds for removal, as it would be tumultuous to remove the Fed chair for bad economic results [1].

The OMB has demanded that Powell address the legality and oversight of the renovation project within seven days of the public notice. Trump has confirmed he is actively weighing candidates to replace Powell, whose term ends in May 2026.

References:
[1] https://www.newsmax.com/newsfront/russ-vought-omb-federal-reserve/2025/07/17/id/1219093/
[2] https://www.livemint.com/news/us-news/committed-to-working-with-you-jerome-powell-asks-inspector-general-to-review-fed-headquarters-renovation-project-11752547859939.html