Federal Reserve Orders Review of $700 Million Renovation Cost Overruns

Federal Reserve Chair Jerome Powell has formally requested the central bank's inspector general to review the costs associated with a $2.5 billion renovation project. The renovation, which has been ongoing for several years, has faced significant criticism due to cost overruns that have pushed the total expense to $700 million more than initially anticipated. The project involves the renovation of two office buildings in Washington, D.C.

The request for a review comes amid intense scrutiny from the White House, which has labeled the renovation as "ostentatious" and suggested that it may be in violation of local building regulations. The Trump administration has been particularly critical of Powell, accusing him of not reducing the Fed's short-term interest rate to lower the government's borrowing costs. This criticism has been part of a broader effort by the administration to exert greater control over the Fed, an independent agency tasked with maintaining stable prices and maximum employment.

The inspector general, an independent watchdog, confirmed the request but declined to provide further comment. The review is expected to assess the cost overruns and the overall management of the renovation project. This move by Powell is seen as a proactive step to address the concerns raised by the administration and to ensure transparency in the use of public funds.

The renovation project has been a contentious issue, with some officials suggesting that the amenities included in the remodeled buildings are excessive. The Trump administration has used this as an opportunity to criticize Powell and the Fed's independence. The president has repeatedly called for Powell to resign, although there is no indication that Powell will step down before his term ends in May.

The review by the inspector general is expected to provide a comprehensive assessment of the renovation project, including the reasons for the cost overruns and the measures taken to address them. This review is crucial for maintaining the Fed's credibility and ensuring that it continues to operate independently from political interference. The outcome of the review will be closely watched by both the administration and the public, as it will have significant implications for the Fed's future operations and its relationship with the White House.