Trump Allies Demand Probe into $2.5 Billion Fed Renovation Costs

Allies of President Donald Trump are advocating for a comprehensive investigation into the $2.5 billion renovation of the Federal Reserve headquarters in Washington. They suspect that the escalating costs may be linked to mismanagement or even fraud. The political objective behind this push is to leverage the controversy to remove Jerome Powell from his position at the Fed, as Trump has been displeased with Powell's refusal to lower interest rates this year.

The renovation project encompasses the 1937 Marriner S. Eccles Building and the 1931 East Building, both of which are nearly a century old and have never undergone a complete renovation before. Officials from Trump’s administration have criticized the project as wasteful.

In response to the accusations from Trump's team, Powell defended the renovations in a letter dated July 17. He emphasized that the project is being conducted transparently and clarified that the gardens are actually green roofs for environmental compliance, while the elevator extension is to meet accessibility standards. Powell also requested the Fed’s Inspector General to review the entire project. He had previously informed Congress in June that the Eccles Building was “not really safe” and “not waterproof,” and that he initiated the project after realizing the severity of the situation while serving as administrative governor.

The initial cost estimates for the renovation were around $1.9 billion, but the price increased by more than 30% after construction began. This increase was partly due to a spike in steel prices in 2021 and delays caused by several design review agencies. The buildings' location in Washington’s “monumental core” requires compliance with federal boards that oversee changes to historic architecture and tougher federal security codes implemented after the 9/11 attacks.

The most challenging aspects of the renovation are taking place underground. Construction crews are excavating deep to convert old parking garages into office space. Under the East Building’s lawn, a new parking garage with 318 spaces is being added. A five-story extension on the East Building includes four floors that are completely below ground, a common practice in the region due to height restrictions. However, the project faced additional challenges due to an unexpectedly high water table.

Berkel and Company Contractors had to physically lower the slab foundation of the Eccles Building to create the new basement. They used a bracing system to support the building while the floor was demolished and lowered by over 20 feet. The job required 1,000 micropiles, steel foundation tools used when the soil is too soft for traditional supports.

The Federal Reserve hired Fortus, a joint venture between a Dutch firm and a DC-based company, to carry out the work. Both firms have experience with large-scale projects, including historic building restorations. During the first Trump administration, the Fed proposed using more glass in the new design, but Trump’s appointees to the U.S. Commission of Fine Arts insisted on a classical look with white marble, further delaying the project.

Similar challenges have been faced by other projects in the region. The Smithsonian’s African American History Museum, where 60% of the building sits underground, cost 50% more than expected. The 9/11 Museum in New York eventually cost $700 million, even after being scaled down from $1 billion. A proposal to renovate the Smithsonian Castle with new underground support was abandoned when it reached $2 billion. Mina Wright, who leads the GSA’s Office of Planning and Design Quality, noted that the Fed’s team faced a rigorous process, including unjustified criticism at times.