White House Accuses Powell of Mismanagement Amid Fed Renovation Dispute

The White House has accused Federal Reserve Chairman Jerome Powell of mismanagement, citing renovations at the central bank’s headquarters in Washington, DC. The Fed responded to these claims by updating its frequently asked questions page on its website. This dispute arises as President Donald Trump continues to pressure Powell to lower interest rates. Powell and most other Fed policymakers have maintained a cautious approach, expressing concerns that Trump’s tariffs could lead to inflation later in the year.

The White House has accused Powell of mismanaging the Fed, which is a self-funded agency, as well as the renovations at the central bank’s headquarters. In a letter sent to Powell, Office of Management and Budget Director Russell Vought highlighted the project’s cost overruns and questioned its compliance with the National Capital Planning Act. Vought’s letter also listed nearly a dozen questions about the project, suggesting that plans may have changed from what was approved in 2021. Powell has stated that there are no plans for a VIP dining room, new marble, special elevators, new water features, or a rooftop terrace garden, which Vought interpreted as deviations from the approved plan.

Vought called for an investigation into the project and suggested that the renovation is linked to Powell’s stance on interest rates. National Economic Council Director Kevin Hassett further escalated the situation by indicating that Powell’s job could be at stake. When asked if the renovation could be used as a reason to fire Powell, Hassett said that the president’s decision would depend on the answers to the questions sent to the Fed by Vought. Trump has previously denied that he would fire Powell but suggested that Powell should resign if allegations of misconduct are proven true. Powell has maintained that Trump cannot fire him, and the Supreme Court ruled this year that Fed officials have greater protections from termination.

A seat on the board of governors will open up early next year, allowing the president to name a potential replacement for Powell. However, financial markets may be underestimating the risk that Powell could be ousted, according to an analyst's forecast. The Fed responded to the White House’s attacks by updating its frequently asked questions webpage with details that seemingly rebut the administration’s claims. The Fed explained that the renovation will address asbestos and lead contamination, replace outdated systems, and bring buildings up to code on accessibility, security, and safety standards. Cost overruns were attributed to changes stemming from consultations with review agencies, actual costs of materials, equipment, and labor, and unforeseen conditions such as more asbestos than anticipated, toxic contamination in soil, and a higher-than-expected water table.

The FAQs also addressed specific details like marble, the VIP dining room, new elevator, water features, and garden terrace. Prior to the current project, the Fed’s Marriner S. Eccles building hadn’t undergone a comprehensive renovation since its construction nearly 100 years ago. Even if a new Fed chief more aligned with Trump’s views is installed, it won’t guarantee that interest rates will be lowered. Powell’s term as chair of the Fed’s board of governors expires in May, but his term on the board extends to January 2028, making him eligible to serve as chair of the Federal Open Market Committee, which sets interest rates. The next Fed chair, regardless of their alignment with Trump, must work with the consensus-driven FOMC, where dissenting opinions on policy decisions are rare. If a loyalist takes over and is too much of an outlier on monetary policy, they could be outvoted, weakening the power of the Fed chair and raising concerns about internal conflict within the Fed.