THE White House on Thursday launched a fresh attack on Federal Reserve Chair Jerome Powell, with a top Trump administration official saying Powell had “grossly mismanaged” the central bank, chastising him for running a deficit and for extensive cost overruns for building renovations.
Office of Management and Budget Director Russell Vought, in a letter addressed to Powell and posted on social media platform X, said: “Instead of attempting to right the Fed’s fiscal ship, you have plowed ahead with an ostentatious overhaul of your Washington, D.C., headquarters.”
The letter arrived as President Donald Trump and his aides kept up their criticism of Powell for not lowering interest rates.
“While continuing to run a deficit since FY23 (the first time in the Fed’s history), the Fed is way over budget on the renovation of its headquarters. Now up to US$2.5 billion, roughly US$700 million over its initial cost,” Vought wrote in an X post accompanying the letter. “These renovations include terrace rooftop gardens, water features, VIP elevators, and premium marble. The cost per square foot is US$1,923–double the cost for renovating an ordinary historic federal building. The Palace of Versailles would have cost US$3 billion in today’s dollars!”
A Fed spokesperson was not immediately available to comment.
The Fed is required by law to return any of its excess earnings to the Treasury, but for about three years it has run an operating deficit.
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Higher interest rates imposed by the Fed to combat inflation starting in 2022 led to its outlays to commercial banks for the reserves they deposit at the Fed exceeding the interest it earned on its large but shrinking bond portfolio and other fees it collects for providing services to the financial sector.
As of Wednesday that deficit had reached more than US$235 billion, Fed data shows.
Meanwhile, the Fed has been renovating two buildings adjacent to its Washington headquarters, and Powell was pressed by lawmakers about the cost overruns during his testimony last month to the congressional committees charged with Fed oversight.
Powell rejected reports that the project included lavish features but conceded it had run over budget, saying, “the cost overruns are what they are.”
“There are no new water features, there’s no beehives, and there’s no roof terrace gardens,” Powell said in response to questioning from Senator Tim Scott, a South Carolina Republican and chair of the Senate Banking Committee.
“We do take seriously our responsibility as stewards of the public’s money,” he said as he defended the need to upgrade the buildings.
Vought said Powell’s testimony “raises serious questions about the project’s compliance with the National Capital Planning Act.”
He gave Powell a list of 11 questions regarding the project and changes to it. He requested answers within seven business days.
Trump, who has considered trying to fire Powell over his failure to lower interest rates, on Tuesday said the Fed chief should resign if his testimony to Congress about the project was misleading. REUTERS
