Can Trump fire Fed chief over a building renovation? Fed chair Powell accused of ‘ludicrous’ $2.5bn headquarters makeover

Officials from the Trump administration are preparing to visit the US Federal Reserve this week to look into a $2.5bn renovation project, which they argue is symbolic of wider problems under Fed chair Jerome Powell. Russell Vought, the director of the Office of Management and Budget and a close ally of the president, compared the renovation to the construction of the Palace of Versailles and said the spending was “outrageous”.

“There’s just a lot of genuine curiosity from the director... to see where all this money is really going. Because $2.5bn for a building renovation is ludicrous,” an official told the Financial Times.

What are the main concerns?

Vought and other Trump officials believe the refurbishment of the Marriner S Eccles Building and nearby structures is an example of poor oversight. Vought described one of the buildings as “a palace”, criticising what he saw as “largesse”. He added, “You go through the halls and there is just so much artwork… This is an institution that has no accountability.” On Monday, Treasury Secretary Scott Bessent supported the inquiry, calling for a broader review of the entire Fed.

Is Powell’s job on the line?

The investigation has sparked speculation that President Trump may be trying to use it to fire Powell before his term ends in May. However, legal experts doubt that cost overruns would be enough to remove him “for cause”. Bessent told Fox Business that Powell didn’t need to step down, “If he wants to leave early, I think he should. If he wants to stay, I think he should,” he said.

What are Trump’s wider criticisms of Powell?

Since returning to the White House, Trump has been sharply critical of Powell’s refusal to cut interest rates. He claims this has slowed US economic growth and added financing costs. In recent weeks, the administration has accused Powell of “grossly” mismanaging the Fed renovation and possibly misleading Congress about cost-cutting plans.

The Fed has argued that it was not required to notify the National Capital Planning Commission about project changes. An official countered that the Fed “should have consulted” the NCPC. Powell has since written to senators Tim Scott and Elizabeth Warren to confirm that the central bank’s inspector-general will review the budget issues.

Are federal projects often over budget?

Yes. A 2018 Government Accountability Office report found that more than two-thirds of major federal projects went over budget between 2014 and 2018. The FBI’s 1974 headquarters cost double its original budget, while the Ronald Reagan Building ended up costing more than $800 million, far more than the $362 million originally planned.

In 2021, the US General Services Administration found that only one other project had higher final costs than the Fed’s, Puerto Rico’s Federico Degetau Federal Building. The Fed notes that the Eccles Building, opened in 1937, has not had major modernisation since. Its second building, added in 2018, had sat empty for years.

Powell explained in a letter to Vought that the project includes asbestos and lead removal, as well as major plumbing and structural upgrades. However, the Fed has not yet given a full itemised breakdown of where themoneyisgoing.