[Report by OanChan, Xiaoran Xiong] Previously, President Donald Trump and his allies had repeatedly criticized Federal Reserve Chairman Jerome Powell. Now, they have found a new reason to criticize him—his handling of the expensive renovation project at the Fed headquarters building.
According to a report by Bloomberg on July 12th, this renovation project is the most clear example so far, indicating that Trump and his circle are seeking every opportunity to scrutinize Powell’s leadership within the Fed, even surpassing his economic management duties. Some government officials seem to be constructing an argument that the renovation project provided Trump with an opportunity to meet the high legal threshold required to remove Powell as the Fed chairman.
As the pressure intensifies, Trump continues to demand interest rate cuts from the Fed while Powell and other policymakers have consistently refused to compromise this year. Trump then fiercely criticized the Fed chairman multiple times and explicitly stated that he would appoint someone supportive of interest rate cuts to replace Powell when his term as Fed chairman ends in May next year.
In recent days, officials from the Trump administration and some Republican members of Congress have focused on the renovation project, questioning its rising costs, their so-called “luxury design,” and Powell’s recent testimony about the construction project in Congress.
Bill Pulte, the head of the Federal Housing Finance Agency (FHFA), who strongly criticized Powell’s interest rate policies and also attacked him over the renovation project, claimed that Powell made false statements about the project details during a Senate hearing on June 25th. He asserted that these statements constituted “just cause” for removing Powell’s position and called for an investigation by Congress. However, Pulte did not provide specific details.
On July 11th, local time, Pulte, who also serves as the chairman of Fannie Mae and Freddie Mac, released a statement through the FHFA’s official website. The full text of the statement only included one sentence: “Reports that Jerome Powell is considering resignation are encouraging to me. I believe this is the right decision for the United States, with the economy poised for robust growth.”
The Federal Reserve’s budget document shows that compared to $1.9 billion in 2023, the cost estimate for this renovation project has risen to $2.5 billion this year. The Federal Reserve’s 2025 budget report states: “Due to factors such as bidding offers, the construction cost estimates continue to rise, especially in the areas of mechanical, electrical, and plumbing engineering.”
However, Powell’s critics have been closely monitoring the growing costs, while multiple media reports have described some design features of the renovation project as “luxurious extravagance.”
In a letter to Powell dated July 10th, local time, Russ Vought, the Director of the White House Office of Management and Budget, criticized the project and requested more details from Powell.
Vought stated in a post on social media: “You did not attempt to correct the Federal Reserve’s fiscal condition but continued to push forward with the lavish renovation of the Washington D.C. headquarters.” In the post, Vought also asserted that Powell had “serious management issues” at the Federal Reserve.
In his letter to Powell, Vought expressed that Powell’s testimony raised “serious issues,” specifically whether the renovation project complies with relevant building laws. He wrote: “Although minor deviations from the approved plan may be inevitable, your testimony seems to indicate that the main design elements of the project do not align with the approved plan.”
The document released by the National Capital Planning Commission (NCPC) in 2021, which is responsible for approving construction projects for federal agencies like the Federal Reserve, is the latest comprehensive review report for the renovation project.
Federal Reserve officials have stated that external architectural and engineering firms have never recommended the need to resubmit the modification proposal for approval by the committee.
It is noteworthy that Trump has recently appointed three White House officials to serve in the National Committee for Commerce and Innovation (NCPC). Among them, James Blair, the Deputy Chief of Staff at the White House Office, recently declared on social media that he would immediately request a review of the project and conduct field inspections.
He wrote: “As the Federal Reserve faces operational deficits, high interest rates, and heightened public scrutiny, it becomes necessary to question whether the so-called ‘Taj Mahal near the National Mall’ project (the so-called ‘Taj Mahal near the National Mall’ project) aligns with the best interests of the Associated Press Council and its constituents.”
The Federal Reserve has stated that the purpose of renovating two historic buildings at its Washington headquarters is to integrate operations to reduce costs.
Powell and the Federal Reserve are attempting to refute criticisms of the renovation project. On July 11th, local time, the Federal Reserve added a “Frequently Asked Questions” page to its website regarding the project, explaining the reasons for the increased costs and refuting design features criticized by critics.
“The Federal Reserve is earnestly fulfilling its responsibility as a good manager of public resources,” the webpage states. An official from the Federal Reserve mentioned that Powell was honest during his discussion of the project at last month’s Senate Banking Committee hearing.
Reportedly, Powell admitted during the Republican questioning that there had been cost overruns in the renovation project but refuted claims that it was too extravagant. He added that the project plan has been evolving, with some early designs no longer included in the plan.
Powell also promised to arrange for Federal Reserve staff to brief the Republican senators’ team, with the briefing expected to take place later this month.
Bloomberg noted that the current turmoil has arisen from Powell’s refusal to answer questions about whether he would leave the Federal Reserve at the end of his term in May 2028. Powell’s term as a Fed director is set to last until 2028, and past Fed chairmen typically choose to step down after their term ends. If Powell chooses to stay, it could hinder Trump’s ambition to exert more influence over monetary policy after appointing a new Fed chairman.
In fact, due to the decision-making process involving a 12-member Federal Open Market Committee (FOMC) vote, Trump might not have complete control even if he had appointed loyalists as Fed chair. If Powell stays on as a director, it would not only block Trump’s chance to fill a director vacancy but also potentially undermine the new chair’s credibility within the Fed system, allowing Powell to maintain an outsized influence within the FOMC beyond his successor.
Meanwhile, these dramatic events surrounding the Fed have also occurred following a Supreme Court ruling in May this year, which indicated that the Supreme Court might protect the Fed from Trump’s potential decisions to remove other independent federal agency officials. Although legal challenges to the case are ongoing, the decision suggests that any removal of a Fed director still requires “just cause,” and judicial precedents define such actions only in terms of “ineffective performance, dereliction of duty, or improper conduct.”
“What they were trying to create was some ‘reasons’ unrelated to monetary policy disagreements,” said Scott Alvarez, former general counsel of the Federal Reserve.
He believes that Powell’s statements about the Fed’s renovation project did not reach the level of “just cause” termination under law.
Kathryn Judge, a law professor at Columbia University researching the Federal Reserve, pointed out that if the public forms an impression that the Fed is wasting funds on construction projects, it would further erode its negative image of being “out of touch with the people’s plight.” She analyzed that this public sentiment could weaken public trust in the Fed, objectively supporting Trump’s argument—that we need a Fed more accountable to the president and his voters.
Judge stated that the White House reviewing the Fed’s spending to ensure accountability was reasonable, but in this case, the motivation warrants discussion. She believes that given the Trump administration’s relentless pressure on Powell to speed down interest rates and even attempt to force him to resign prematurely, it is hard for outsiders to believe the justification for reviewing renovation costs at this time. This way of exploiting the issue has turned concerns about the cost of the project into a political ploy, which is far from a viable approach to maintaining the long-term credibility of the Fed.