Key Points
- White House National Economic Council Director Kevin Hassett confirmed the Trump administration is actively investigating the Federal Reserve’s $2.5 billion headquarters renovation, citing a $700 million cost overrun.
- Hassett stated on ABC’s “This Week” that President Donald Trump’s decision to attempt firing Fed Chair Jerome Powell will depend on answers to questions sent to the Fed by Office of Management and Budget Director Russell Vought.
- Vought compared the renovation to the Palace of Versailles and criticized Powell for an “ostentatious overhaul,” highlighting features like rooftop gardens and premium marble.
- Trump has repeatedly called for Powell’s resignation, criticizing him for not lowering interest rates and labeling him “very bad for the country”.
- The Federal Reserve responded by updating its website with a FAQ section defending the renovation, denying construction of new VIP dining rooms and clarifying the project’s necessity and funding sources.
- Legal questions remain as to whether the president can fire the Fed chair, with recent Supreme Court decisions leaving the issue unresolved.
- Hassett is considered a potential candidate to replace Powell if the president moves to remove him before his term ends in May 2026.
- The controversy has raised concerns about the independence of the Federal Reserve and market stability, with previous threats to fire Powell causing market volatility.
The White House has launched a high-profile investigation into the Federal Reserve’s $2.5 billion headquarters renovation, with top economic adviser Kevin Hassett confirming that President Donald Trump is weighing whether he has authority to fire Fed Chair Jerome Powell over the project’s $700 million cost overrun. The administration’s actions have intensified long-standing tensions between the White House and the central bank, raising questions about the future of Fed independence and the stability of U.S. monetary policy.
Why Is the White House Investigating the Fed’s Renovation Project?
As reported by David Lawder of Reuters, Kevin Hassett stated on ABC’s “This Week” that the Trump administration is scrutinizing the Federal Reserve’s renovation costs at its Washington headquarters, focusing on what the administration calls a $700 million cost overrun.
Hassett said,
“The Fed has a lot to answer for any decision by President Trump to try to fire Powell is going to depend a lot on the answers that we get to the questions that Russ Vought sent to the Fed”.
Russell Vought, Director of the Office of Management and Budget, last week sent a letter to Powell criticizing the “ostentatious overhaul” and demanding detailed answers about the $2.5 billion project. Vought’s letter, shared on X, compared the project to France’s Palace of Versailles, referencing rooftop gardens, water features and premium marble.
What Are the Specific Concerns Raised by the White House?
According to CNBC’s reporting, Vought accused Powell of “grossly mismanaging the Fed” and targeted the project’s features, including terrace rooftop gardens, water installations, VIP elevators, and high-end marble. Vought calculated the renovation’s cost per square foot at $1,923—twice the expense of refurbishing a typical historic federal building. He also referenced Powell’s testimony before the Senate Banking Committee, where the Fed chair was pressed about the project’s compliance with the National Capital Planning Commission’s approved plans.
Vought’s letter posed nearly a dozen questions about the renovation, including whether the project deviated from the approved plans and if it prioritized luxury over fiscal responsibility. The administration’s criticism comes amidst the Fed’s first operating deficit since 2023, further fueling concerns about financial stewardship.
How Has the Federal Reserve Responded to the Criticism?
As reported by CNBC, the Federal Reserve quietly updated its website with a new FAQ section to address the administration’s objections. The Fed denied that new VIP dining rooms were being constructed and clarified that existing rooms were being preserved for mealtime meetings. The FAQ also explained that cost increases stemmed from changes required by review agencies, higher-than-expected asbestos removal, and unforeseen conditions like toxic soil contamination.
Importantly, the Fed emphasized that taxpayers are not funding the renovation, as the central bank is self-sustaining through interest on securities and fees charged to banks. The FAQ stated,
“No new VIP dining rooms are being constructed as part of the project,”
directly countering Vought’s assertions.
What Has President Trump Said About Powell and the Fed?
According to Fox Business, President Trump told reporters on Sunday that Powell’s resignation “would be a great thing” for the country, reiterating his criticism of the Fed chair for not lowering interest rates:
“Jerome Powell has been very bad for our country. We should have the lowest interest rate on Earth, and we don’t. He just refuses to do it”.
Trump has repeatedly threatened to fire Powell over his reluctance to cut rates and has labeled him with derogatory nicknames, such as “Too Late Powell”. While Trump stated as recently as Friday that he was not planning to fire Powell, Hassett’s comments have “cracked the door open again,” according to Axios.
Does the President Have the Authority to Fire the Fed Chair?
In an interview with Jonathan Karl on ABC’s “This Week,” Hassett was asked if Trump has the authority to remove Powell. Hassett responded,
“That’s a thing that’s being looked into, but certainly if there’s cause, he does”.
NBC News noted that the question of presidential authority to fire the Fed chair is under legal review, and a recent Supreme Court ruling on independent agencies may not apply to the Federal Reserve, which is considered a “uniquely structured, quasi-private entity”.
Neither the White House nor the Federal Reserve Board of Governors has provided immediate responses to requests for further clarification on this legal question.
What Are the Broader Implications for the Fed and the Economy?
As reported by Fortune, the dispute over the renovation has raised concerns about the independence of the Federal Reserve and the potential for increased political pressure on monetary policy. The mere threat of firing Powell earlier this year caused a sell-off in financial markets, sending interest rates soaring. Experts warn that undermining the Fed’s independence could destabilize markets and erode confidence in U.S. economic policy.
Hassett is widely seen as a leading contender to replace Powell if the administration moves to oust him before his term expires in May 2026. Other names reportedly under consideration include former Fed Governor Kevin Warsh.
What Happens Next?
According to Axios, Vought’s letter to Powell gives the Fed seven business days to respond to the administration’s questions, setting the stage for a critical decision point at the end of the week. The outcome could determine not only the fate of Powell’s chairmanship but also the future direction of U.S. monetary policy and the relationship between the White House and the central bank.
What Are the Key Statements from All Sides?
- As reported by David Lawder of Reuters: U.S. President Donald Trump has the authority to fire Federal Reserve Chair Jerome Powell for cause if evidence supports that, White House economic adviser Kevin Hassett said on Sunday, adding that the Fed ‘has a lot to answer for’ on renovation cost overruns at its Washington headquarters.
- Russell Vought, in his letter (as reported by Reuters and CNBC): Rather than making efforts to correct the Fed’s fiscal course, you have proceeded with an extravagant renovation of your Washington, D.C., facility.
- Federal Reserve FAQ statement (as cited by CNBC and Fortune): No new VIP dining rooms are being constructed as part of the project. Various factors have driven cost increases, including changes to original building designs due to consultations with review agencies and unforeseen conditions such as more asbestos than expected.
- President Trump to Fox Business: Jerome Powell has been very bad for our country. We should have the lowest interest rate on Earth, and we don’t. He just refuses to do it.
- Kevin Hassett to ABC News: That’s a thing that’s being looked into, but certainly if there’s cause, he does.
Could This Lead to a Major Shift in U.S. Monetary Policy?
The ongoing investigation and the possibility of firing Powell have injected significant uncertainty into the future of the Federal Reserve’s leadership and policy direction. As reported by multiple outlets, the administration’s actions have already triggered market volatility and raised alarms about the politicization of the central bank.
While the White House waits for Powell’s response, the broader financial community is bracing for potential upheaval in the leadership of the world’s most important central bank. The coming days will be critical in determining whether the administration proceeds with efforts to remove Powell and what that could mean for the U.S. economy and global markets.