Is the Federal Reserve building a palace while America struggles with economic uncertainty? Two leading candidates to replace Chairman Jerome Powell, alongside Trump administration allies, have launched a fierce critique of a $2.5 billion renovation project at the Fed’s headquarters. This escalating battle raises questions about fiscal responsibility and Powell’s leadership.
According to Yahoo! Finance, the controversy centers on a massive renovation of the Fed’s Marriner S. Eccles Building and a nearby property on Constitution Avenue, with costs ballooning by over $700 million, drawing sharp criticism from potential successors and White House officials.
Criticism of Powell’s handling of the project began intensifying recently. National Economic Council Director Kevin Hassett and former Fed governor Kevin Warsh publicly slammed the renovation costs as “outrageous” on a recent Sunday. Warsh even declared that the Fed “has lost its way.”
Last week, White House budget director Russ Vought joined the fray, accusing Powell of having “grossly mismanaged” the Fed. Vought sent a pointed letter to Powell, highlighting concerns over cost overruns and questioning the project’s compliance with federal planning laws.
Vought’s letter cited specific excesses, including plans for rooftop terrace gardens and marble features, though the Fed later clarified some of these elements are no longer in the design. The budget director argued that Powell’s testimony to Congress suggests the project may violate the National Capital Planning Act. This act requires approval from the National Capital Planning Commission (NCPC), which greenlit a plan in 2021.
Adding fuel to the fire, Axios reported over the weekend that Powell requested an internal review of the project costs by Fed Inspector General Michael Horowitz. The Fed also posted updates on a recent Friday night, emphasizing transparency with monthly reports to the inspector general on expenditures and schedules.
The Fed has pushed back against the criticism, attributing cost overruns to design changes, rising material and labor expenses, and unexpected issues like asbestos and soil contamination. It clarified that no VIP dining rooms or elevators are being built, and water features have been scrapped. The so-called “garden terrace” is merely the front lawn of the Constitution Avenue building.
During testimony to Senate lawmakers on June 25, Powell dismissed media reports as inaccurate, stating that inflammatory claims about the project were “not in the current plan.” He has also previously asserted that any attempt to remove him as chair would be “not permitted under the law.”
Meanwhile, the legal debate over Powell’s tenure heats up, as his term isn’t set to end until May 2026. Hassett noted that the Trump administration is exploring whether the president has the authority to remove Powell early, saying it’s “being looked into.” He added that if there’s “cause,” the president “certainly” has the power.
The Federal Reserve Act allows board members to be removed “for cause,” though the term isn’t clearly defined beyond legal interpretations like inefficiency or neglect of duty. This ambiguity leaves room for speculation about Powell’s future. Trump himself weighed in on a recent Sunday, stating, “if Jerome Powell stepped down, it would be a great thing.”
Trump has also criticized Powell’s refusal to lower interest rates, arguing that America should have the “lowest interest rate on Earth.” He bluntly stated that Powell “has been very bad for our country.” Potential successors like Hassett, Warsh, Treasury Secretary Scott Bessent, and Fed governor Christopher Waller are in the mix to replace Powell. Warsh, in particular, has called for a “reformer to fix” the Fed, advocating for “regime change” to rebuild credibility.
For investors and savers, this saga is a reminder of the importance of fiscal discipline—whether in government or personal finance. The Fed’s $2.5 billion project, with a staggering $700 million overrun, mirrors the kind of unchecked spending that can erode trust in institutions. Hassett underscored the scale, noting this is “the most expensive project in D.C. history.”
So, what can you do? Keep a close eye on Fed policy and leadership changes, as they directly impact interest rates and inflation—key drivers of your portfolio. Consider diversifying into assets less sensitive to monetary policy swings, like hard commodities or dividend-paying stocks.
Ultimately, this clash over a renovation project reflects deeper concerns about the Fed’s direction and accountability. As taxpayers and wealth-builders, staying informed is your best defense against government overreach or mismanagement. Let’s demand the same frugality from our institutions that we practice in our own lives.