Powell Rejects Trump Admin’s Accusations Over Fed Overhaul/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Federal Reserve Chair Jerome Powell has pushed back against accusations from the Trump administration over a costly building renovation. Powell says the $2.5 billion project complies with all legal requirements and underwent only minor approved changes. The conflict reflects broader tensions between the Fed’s independence and Trump’s political pressure on interest rates.
Fed Renovation Controversy Quick Looks
- Project Cost: Fed renovation costs rose to $2.5 billion, up from $1.9B
- Powell’s Response: Defended spending, citing structural repairs, asbestos removal, system replacements
- Legal Dispute: White House claims project may violate the National Capital Planning Act
- Trump’s Pressure: Criticized Fed’s renovation as excessive, hinted at Powell’s removal
- Powell’s Defense: Says only minor design changes were made, legally compliant with 2021 approval
- Political Undercurrent: Trump seeks to leverage spending issues to criticize Powell’s rate stance
- Fed Independence: Wall Street executives warn against political interference in central bank operations
- Next Steps: Powell signals watchdog review but maintains that the Fed followed lawful process
Powell Rejects Trump Admin’s Accusations Over Fed Overhaul
Deep Look
WASHINGTON, D.C. — In the latest flashpoint between the Federal Reserve and the Trump administration, Fed Chair Jerome Powell defended the central bank’s ongoing $2.5 billion renovation of two century-old buildings in Washington. Powell responded Thursday to sharp criticism and legal claims from White House officials who accused the Fed of straying from approved renovation plans and potentially violating federal law.
The issue has escalated into a symbolic battle over the Fed’s independence, with President Donald Trump using the renovation costs to bolster his long-standing criticism of Powell’s monetary policy decisions.
Renovation Under Fire
According to Powell’s letter, the renovation — initially estimated at $1.9 billion — has ballooned in cost due to necessary infrastructure upgrades, including the removal of asbestos and lead, along with complete system overhauls (HVAC, electrical, plumbing, and fire suppression). Powell wrote that the Fed made a few design simplifications to manage delays and cost increases — not extravagant additions.
“Both buildings were in need of significant structural repairs,” Powell emphasized.
“The project is proceeding in accordance with the plan that the NCPC approved in 2021.”
The National Capital Planning Commission (NCPC) approved the renovation plans in September 2021. Powell stated that changes since then were “minor” and didn’t require additional review.
White House Allegations
Trump’s top budget adviser, Russell Vought, sparked the controversy in a formal letter last week, accusing Powell of managing a “bloated and misaligned” renovation process. Vought warned that deviations from the NCPC-approved blueprint may run afoul of the National Capital Planning Act, thus opening the door to legal repercussions — and potentially giving Trump grounds to dismiss Powell “for cause.”
While the president cannot legally fire the Fed chair over policy disagreements, he can act in the case of malfeasance or neglect — a line critics argue Trump is now trying to blur.
The Broader Political Context
The dispute is the latest clash between Trump and Powell. The president has repeatedly urged the Fed to lower interest rates to stimulate borrowing and economic growth, particularly in light of recent tariffs. Powell, meanwhile, has said the Fed will proceed cautiously and evaluate the inflationary impact of Trump’s economic policies before adjusting rates.
Earlier this week, Trump downplayed speculation about firing Powell, calling it “highly unlikely,” but still used the renovation controversy to increase public pressure.
“The Fed needs to be held accountable,” Trump said on Truth Social. “This kind of reckless spending is exactly what’s hurting the American taxpayer.”
Fed Independence Under Threat?
Wall Street figures and economists have raised alarms about the implications of Trump’s attacks on the Fed. Several financial leaders warned that undermining the central bank’s autonomy could rattle markets and hurt economic credibility.
“The Fed’s independence is foundational to market stability,” one executive told CNBC anonymously. “If this becomes political theater, everyone loses.”
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