The Federal Reserve has initiated an inspection of its ongoing building expansion project, which has faced significant backlash from the White House, according to a source familiar with the matter.
Chair Jerome Powell requested the inspector general’s review amidst strong criticism directed at the project, originally estimated at $2.5 billion, which has since experienced considerable cost overruns. This has led to accusations from President Donald Trump and other officials regarding “fundamental mismanagement” of funds.
“The notion that the Fed can print money and subsequently invest $2.5 billion in a building without substantial congressional oversight is alarming,” remarked Kevin Hassett, director of the National Economic Council, during an appearance on Finance Newso’s “Squawk Box” on Monday. “We are faced with a serious issue concerning oversight and excessive spending.”
The inspector general’s office, which serves both the Federal Reserve and the Consumer Financial Protection Bureau, is tasked with investigating fraud, waste, and abuse within these institutions. Powell’s request for a review was first reported by Axios.
In a letter shared on social media last week, Russell Vought, the head of the Office of Management and Budget, also criticized the project, which encompasses two of the three buildings the Fed operates in Washington, D.C., including its main headquarters known as the Eccles Building.
Vought further compared the building to France’s Palace of Versailles, accusing Powell of “fiscal mismanagement” at the Federal Reserve.
In response, the central bank has created a comprehensive frequently asked questions page on its website. This page addresses essential elements of the renovation and elucidates why certain specifications were altered or scaled back due to unexpectedly high construction expenses.
“The project also addresses safety concerns by eliminating hazardous materials like asbestos and lead, ensuring the buildings comply with modern safety standards,” the FAQs state. “Although some maintenance has been performed to keep the buildings usable, neither has undergone a thorough renovation since their original construction.”
The Federal Reserve operates independently and is not funded by taxpayer dollars, placing it outside the supervision of the Office of Management and Budget. The Fed has collaborated with the National Capital Planning Commission on the project but maintains that the changes implemented do not necessitate any additional scrutiny.
Speaking on Finance Newso News Sunday, former Fed Governor Kevin Warsh labeled the renovation costs as “outrageous” and suggested it demonstrates that the central bank “has lost its way.” Warsh is viewed as a potential successor to Powell when his term ends in May 2026.
Correction: Former Fed Governor Kevin Warsh spoke Sunday on Finance Newso News. An earlier version misidentified the network.
