Russell Vought, Director of the Office of Management and Budget, announced on Friday his intention to initiate an investigation into the escalating renovation costs at the Federal Reserve building, which he described as a “palace.” Vought criticized the financial mismanagement surrounding the project, which is projected to cost $2.5 billion.
This investigation could heighten the ongoing tensions between President Donald Trump and Federal Reserve Chair Jerome Powell. In remarks to Finance Newso, Vought expressed concerns that Powell may have been misleading the public regarding the project’s costs.
“When you visit the nation’s mall, you witness the construction of this palace … with an outsized $2.5 billion cost overrun,” Vought stated during his “Squawk Box” interview. “We want to ensure we have accurate information regarding the extravagance and the extent of these overruns. This situation underscores the fundamental mismanagement of the Fed under its chairman.”
In a letter sent out on Thursday, Vought accused Powell of significant mismanagement at the Fed and alleged that he had provided misleading information to Congress concerning the renovation’s costs and specifications. Vought specifically mentioned a congressional meeting in June where Powell allegedly denied that certain extravagant features, including a VIP dining area and rooftop garden terraces, were included in the renovation plans, despite them being part of the specifications.
This confrontation adds another layer to Trump’s ongoing criticisms of Powell, whom he has accused of political bias in relation to interest rate policies and has called for his resignation.
“The challenge with Chairman Powell is his consistent delays,” Vought remarked. “It’s time to reduce rates. There is a problem here. However, it’s primarily about the excessive spending and the systemic mismanagement at the Fed, as evidenced by what we observe with this extravagant project, likened to a ‘Palace of Versailles,’ on the National Mall.
New Oversight for Fed Renovation Project
The renovation is subject to oversight by the National Capital Planning Commission. Recently, President Trump appointed three new members to this board, all directly linked to the White House: Will Scharf, serving as the new chair and White House staff secretary; James Blair, the White House deputy chief of staff; and Stuart Levenbach, a policy analyst at the OMB.
In response to ongoing concerns regarding interest rates, Powell has insisted that political considerations do not influence the Federal Reserve’s decision-making process. While the Fed has maintained its key overnight borrowing rate since December, many in the market anticipate that a reduction may occur, potentially in September rather than during the July meeting.
A recent ruling by the Supreme Court emphasized that presidents cannot dismiss Fed officials at will. Nevertheless, the allegations concerning renovation costs could provide Trump with potential grounds to dispute Powell’s position.
Powell’s current term as chair is set to conclude in May 2026, although he can remain as a governor until 2028. He was initially nominated by Trump in November 2017 and re-nominated by President Biden for a second term starting in 2022.
During the Finance Newso interview, Vought sidestepped a question linking the renovation allegations to Powell’s stance on interest rates. “This certainly pertains to the fiscal mismanagement at the Fed, of which [interest rates] are one component,” he acknowledged. “We are taking a closer look at these issues as we now have new commissioners at the National Capital Planning Commission who are keen on asking important questions.”
Finance Newso.com has sought comments from the Federal Reserve regarding these developments.
