Chairman of the Federal Reserve Jerome Powell could be in the hot seat. The plan—a $2.5 billion renovation project for the central bank’s headquarters and an adjacent, Beaux Arts–style building, purchased in 2018—has ignited a public firestorm. The project has been operating since the beginning of Donald Trump’s first term in office. Its budget has nearly doubled and is now $600 million over the original estimate. As the renovation comes under growing criticism, Trump has taken the unusual step of badmouthing Powell. He thinks the mismanagement that everybody apparently sees could get Powell fired.
The renovation project includes forward-looking improvements that go beyond the usual cycle of maintenance. It is to make the infrastructure more usable and to comply with the City’s own local liability laws. Washington’s draconian building height regulations required going underground, increasing costs even more. The project has faced some brutal financial obstacles as well. Rising construction costs are being led by inflation increases that peaked in 2021 and 2022.
Powell has publicly defended the project against claims of mismanagement, stating that the renovations were essential and in line with regulatory guidelines. At a recent Senate Banking Committee hearing, Mr. Wiggins again stressed that nothing lavish was put into the project, or over the top.
“There’s no VIP dining room,” “There’s no new marble. … There are no special elevators. There are no new water features. … And there’s no roof terrace gardens,” – Jerome Powell
The renovation’s steep cost raised a firestorm of criticism from all sides, including Trump himself, who reacted in surprise and disbelief over the planned spending. He stated the project’s financial impact, calling it an embarrassment for Powell’s leadership.
“I think it sort of is. When you spend $2.5 billion on, really, a renovation, I think it’s really disgraceful,” – Donald Trump
The project schedule has dragged on for nearly half a decade and undergone other drastic changes since originally planned. Submitted plans as submitted initially in 2021, enough changes were made that many items had been adjusted or eliminated from the final plan. In response, Powell requested that the inspector general examine the renovation expenses. His stated purpose is to improve transparency and accountability in the planning and execution of the project.
With significant and welcome help from James Blair, a member of the National Capital Planning Commission, this group provided invaluable perspective on the project’s differences. He further observed a misalignment between the renovation’s implementation and what had been approved in concept.
“leads me to conclude the project is not in alignment with plans submitted to & approved by the National Capital Planning Commission in 2021,” – James Blair
As the renovation continues to unfold, questions linger regarding fiscal responsibility and oversight at one of the nation’s most influential financial institutions. Powell is caught between a rock and a hard place—squeezed by market inflationary pressures and the political retribution. Even as he’s making the necessary physical renovations, he faces the daunting challenge of reputational renovation.
