White House watchdog rips Jerome Powell over costly Fed HQ revamp

The White House financial watchdog ripped Federal Reserve Chair Jerome Powell over a lavish revamp of the central bank’s Washington, DC headquarters — and warned construction could be halted.

In a Thursday letter obtained by The Post, Office of Management and Budget (OMB) Director Russell T. Vought ripped Powell over the $2.5 billion Eccles Building renovation, which has seen $700 million in cost overruns, according to public disclosures.

In April, The Post exclusively revealed that the Fed was pushing ahead with the overhaul despite mounting losses – prompting criticism that likened top officials at the central bank to French royalty seeking to build a “Palace of Versailles.” 

“The President is extremely troubled by your management of the Federal Reserve System,” Vought told Powell in the letter. “Instead of attempting to right the Fed’s fiscal ship, you have plowed ahead with an ostentatious overhaul of your Washington DC headquarters.” 

The letter took direct aim at Powell’s June 25 testimony before the Senate Banking Committee, in which the Fed chairman attempted to deny the luxurious upgrades and called The Post report “misleading and inaccurate.” 

“There’s no VIP dining room. There’s no new marble. There are no special elevators,” Powell insisted during the hearing. “There are no new water features, there’s no beehives, and there’s no roof terrace gardens.”

The OMB’s letter to Powell, however, stated that the project does, in fact, include “rooftop terrace gardens, VIP private dining rooms and elevators, water features, premium marble, and much more.”

The upgraded facility also will give employees an average of 512 square feet of office space — more than triple the OMB’s recommended 150 square feet.

Powell had also testified that the 90-year-old Eccles building “was not really safe” and that it it “really needed a serious renovation, had never had one” — an assertion that the OMB refutes by noting that the building underwent a comprehensive renovation between 1999 and 2003.  

That earlier renovation included a replacement of the roof and building systems. 

Vought’s letter said the costly revamp may now be in violation of the National Capital Planning Act (NCPA), which mandates that federal development projects in Washington receive approval from the National Capital Planning Commission (NCPC).  

According to the letter, Powell’s own statements suggest that the project may now deviate significantly from the plan approved by the NCPC in September 2021. 

“Your testimony appears to reveal that the project is out of compliance with the approved plan with regard to major design elements,” Vought wrote.  

“This would bring the project outside of the NCPC’s approval and thus in violation of the NCPA, and require the Fed to immediately halt construction and obtain a new approval from the NCPC before proceeding any further.” 

In his letter on Thursday, Vought contrasted the scale and cost of the Fed’s renovation with other federal building projects, calling the renovation “many orders of magnitude” more expensive than comparable efforts. 

Vought also asked whether the Fed consulted with the NCPC before making any changes to the original construction plan, and requested a summary of any communications with the commission, along with whether those changes were formally approved. 

“This Administration takes this matter very seriously,” the letter concludes. Powell was asked to respond to the inquiries within seven business days. 

A Fed spokesperson declined to comment.  

The letter was sent on the same day that Trump reiterated his criticisms of Powell on his Truth Social account, dubbing the central bank chief “Too Late” for maintaining interest rates at current levels. 

The president wrote that interest rates are “at least three points too high,” accusing Powell of costing the US hundreds of billions in interest payments, adding: “No Inflation, COMPANIES POURING INTO AMERICA. ‘The hottest Country in the World!’ LOWER THE RATE!!!” 

Trump earlier this week ramped up his war of words with Powell by backing calls for a probe into whether he lied to Congress the $2.5 billion upgrade to the Fed headquarters.

“It’s OK with me. I think he’s terrible,” Trump told reporters during a cabinet meeting at the White House. “I call him ‘Too Late.’ “He’s always late. But he wasn’t late with Biden before the election, he was cutting [rates] like crazy.”

The OMB emphasized that federal agencies are required to consult with the NCPC in advance of undertaking such projects.  

“The Office of Management and Budget has long instructed agencies ‘to consult with the National Capital Planning Commission in advance regarding proposed developments and projects or commitments for the acquisition of land in the National Capital area’ in accordance with the NCPA,” the letter states, citing OMB Circular A-11. 

The letter also demanded clarification from Powell on whether the Federal Reserve’s Constitution Avenue renovation is proceeding according to the NCPC-approved plan. 

Specifically, the administration wants to know whether rooftop garden terraces, private dining rooms on Level 4, marble finishes, an extended private elevator to the dining suite and decorative water features — all detailed in the Fed’s final submission — are still part of the project. 

Asked for comment, a White House spokesman referred The Post to Vought’s letter.

The Federal Reserve, in a statement on its website, said the renovations “will consolidate most Board staff into one campus; reduce off-site leases; and provide a modern, efficient workspace for employees to conduct their work on behalf of the American people.”

A report released earlier this year by the Federal Reserve’s Inspector General stated that, as of February, the renovation costs were projected to reach $2.4 billion—an increase from $1.9 billion two years earlier.

This surge in expenses comes as the Fed grapples with significant and unusual losses tied to its monetary policy operations.

Although the central bank is self-funded, earning revenue from the bonds it holds and services it offers, it has not turned a profit in recent years. Elevated interest rate costs—used to control inflation—have weighed heavily on its balance sheet.

While the Fed has handled these losses through accounting mechanisms and maintains they do not affect its ability to operate, some lawmakers are now scrutinizing the framework responsible for the financial shortfall.