Russell Vought, the director of the Office of Management and Budget, sent a letter to Powell on Thursday demanding answers about the $2.5 billion renovation of the Fed’s main building.
Vought said the Fed may have moved ahead with major design changes without getting approval from the National Capital Planning Committee (NCPC). That could put the Fed in violation of the National Capital Planning Act, a decades-old law that governs Federal building projects in D.C.
Vought asked Powell to halt construction and explain whether the Fed stuck to the plan the NCPC approved in 2021 or if changes were made without permission. He also criticized the high price tag associated with the renovation, calling the project ostentatious and comparing it to the Palace of Versailles. He said the cost per square foot is $1,923, about twice the average for a historic federal building.
In a hearing before Congress last month, Powell told lawmakers that some of the more expensive design elements—lush rooftop gardens, new marble finishes, and executive dining rooms—were no longer in the plan. But the Trump administration says that isn’t clear from the Fed’s official filings.
The letter is part of a larger push by Trump-aligned officials to probe the Fed and challenge Powell’s leadership. Last week, Trump’s director of Federal Housing, Bill Pulte, also posted a message criticizing the renovation. Trump himself has repeatedly attacked Powell over interest rate decisions and has suggested that he may announce Powell’s replacement well before his May 2026 term ends.
The renovation project, which began after years of planning, is meant to modernize the Marriner S. Eccles building, the Fed’s headquarters since 1937. The Fed says the building badly needs repairs to meet current safety and security standards. Though parts of it were updated in the early 2000s, this is the first full renovation in nearly 90 years.
The Fed doesn’t rely on Congress for its funding. Instead it makes money by holding U.S. government bonds and other assets, then sends most of its profit to the Treasury. This setup allows it to operate independently from the White House and Capitol Hill. It also means the Fed has long been able to decide how to spend on its own facilities. That independence is now being challenged by Trump officials who argue the central bank is spending recklessly.
Still, Vought’s argument is less about the money itself and more about whether the Fed followed the rules. If Powell’s team made major design changes without alerting the NCPC, it may have sidestepped a key part of the approval process.
That makes the angst over this renovation project more than just political theater. Trump has floated the possibility of removing Powell before his term ends, a move that would be legally difficult under current precedent. But if the Fed is found to have broken planning rules or misled Congress, it could provide a pretext for trying to fire Powell for “cause.”
“It feels like this is a new approach,” said Mark Spindel, founder of Potomac River Capital and author of The Myth of Independence: How Congress Governs the Federal Reserve. “Rather than an at-will removal, it has the flavor of trying to set up a merit-based case to remove Chair Powell.”
But Spindel is skeptical the argument will hold.
“If they wanted to make a for-cause claim, why wouldn’t they go after the 2021-2022 policy mistake?” he asked. “The fact that they’re leaning on this allegation about the bee gardens on the roof shows you that they want to get rid of him.”
Derek Tang, of LHMeyer research team in Washington, D.C., said the renovation may not rise to the level of mismanagement, but it adds to a broader erosion of the Fed’s political standing. While this alone won’t reach the bar for removal, he said, it could be more like the “straw that breaks the camel’s back.”
Under the current law, Fed governors, including the chair, can only be removed for cause. That standing was reinforced in Humphrey’s Executor v. United States, a 1935 Supreme Court case that essentially barred commissioners at independent agencies from being fired at will.
The Supreme Court recently indicated that it would likely uphold the president’s authority to fire members of certain independent agencies, such as the National Labor Relations Board. The court, however, declined to give the president the same power over the Federal Reserve. It noted the central bank was unique among government agencies.
If that holds, Fed officials, including the chairman, can be removed for cause, such as misconduct. Disagreements between the president and central bank policymakers regarding the path of monetary policy are generally not considered to be sufficient grounds.
Todd Phillips, a professor of legal studies at Georgia State University, said the legal bar to fire Powell remains high, but the attacks may be meant to test the waters. There is a growing chorus calling for Powell to step down, he said, but if the president actually attempts to remove him, markets would go haywire. So far the administration hasn’t shown it is willing to allow for that.
The Federal Reserve didn’t immediately respond to requests for comment on the letter. Powell has said he takes the issue seriously and that his staff is working to brief lawmakers.
Write to Nicole Goodkind at nicole.goodkind@barrons.com and Megan Leonhardt at megan.leonhardt@barrons.com
(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
