The Federal Reserve has come under intense scrutiny for a costly building expansion project that has prompted Chair Jerome Powell to call for an internal review by the institution’s inspector general.
Initially estimated at $2.5 billion, the project has experienced cost overruns, triggering sharp criticism from President Donald Trump and members of his administration. Powell’s request for the review highlights the growing concern over the Federal Reserve’s internal spending and oversight mechanisms.
White House Slams Fed’s Costly Renovation, Fed Defends Safety and Modernization Efforts
The project has been heavily criticized by key White House figures, including Kevin Hassett, Director of the National Economic Council. Hassett questioned the legitimacy of the Fed’s spending power, arguing on CNBC that such large expenditures without congressional oversight contradict the intent behind the Federal Reserve Act.
Federal ReservePowell asks inspector general to review $2.5 billion renovation after Trump blasts Fed project
The criticism intensified when Russell Vought, Director of the Office of Management and Budget, publicly compared the renovation to the extravagant Palace of Versailles and accused Powell of fiscal mismanagement.
The renovation project involves two of the Fed’s buildings in Washington, D.C., including its iconic Eccles Building. In response to the backlash, the Federal Reserve published an FAQ page explaining the rationale behind the renovation and highlighting changes made to contain costs.
The central bank emphasized that updates are necessary to address serious safety issues such as asbestos and lead, and to modernize infrastructure that hasn’t been comprehensively renovated since its original construction.
Fed’s Independence, Oversight Gaps, and Future Leadership Now Under Growing Political Scrutiny
Despite calls for accountability, the Federal Reserve maintains a unique position as a non-taxpayer-funded entity, which places it outside the direct oversight of the Office of Management and Budget.
The Fed noted that it has been working with the National Capital Planning Commission on the expansion and sees no need for further review. The FAQ page further underscores that many specifications were scaled back in response to rising construction costs.
Beyond financial concerns, the controversy is feeding into broader political debates over the Federal Reserve’s role and transparency. Former Fed Governor Kevin Warsh, seen as a potential successor to Powell in 2026, called the project costs “outrageous” and suggested the central bank has “lost its way.”
These remarks suggest that the controversy could have lasting implications, not just for the renovation itself, but for future leadership and the Fed’s institutional credibility.
