The Trump administration has accused Federal Reserve Chair Jerome Powell of potentially “violating the law” over his renovation of the central bank’s Washington, D.C., headquarters.
The Office of Management and Budget (OMB) Director Russell Vought said Thursday that Powell had misled Congress about the “ostentatious” renovations during his testimony before the Senate Banking Committee in June.
Newsweek has reached out to Powell for comment via email.
Why It Matters
The accusations are the latest escalation in a series of personal and policy attacks against Powell by President Donald Trump and his administration.
Trump, who appointed Powell as Fed chair in 2018, has insisted that the Fed’s reluctance to sharply cut interest rates is damaging the U.S. economy and costing taxpayers billions of dollars in debt servicing. The president has publicly declared he plans to name a replacement for Powell, whose term does not expire until May 2026, as early as September.
Powell has held the rates steady, citing concerns over Trump’s tariffs, which are expected to go into effect in August after multiple pauses and delays. He has said he is open to lowering the rates if the summer’s inflation data is lower than expected.
What To Know
In a Thursday post to X, formerly Twitter, Vought accused Powell of having “grossly mismanaged the Fed” and criticized the headquarters renovations for going over budget.
Trump’s budget chief said that the work was “up to $2.5 billion, roughly $700 million over its initial cost” and included terrace rooftop gardens, water features, VIP elevators and premium marble. “The Palace of Versailles would have cost $3 billion in today’s dollars!” he added.
Powell has pushed back on claims he was spending excessively on the renovations, telling the Senate committee last month that the almost 90-year-old headquarters “was not really safe.”
“The media reports … are misleading and inaccurate in many, many respects,” he added.
However, Vought and the OMB have seized upon the testimony as proof that the Fed may have breached the National Capital Planning Act by making unapproved changes to the renovation plans.
“In his recent testimony, he slipped up and revealed he might also be violating the law,” the OMB said in a separate X post. “The Trump Administration is demanding answers, and we’re going to hold him accountable.”
In a letter addressed to Powell and shared on X, Vought said he was giving the Fed chair seven days to respond to his questions to “get to the bottom of this.”
The OMB letter raises questions over whether the Trump administration could try to remove Powell from his seat through cause.
But according to the Federal Reserve Act of 1913, which established the bank, it appears that the Fed may not be required to seek planning permission from the National Capital Planning Commission. The act states that the Fed can levy an assessment on Federal Reserve Banks to acquire a “site or building in the District of Columbia as in its judgment alone shall be necessary for the purpose of providing suitable and adequate quarters for the performance of its functions.”
A May Supreme Court decision also suggested that it would not uphold an attempt by the president to fire the chairman of the Fed, emphasizing it is an independent body.
What People Are Saying
Vought said in a post on X: Unfortunately, Powell’s recent testimony to Congress has led to serious questions that now require additional oversight from OMB, in conjunction with the National Capital Planning Commission. Today, I sent the letter below to Chairman Powell to get to the bottom of this largesse.”
Trump told Fox News in June: “I have three [names in mind.] They’ll all be good. … Anybody but Powell. He’s a bad person.”
Powell, at the European Central Bank forum on July 1: “I’m very focused on just doing my job. The things that matter are using our tools to achieve the goals that Congress has given us: maximum employment, price stability, financial stability. And that’s what we focus on 100 percent.”
What Happens Next
The OMB has demanded that Powell address the legality and oversight of the renovation project within seven days of the public notice. Trump has confirmed he is actively weighing candidates to replace Powell, whose term ends in May 2026.
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