The Federal Reserve took steps on Friday to defend itself against accusations by President Trump and his allies that Jerome H. Powell, the Fed chair, mismanaged renovations at the central bank’s headquarters and then lied to Congress about those plans.
The new line of attack, after Mr. Trump aimed a barrage at the Fed’s reluctance to lower borrowing costs, has raised alarm that the White House is trying to lay the groundwork to fire Mr. Powell for cause.
In an update to its website late Friday, the central bank laid out details intended to support Mr. Powell’s statements to lawmakers regarding the project, which kicked off in 2021 and is estimated to be $700 million over budget at around $2.5 billion.
The extent of the renovations and their swelling cost have spawned intense criticism from both the White House and a number of leading Republicans, who have taken issue with luxury features in an initial plan, including rooftop garden terraces and marble finishings.
Mr. Trump said on Friday that he was not planning to fire Mr. Powell, despite saying the Fed chair was doing a “terrible job.” But legal experts warned that the latest front in the White House’s attacks on the central bank could potentially be pursued as an avenue to remove Mr. Powell as chair before his term expires in May.
“We can’t ignore context when we are looking at these accusations,” said Kathryn Judge, a financial regulation expert at Columbia Law School. “What they’re trying to do is build up a public case and to discredit him.”
Russell Vought, director of the Office of Management and Budget and one of the most vocal critics of Mr. Powell regarding the renovations, has pressed for an investigation into whether the chair was deceptive about the plans when he testified in Congress last month.
“This is about the largess and the fact that he has systemically mismanaged the Fed,” Mr. Vought said in an interview with CNBC on Friday.
A day earlier, he wrote a letter to Mr. Powell in which he condemned the project and questioned whether it was in compliance with rules around such renovations. “Instead of attempting to right the Fed’s fiscal ship, you have plowed ahead with an ostentatious overhaul of your Washington, D.C., headquarters,” he wrote.
In a post on its website on Friday, the Fed addressed many of the questions in Mr. Vought’s letter, which specifically asked about the latest plans that Mr. Powell had relayed to lawmakers.
“There’s no V.I.P. dining room, there’s no new marble,” the chair said at the time. “There are no special elevators — there’s just, there are old elevators that have been there — there are no new water features, there’s no beehives and there’s no roof terrace gardens.”
Mr. Powell added that the project’s plans had “continued to evolve” and that some features that had been initially incorporated were scrapped.
The “Frequently Asked Questions” post on Friday reaffirmed those responses and said: “The Federal Reserve takes seriously the responsibility to be a good steward of public resources. The project will reduce costs over time by allowing the Board to consolidate most of its operations.”
A person familiar with the matter at the Fed said that Mr. Powell had been honest during his testimony and that no one involved in the project had informed the central bank that any scaling back of the plans needed to be resubmitted to the National Capital Planning Commission, which is responsible for reviewing the Fed’s proposal.
This week, Mr. Trump installed three White House advisers to that commission, including a deputy chief of staff, James Blair, and the staff secretary, Will Scharf.
The latest attempt to undermine the Fed chair comes as the Supreme Court has re-established that the president is limited in his ability to remove an official at the central bank without cause. That typically has meant serious misconduct and other violations.
Scott Alvarez, a former general counsel at the Fed board, said proving that is “really, really hard to do” because it is so ambiguous.
“The case here is so light that I don’t think it’s credible,” he said. “I think this is just about building pressure on the chair to make him feel uncomfortable and make him want to leave.”
Graham Steele, a longtime financial regulation lawyer and former Treasury Department official, likened it to a “game of chicken” in which the White House was pressuring the Fed so that it either lowered interest rates or was thrust “in the middle of this giant political storm.”
Colby Smith covers the Federal Reserve and the U.S. economy for The Times.
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