Two top contenders to replace Jerome Powell slammed the Federal Reserve chairman for a $2.5 billion renovation of the central bank’s headquarters. One said the Trump administration is examining whether it has the authority to fire the policymaker, and the other said the project is an example of how the Fed has “lost its way.”
The new comments Sunday from National Economic Council Director Kevin Hassett and former Fed governor Kevin Warsh were the latest in multiple pressure points coming from Trump and his allies as the White House continues to use a new line of attack to argue its case that Powell is no longer suited for the job.
Hassett said on ABC News’s “This Week” that whether the president has the legal authority to fire Powell before his term is up next May “is being looked into” and that “certainly, if there’s cause, he does.”
Kevin Hassett, director of the US National Economic Council, at the White House on June 30. (Andrew Caballero-Reynolds/AFP via Getty Images) ·ANDREW CABALLERO-REYNOLDS via Getty Images
Fed governor Kevin Warsh, on Fox’s “Sunday Morning Futures with Maria Bartiromo,” called the costs involved in renovating the central bank’s headquarters “outrageous.” He and Hassett are both in the mix to succeed Powell, who ends his term as chair next May, along with Treasury Secretary Scott Bessent and Fed governor Christopher Waller.
Arguing it was one of several examples of how the Fed “has lost its way,” Warsh said the American people “need a reformer to fix” the institution and rebuild its credibility.
“Frankly, it’s about breaking some heads,” he added, calling for “regime change.”
The campaign to raise questions about the Fed’s renovation of the Marriner S. Eccles Building and a neighboring property on Constitution Avenue escalated last week as White House budget director Russ Vought said in a social media post that Powell had “grossly mismanaged” the Fed as a result of the project.
Read more: How much control does the president have over the Fed and interest rates?
Vought also sent the chairman a letter raising concerns about cost overruns and statements Powell had made to Congress about the renovations.
Axios reported that over the weekend, Powell asked Fed Inspector General Michael Horowitz to review the costs involved in the project.
The Fed on Friday night also posted new information about the construction project, noting that the inspector general’s office “has had full access to the project information on costs, contracts, schedules, and expenditures and receives monthly reports on the construction program.”
Cost overruns, the Fed said on its website, are the result of changes to the original designs; differences over time in the cost of materials, equipment, and labor; and some unforeseen conditions, such as asbestos and toxic contamination in the soil.
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Vought last week cited cost overruns of more than $700 million, plans for rooftop terrace gardens, VIP private dining rooms and elevators, water features, and marble.
White House budget director Russ Vought speaks with the press outside the West Wing at the White House in May. (Demetrius Freeman/The Washington Post via Getty Images) ·The Washington Post via Getty Images
The Fed said on its website that no VIP dining rooms are being constructed, there is no VIP elevator, and new water features that had been planned have been eliminated.
It added that the “garden terrace” as described in a 2021 plan to the National Capital Planning Commission (NCPC) refers to the ground-level front lawn of the Constitution Avenue building, which serves as the roof of the parking structure beneath.
Those statements align with what Powell told Senate lawmakers on June 25 when asked about media reports on the project.
“All the sort of inflammatory things that the media said are either not in the current plan or just inaccurate,” he told lawmakers.
Read more: How jobs, inflation, and the Fed are all related
In his letter to Powell last week, Vought said Powell’s testimony raises serious questions about the project’s compliance with the National Capital Planning Act, which requires that projects like the Fed headquarters be approved by the NCPC.
The NCPC did approve a plan in 2021, Vought said, but Powell’s testimony “appears to reveal the project is out of compliance with the approved plan.”
That, he said, would be a violation of the National Capital Planning Act and require the Fed to halt construction and obtain a new approval from the NCPC. Trump appointed three of his allies to the NCPC last week.
However, the Federal Reserve Act does state that the Fed has jurisdiction over its own buildings. The Fed noted in its Friday night post that it is “not generally subject to the direction of NCPC with respect to its building projects.”
While it did make “a small number of design changes to remove certain elements and added no new elements,” the Fed “does not regard any of those changes as warranting further review.”
Federal Reserve Chairman Jerome Powell testifies during a Senate Banking, Housing, and Urban Affairs Committee hearing on June 25. (Tom Williams/CQ-Roll Call, Inc via Getty Images) ·Tom Williams via Getty Images
Hassett was asked Sunday if the renovation project could be used as a predicate to fire Powell.
“I think that whether the president decides to push down that road or not is going to depend a lot on the answers that we get to the questions that Russ Vought sent to the Fed,” he said.
“The bottom line is that this is the most expensive project in D.C. history, $2.5 billion with a $700 million cost overrun,” Hassett said. “To put that in perspective, the cost overrun for this Federal Reserve project is about the same size as the second biggest building overhaul in American history, which was the FBI building. And so, the Fed has a lot to answer for.”
Read more: What experts say about the possibility of additional rate cuts
Powell has been adamant that the president cannot remove him. When asked earlier this year whether the president could do so, Powell simply said, “Not permitted under the law.”
The only language in law pertaining specifically to the removal of Fed board members can be found in Section 10 of the Federal Reserve Act. The law states that each member of the board shall hold office for 14 years “unless sooner removed for cause by the President.”
The statute doesn’t have any language that specifically addresses the chair of the Board of Governors, nor does it detail what exactly constitutes “for cause.” The term has been interpreted in legal rulings to mean “inefficiency, neglect of duty, or malfeasance.”
Trump himself on Sunday mentioned the renovation project while also repeating his previously stated desire for the chair to resign. The president has been calling on Powell to lower rates for months now.
“Well, I think if Jerome Powell stepped down, it would be a great thing,” Trump said. “I don’t know that he’s going to, but he should. Jerome Powell has been very bad for our country. We should have the lowest interest rate on Earth, and we don’t. He just refuses to do it.”
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