The Federal Reserve has brought in its inspector general to examine a major building expansion project that has drawn sharp criticism from the White House, according to sources familiar with the matter.
Powell Requests Review Amid Accusations of Mismanagement
Fed Chair Jerome Powell initiated the review following growing concerns over the project’s escalating costs. Initially budgeted at $2.5 billion, the building expansion has experienced significant cost overruns, prompting accusations from President Donald Trump and other administration officials of “fundamental mismanagement.”
Kevin Hassett, director of the National Economic Council, criticized the lack of oversight, saying on CNBC’s “Squawk Box,” “The idea that the Fed could print money and then spend $2.5 billion on a building without real congressional oversight… we’ve got a real problem of oversight and excess spending.”
The inspector general, responsible for overseeing fraud, waste, and abuse at both the Fed and the Consumer Financial Protection Bureau, will investigate the project. This request was first reported by Axios.
Russell Vought, head of the Office of Management and Budget, also condemned the project in a letter and during a CNBC interview, comparing the Fed’s headquarters renovation to the extravagant Palace of Versailles and accusing Powell of fiscal mismanagement.
Safety and Modernization Justify Costs
The Fed published a detailed FAQ addressing concerns about the project, highlighting necessary safety upgrades such as removing asbestos and lead, and bringing the buildings up to modern codes. It noted that the two Washington, D.C., buildings, including the main Eccles Building, had not undergone comprehensive renovations since their construction.
As a self-funded institution, the Fed is not under OMB supervision and has coordinated with the National Capital Planning Commission on the project, asserting that recent changes do not require further review.
Kevin Warsh, a former Fed Governor and potential successor to Powell, called the renovation costs “outrageous” during a Fox News interview, saying the project reflects how the central bank “has lost its way.”
Author’s Opinion
The Federal Reserve’s building project highlights a pressing need for increased transparency and fiscal responsibility within autonomous institutions. While modernization is necessary, multi-billion dollar budgets must be carefully scrutinized to avoid public distrust and ensure that funds are used efficiently. It’s critical that the Fed maintains the confidence of the American people, especially given its crucial role in the economy.
Featured image credit: Brookings Institution via Flickr
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