The Trump administration has stepped up its pressure campaign against Federal Reserve Chair Jerome Powell, accusing him of mismanaging a $2.5 billion renovation of the Fed’s Washington headquarters and questioning whether the central bank has followed legal requirements for the project.
Two officials viewed as contenders to replace Powell have openly criticized the project, describing it as a symbol of government excess. Some in the administration are now examining whether the renovation could provide legal grounds to remove Powell from office before his term expires in May.
White House Reviews Fed Project, Eyes Possible Dismissal
National Economic Council Director Kevin Hassett confirmed on Sunday that the White House is reviewing whether President Trump has the authority to fire Powell early.
Under federal law, members of the Fed’s board of governors serve 14-year terms and can only be removed “for cause.” The statute does not clearly define what “cause” means, nor does it outline specific rules for the chairman’s role.
Hassett said the administration is waiting for answers from the Fed about the cost overruns before deciding its next move.
“This is the most expensive building renovation in Washington’s history,” Hassett said. “It’s a $2.5 billion project with a $700 million overrun. That raises serious questions about management and oversight.”
Federal Reserve Pushes Back on Allegations
The Federal Reserve says the claims about luxury upgrades and wasteful spending are misleading. According to the Fed, some of the controversial features mentioned by administration officials—such as VIP dining rooms, private elevators, and decorative water features—were either eliminated from the final design or were never part of the plan to begin with.
| Controversy | Fed Response |
|---|---|
| VIP dining rooms | Not included in project |
| Private elevators | Not part of design |
| Water features | Removed from plans |
| Rooftop garden | Refers to the building’s front lawn above parking |
The Fed says costs have risen because of inflation in materials and labor, as well as unexpected construction challenges, including asbestos removal and soil contamination.
Officials at the central bank also said the project was approved in 2021 after consultations with federal and state agencies, and that lawmakers were notified at the time.
Legal Dispute Over Planning Compliance
The White House has also raised questions about whether the renovation complies with the National Capital Planning Act. Budget Director Russ Vought sent Powell a letter last week suggesting that changes to the renovation may violate federal planning rules.
If the project is out of compliance, it could require the Fed to pause construction and resubmit plans for approval. Trump recently appointed three new members to the National Capital Planning Commission, giving the administration additional influence over the process.
The Fed maintains that it has full control over its buildings under the Federal Reserve Act. It acknowledged some minor design adjustments but says none of the changes are significant enough to require new approvals.
Warsh Calls for Leadership Change
Former Federal Reserve governor Kevin Warsh, who is also being considered as a possible successor to Powell, called the renovation costs “outrageous” and accused the Fed of losing focus on its core responsibilities.
“The institution needs a reset,” Warsh said. “We need someone who can restore credibility and bring discipline back to the Federal Reserve.”
Warsh’s comments reflect a growing view inside the White House that Powell’s leadership is no longer tenable—not just because of policy disagreements over interest rates, but because of how the Fed is managing its internal affairs.
Fed Chair’s Job Protection Faces Test
Powell has argued that the law does not allow the president to remove him without clear legal cause. That position has been echoed by legal scholars, who note that “cause” typically refers to serious misconduct, neglect of duty, or malfeasance—not disagreements over policy or construction spending.
So far, the administration has not identified specific legal grounds for firing Powell, but officials have said the building project could provide a basis for further review.
Trump Repeats Call for Powell to Step Down
President Trump has long been frustrated with Powell over interest rate policy, repeatedly urging the Fed to cut rates more aggressively. Over the weekend, Trump again called for Powell to resign.
“If Jerome Powell stepped down, it would be a great thing,” Trump said. “He’s been very bad for our country. We should have the lowest interest rates in the world, and we don’t. He refuses to do it.”
The headquarters renovation has now become a central piece of the White House’s case against Powell, adding new tensions to an already strained relationship between the Trump administration and the Federal Reserve.
Also Read: Trump Considers Replacing Fed Chair Powell with Hassett, Bessent, or Warsh
