Trump has repeated his call for former Federal Reserve Chair Jerome Powell to resign from the central bank’s Board after a watchdog report found major cost increases and management problems surrounding the renovation of two historic Federal Reserve buildings in Washington, DC.
The Federal Reserve Office of Inspector General published its evaluation of the Eccles and 1951 building renovation project on September 29. It found serious deficiencies in the Federal Reserve Board’s management and oversight of the project, and the review did not find evidence of criminal referral or administrative misconduct.
The report comes after a long-running dispute between Trump and Powell. Trump has repeatedly hit Powell over monetary policy and interest rates and the renovation project has become a point of contention between the president and former Fed chair.
Trump Recites Call For Powell to Resign.
After the release of the watchdog report, Trump again targeted Powell and called for his resignation from the Federal Reserve Board. In a post on Truth Social, Trump said Powell should leave the Board and criticized his handling of the renovation project as well as his approach to monetary policy.
Trump's comments came after an Inspector General report concluded no reasonable grounds to believe a violation of federal criminal law had occurred that warranted referral to the US attorney general. The report also said administrative misconduct was not identified in the evaluation.
But the findings did point to significant management problems. The Board had not adequately managed and executed its construction-manager-at-risk contract and had frequently violated cost-management provisions, the Inspector General said.
The cost of Fed Renovation Costs Rise Sharply
The renovation of the Eccles and 1951 buildings has attracted much attention because of the sharp increase in projected costs. In February 2020, the Board’s renovation budget was $921 million and its most recent 2024 budget was $2.018 billion, the Inspector General said.
The total cost for the project in general has risen to more than $2.4 billion and the increase has become a major political issue, Reuters reported. The watchdog’s findings attributed the cost growth to deficiencies in project oversight and management, not criminal wrongdoing.
The Inspector General also concluded that the Board’s internal project governance was not sufficient for a project of the size and complexity involved. It identified several opportunities where stronger cost controls could have helped limit some of the increases.
The report made seven recommendations to address the problems identified during the evaluation. The Federal Reserve Board agreed with those recommendations.
No Criminal Misconduct Found
One of the key distinctions in the report is between poor project management and criminal or administrative misconduct. While the Inspector General identified deficiencies in the way the renovation was overseen, it did not find evidence that warranted a criminal referral.
That distinction is significant because the renovation issue has been used in the broader political debate about Powell. The watchdog’s findings provide evidence of management and cost-control failures but do not indicate Powell and other officials committed criminal misconduct in connection with the project.
The Federal Reserve’s Inspector General is responsible for independent oversight of the Board and the Consumer Financial Protection Bureau, including examining waste, fraud, abuse and weaknesses in agency operations.
Trump-Powell Dispute Continues
Trump’s criticism of Powell predates the renovation controversy. Powell was nominated by the president in 2017 to lead the Federal Reserve and Powell became Chair in 2018. Their disagreements over monetary policy have continued in the years since, especially regarding the level and direction of interest rates.
And the renovation project was a target of Trump’s criticism as costs rose. The White House and Trump’s allies have pointed to the cost of the project and the Federal Reserve’s management.
Powell has defended the renovation project in the past, while the new Inspector General report provides a more detailed picture of the management issues involved. Powell declined to comment on the new watchdog findings, Reuters reported.
What Would The Report Tell The Fed?
The Inspector General’s findings will keep focus on how the Federal Reserve manages major construction projects and public resources. Contract management, project governance and cost controls, the report identified were weaknesses.
The Board has agreed to take the recommendations and form a framework for changes to its oversight over major renovation projects. So the report goes beyond the political argument between Trump and Powell and looks at operational problems that the Federal Reserve is expected to deal with.
But Powell’s report has become another element in the larger political debate over the Federal Reserve and its leadership. The watchdog identified huge deficiencies in project management but the findings did not establish criminal or administrative misconduct.
The renovation controversy has now emerged in line with the discourse on monetary policy, presidential pressure on the central bank and the Fed’s independence. How the Board implements the Inspector General’s recommendations will determine the next phase of scrutiny around the costly renovation project.
