Another prominent federal official has joined the growing criticism of Federal Reserve Chairman Jerome Powell.
Russell Vought, head of the White House’s Office of Management and Budget (OMB), posted a two-page letter addressed to the Fed chair to his X account Thursday that accused Powell of fiscal mismanagement of the Fed’s operating budget. It specifically referenced the Fed’s $2.5 billion renovation of its headquarters in Washington, D.C.
Powell had previously testified before the Senate Committee on Banking, Housing and Urban Affairs on June 25 regarding escalating costs for the renovation project, which was originally budgeted at $1.9 billion. He said the project was prompted by required safety updates and waterproofing needs, and he also characterized media reports about lavish upgrades as “misleading and inaccurate” and said the “cost overruns are what they are.”
Vought questioned that testimony in his letter and suggested the additional project costs may have run afoul of federal planning commission rules.
“Your testimony raises serious questions about the project’s compliance with the National Capital Planning Act, which requires that projects like the Fed headquarters renovation be approved by the National Capital Planning Commission,” Vought wrote. “Although minor deviations from approved plans may be inevitable, your testimony appears to reveal that the project is out of compliance with the approved plan with regard to major design elements.”
The letter proceeded to list 11 design-related questions and asked that Powell respond within seven business days. The bulleted list included inquiries about whether the current renovation plans include water features, private dining rooms and the extension of a private elevator.
A Fed spokesperson declined to comment on the letter in an email to Scotsman Guide on Friday.
Renovation specifics
An FAQ published on the Federal Reserve website Friday addressed some of the specific design elements mentioned by Powell in his Senate testimony and questioned by Vought in his letter.
Regarding water features, the FAQ notes that “the Board’s initial design included new water features for 1951 Constitution Avenue, but they have been eliminated. Fountains that were original to the Eccles Building are being restored.”
It maintains that “no new VIP dining rooms are being constructed as part of the project,” although conference rooms used for mealtime meetings are being renovated and preserved. It also says none of the elevators are limited to just Fed governors, but that existing elevators are being rehabilitated, and one is being extended to make conference rooms more accessible for people with disabilities.
The FAQ also addresses the project’s escalating budget. It attributes the cost increases to required design changes due to consultation with review agencies; differences between original estimates and actual costs of materials, equipment and labor; and other unforeseen construction issues, including more asbestos abatement than expected and the discovery of toxic contamination in soil.
Inflation tensions
Vought also criticized Powell on monetary policy during a Friday appearance on CNBC. He echoed a common refrain from President Donald Trump, claiming that the Fed chair has been “too late” to adapt to shifting economic conditions and either raise or lower interest rates during his term, both when inflation was heating up during the pandemic era and during the recent cooling of consumer prices.
“He was too late to recognize inflation and now he’s too late to lower rates,” Vought said. “And the Fed [chairman] has just mismanaged the institution.”
Besides Trump and Vought, other notable Republicans who have criticized Powell in recent weeks include Sen. Bernie Moreno of Ohio, Sen. Tommy Tuberville of Alabama and Sen. Rick Scott of Florida.
But the attacks from Vought are particularly noteworthy, considering he also serves as acting director of the Consumer Financial Protection Bureau (CFPB), which receives its funding through an annual process where the CFPB requests a budget amount within a fixed percentage of the operating expenses of the Federal Reserve.
The consumer watchdog agency recently saw that maximum percentage of Fed funding slashed from 12% down to 6.5% as part of the GOP-led tax-and-spending megabill that was signed into law by Trump during a July 4 ceremony.
It is unlikely Vought would have requested the full 12% had the CFPB funding made it through the budget reconciliation process unscathed. Since taking the reins of the CFPB in February, Vought has been on a cost-cutting spree, including his controversial push to lay off nearly 90% of the bureau’s workforce.
