Cost overruns for the Federal Reserve’s multibillion-dollar office renovation continue to haunt Fed Chair Jerome Powell, with the central banker telling a Senate committee chair that Fed staff will arrange a briefing to address the project’s snowballing budget.
Powell’s July 3 letter to Sen. Tim Scott, R-S.C., singled out the Fed’s $2.5 billion renovation project among “important issues” Fed and Senate staffers plan to discuss.
“We take seriously the responsibility to be good stewards of public resources and welcome the opportunity for further engagement on this matter,” Powell wrote. “With regard to the important issues you have raised, I understand that our staffs are coordinating a briefing to discuss the project in further detail.”
The letter was sent a week after Powell was grilled about the project by Sen. Mike Rounds, R-S.D., during his semiannual monetary policy report to the Senate. During his testimony, Powell dismissed media reports of lavish upgrades at the Fed’s Washington, D.C., headquarters as “misleading and inaccurate” and said the project’s cost overruns “are what they are.”
Federal Housing Finance Agency Director Bill Pulte, who posted a copy of the Powell letter to his X account, questioned the timing of the missive in a social media post.
“Why would he send it on July 3rd, right before the holiday?” Pulte wrote. “Why did it take him 2 weeks to respond?” In the letter, Powell noted that Scott had sent him a letter on June 24 referencing the renovation project.
On July 2, Pulte accused the Fed chair of lying to Congress about the project and asked for a formal congressional investigation.
This isn’t the first time the Fed office renovation has come under scrutiny. In 2021, the Fed’s Office of Inspector General issued an audit report during the project’s design phase that identified shortcomings in the Fed’s oversight of the architectural and engineering firm designing the upgrades. Specifically, the report said the Fed board did not ensure the firm was submitting regular progress reports, nor did it formally provide advance approval of project schedule changes.
“[The Fed board] did not formally approve any schedule updates after the contract award, even though the project schedule was extended approximately 2 years,” the audit report stated.
Originally budgeted at $1.9 billion in 2019, the estimated costs to renovate the historic Eccles Building and three adjacent structures in downtown D.C. increased to $2.1 billion as of June 2020. The project budget has since ballooned to $2.5 billion.
