The White House Criticizes Fed Chair Powell for "Poor Management" and Here is the Evidence

The White House Budget Director accused Federal Reserve Chairman Jerome Powell of "mismanaging" the agency, citing the renovation project of the Fed headquarters that has exceeded the budget by hundreds of millions USD and shows signs of violating legal regulations. This is seen as the next step in the escalating tension between President Donald Trump and the head of the world's most powerful central bank. The Director of the Office of Management and Budget (OMB), Mr. Russell Vought, publicly criticized Fed Chairman Jerome Powell in harsh terms, arguing that he has "managed this agency extremely poorly." Mr. Vought particularly emphasized the Fed's budget deficit for fiscal year 2023 – something that has never happened before in the history of this agency. The focus of criticism is the renovation project of the Fed's headquarters in Washington, which has already exceeded its budget by up to 2.5 billion USD – 700 million USD more than the initial estimate. "The cost per square meter reaches 1,923 USD, double the normal rate when renovating historic federal buildings. If calculated equivalently, the Palace of Versailles today would only cost 3 billion USD," Mr. Vought sarcastically compared on social media X. What items make the White House suspect that the Fed is wasting the budget? In the letter sent to Chairman Powell, Mr. Vought referenced the Senate hearing on June 25, arguing that the content presented by Mr. Powell was likely to be "misleading" to Congress. According to Mr. Vought, the original design of the project included extravagant items such as a rooftop garden, private dining rooms for VIP guests, a private elevator, decorative water features, and high-end marble. However, in his testimony before Congress, Mr. Powell denied everything: "There is no VIP dining room, no new marble, no special elevator, no water pool, no rooftop garden or beehive." This raises questions for the OMB: if the original design included those items but they were not implemented, then the Fed is deviating from the approved plan; and if they were implemented, then Powell's testimony is inaccurate. One important point raised by Mr. Vought is that the renovation project of the Fed headquarters did not comply with the National Capital Planning Act (NCPA). This law stipulates that all such projects must be approved by the National Capital Planning Commission (NCPC). If there are significant changes from the approved design, the Fed is required to seek re-approval. "Mr. Powell's testimony shows that the project is not in accordance with the plan approved by the NCPC. This could put the entire project in a state of legal violation and require an immediate halt to construction," Mr. Vought affirmed. He also requested the Fed Chairman to answer 11 questions related to the project within 7 working days, including details about construction items, costs, and compliance with legal regulations. Is this a move to remove Mr. Powell from the Fed? The tension between Mr. Trump and Mr. Powell is not a new issue. The U.S. President has repeatedly publicly criticized the Fed for not lowering interest rates as he expected. In fact, Mr. Trump even considered firing Chairman Powell before his term ends next spring. However, a recent ruling by the U.S. Supreme Court shows that members of the Fed Board have special protection against being arbitrarily fired by the President. Nevertheless, Mr. Vought's letter raises the question of whether the Trump administration is trying to construct a "legitimate" reason to dismiss Mr. Powell. Currently, the U.S. Federal Reserve has not made any official comments regarding the letter from the OMB Director. This silence is considered a cautious step, given the political tensions between the White House and the Fed that could affect market confidence. In the past, the Fed has always protected its independence in formulating monetary policies, avoiding being influenced by politics. Being accused of "wasting the budget" or "misreporting" can seriously affect the credibility of this agency if there is no clear response.