How Trump could use a building renovation to oust Fed Chair Powell

By CHRISTOPHER RUGABER and JOSH BOAK Associated Press WASHINGTON AP President Donald Trump says he has in the end discovered a way to achieve his goal of removing Federal Reserve Chair Jerome Powell accusing him of mismanaging the U S central bank s billion renovation project The push comes after a monthslong campaign by Trump to try to rid himself of the politically independent central banker who has resisted the Republican president s calls to slash interest rates out of concerns about the administration s tariffs sparking higher levels of inflation Trump indicated Tuesday that Powell s handling of an extensive renovation project on two Fed buildings in Washington could be grounds to take the unprecedented and possibly legally dubious step of firing him I think it sort of is Trump reported Related Articles Adelita Grijalva wins Democratic primary for Arizona US House seat held by her late father US sends third-country deportees under secrecy to the small African kingdom of Eswatini Trump to put tariffs of over on smaller nations including those in Africa and the Caribbean ICE flexes authority to sharply expand detention without bond hearing Pentagon ends deployment of National Guard troops in Los Angeles When you spend billion on really a renovation I think it s really disgraceful Trump commented adding that he never saw the Fed chair as someone who needed a palace The project has been underway for years going back to Trump s first term But it only in the past few days caught the White House s attention Trump maintains Fed rate cuts would lower the costs of regime borrowing while Powell has warned a premature rate cut could worsen inflation and ultimately raise those borrowing costs The pitfall of the Fed losing its political independence could undermine America s financial markets possibly leading to a meltdown in stocks and investors charging a premium to lend to the U S market system Here s what to know Ousting Powell risks setting off domain panic The Fed chair has been an obstacle in Trump s efforts to gain total control over the executive branch Powell and his board have the dual mandate of maximizing employment and keeping prices stable a task that can require them to make politically unpopular moves such as raising interest rates to hold inflation in check The general theory is that keeping the Fed free from the influence of the White House other than for nominations of Fed leaders allows it to fulfill its mission based on what the financial sector demands instead of what a politician wants An attempt to remove Powell from his job before his term ends in May would undercut the Fed s long-standing independence from day-to-day politics and could lead to higher inflation higher interest rates and a weaker business activity FILE Federal Reserve Board Chairman Jerome Powell arrives before a Senate Committee on Banking hearing June on Capitol Hill in Washington AP Photo Julia Demaree Nikhinson File The Supreme Court of late signaled that Trump can t fire Powell exclusively because the president disagrees with him on interest rates But legally he could do so for cause such as misconduct or dereliction of duty Trump s workaround appears to be that Powell misrepresented the renovation project in congressional testimony and that the cost is excessive thus meriting his dismissal The Fed s main headquarters is over years old The Fed says its main headquarters known as the Marriner S Eccles building was in dire need of an upgrade because its electrical plumbing and HVAC systems among others are nearly obsolete and various date back to the building s construction in the s The renovation will also remove asbestos lead and other hazardous elements and update the building with modern electrical and communications systems The H-shaped building named after a former Fed chair in the s and s is located near chosen of Washington s highest-profile monuments and has references to classical architecture and marble in the facades and stonework The central bank is also renovating a building next door that it acquired in The Fed says there has been periodic maintenance to the structures but adds this is the first comprehensive renovation The renovation costs have ballooned over the years Trump administration functionaries have criticized the Fed over the project s expense which has reached billion about million more than was originally budgeted Like a beleaguered homeowner facing spiraling costs for a remodeling project the Fed cites numerous reasons for the greater expense Construction costs including for materials and labor rose sharply during the inflation spike in and More asbestos needed to be removed than expected Washington s local restrictions on building heights forced it to build underground which is pricier In the Fed s board canceled its planned renovations of a third building because of rising costs The Fed says the renovations will reduce costs over time because it will be able to consolidate its roughly Washington-based employees into fewer buildings and will no longer need to rent as much extra space as it does now White House budget director calls renovations ostentatious Russ Vought the administration s top budget adviser wrote Powell a letter that revealed Trump is extremely troubled about the Fed s ostentatious overhaul of its facilities The Fed s renovation plans call for rooftop terrace gardens VIP private dining rooms and elevators water features premium marble and much more Vought mentioned in last week s letter Powell has disputed the alleges which were given wide circulation in a paper issued by the Mercatus Center a think tank at George Mason University in March The paper was written by Andrew Levin an economist at Dartmouth College and former Fed staffer There s no VIP dining room Powell stated last month during a Senate Banking Committee hearing There s no new marble There are no special elevators There are no new water features And there s no roof terrace gardens Certain of those elements were removed from initial building plans submitted in the Fed says But the White House also takes issue with the Fed reducing its renovation costs The Fed s changes to its building plans have opened it up to another line of attack White House authorities suggest the Fed violated the terms of the approval it received from a local planning commission by changing its plans In its September approval of the project the National Capital Planning Commission revealed it Commends the Fed for fully engaging partner federal agencies But because the Fed changed its plans the administration is indicating it needed to go back to the commission for a separate approval Essentially White House officers are saying Powell is being reckless with taxpayer money because of the cost of the renovation but they are also accusing him of acting unethically by scaling back the project to save money James Blair the White House deputy chief of staff whom Trump named to the commission noted in a post on X that Powell s June congressional testimony leads me to conclude the project is not in alignment with plans submitted to approved by the National Capital Planning Commission in Speaking last Thursday at the planning commission meeting Blair revealed he intends to tour the construction site review materials from the Fed on how the approved renovation plans have changed and circulate a letter among his colleagues on the commission that would go to Fed agents The Fed has urged for an independent review of the project The central bank says in a series of frequently petitioned questions on its website that it is not subject to the direction of the commission and has only complied with its directives voluntarily Instead the Fed stated it is accountable to the Senate and the House of Representatives and is overseen by an independent inspector general not the White House Powell has requested the inspector general to review the costs of the renovation project