Federal Reserve Chair Jerome Powell faces intense scrutiny following accusations of misleading Congress regarding the cost and nature of renovations to the Fed’s headquarters. During a Senate Banking Committee hearing last month, Powell’s statements about the renovation costs contradicted publicly available planning documents filed with the National Capital Planning Commission. The administration’s original budget for the renovation was set at $1.9 billion. It has now ballooned to more than $2.5 billion due to massive cost overruns.
Senators were rightly outraged by Powell’s cavalier attitude about these overruns, saying instead that “These are what they are.” The Fed building is about to undergo some posh renovations. Yet, as many lawmakers have pointed out, these plans are remarkably extravagant. This is quite a statement in light of the Federal Reserve’s projected $77.6 billion operating loss for 2024.
Both the Senate Banking Committee and House Appropriations Committee recently flayed Powell over the renovations approved in 2021. They could find no evidence of any updates or amendments to the plans since. This has led to larger concerns about fiscal responsibility and transparency in the Federal Reserve.
Senator Tim Scott (R-S.C.) voiced his concerns, stating that the renovations “feel more like they belong in the Palace of Versailles.” Meanwhile, Senator Cynthia Lummis (R-Wyo.) expressed doubts about Powell’s management style and preparation for his testimony, suggesting he “was clearly not prepared for his testimony and should be embarrassed.”
In defense of the renovations, Powell stated, “There’s no VIP dining room. There’s no new marble. There are no special elevators. There are no new water features, there’s no beehives, and there’s no roof terrace gardens.” However, planning documents indicate that one of the planned renovations includes restoring private dining rooms on Level 4 of the Fed’s Eccles building and extending the Governors’ private elevator to discharge at the dining suite level.
Senator Lummis didn’t stop there – she went on to criticize Powell further for communicating multiple factually inaccurate statements about the renovations in the course of his testimony. She remarked, “This is typical of the mismanagement and ‘don’t bother me’ attitude that Chair Powell has always shown.”
Senator Gary Levin joined in earlier this month, demanding accountability on the issue. “A top Fed official cannot be permitted to make false statements under oath at a congressional hearing,” Levin stated. He argued that these types of statements should be immediately rectified and could even be subject to censure by the full Senate in extreme instances.
The Federal Reserve has realized losses of just over $1.06 trillion on its Treasury and mortgage-backed security portfolios. Coupled with the almost frivolous wasteful spending on renovations, this excessive sum calls into a question prudence with taxpayer dollars.
As Congress wrestles with these questions, Powell’s tenure at the Federal Reserve is becoming an increasingly hot topic. Sky-high renovation costs and deep operational deficits underscore mismanagement at an alarming level. All of this should be alarming, considering that it is one of the nation’s largest and most powerful financial institutions.