Fed Responds to Criticism Over $2.5 Billion Renovation

The rehab of the Eccles building is ‘the most expensive project in D.C. history,’ according to the director of the National Economic Council.

The Federal Reserve building in Washington on Jan. 26, 2022. Joshua Roberts/Reuters

The Federal Reserve updated its frequently asked questions section in an apparent response to the Trump administration’s criticism of its multi-billion-dollar building renovation plan amid brewing tensions over interest rates.

The Federal Reserve is undertaking a major rehaul of facilities and structural work of the Marriner S. Eccles Building, with current cost estimates at around $2.5 billion, according to Office of Management and Budget (OMB) Director Russ Vought.

The OMB, which oversees federal budgetary expenses, has criticized the project. Vought called it an “ostentatious overhaul” in a July 10 post on social media platform X. A letter addressed to Federal Reserve Chair Jerome Powell was attached to the post.

“While continuing to run a deficit since FY23 (the first time in the Fed’s history), the Fed is way over budget on the renovation of its headquarters,” Vought said. “Now up to $2.5 billion, roughly $700 million over its initial cost.”

Kevin Hassett, director of the National Economic Council, was asked in a media interview about Vought’s criticism and whether it was grounds for firing Powell.

“This is the most expensive project in D.C. history, $2.5 billion with a $700 million cost overrun,” Hassett said. “To put that in perspective, the cost overrun for this Federal Reserve project is about the same size as the second biggest building overhaul in American history, which was the FBI building. And so, the Fed has a lot to answer for.”

Amid rising criticisms, the Fed updated its website FAQ section, justifying the renovation expenses.

“Major systems in both buildings were obsolete and in need of replacement for health and safety reasons,” the website states. “They included plumbing, electrical, fire suppression, water connections, and HVAC. Some systems dated to the construction of the buildings in the 1930s.”

The project will remove hazardous materials such as asbestos and lead and will bring the buildings up to modern code, while interior spaces will be made more accessible for people with disabilities, according to the Fed.

The agency stands to save costs on leasing spaces in commercial office buildings once the renovation is completed, states a response to a question about costs.

“This project allows the Board to consolidate its operations and reduce expenses on leased space elsewhere,” it states.

‘VIP Elevators, and Premium Marble’

Vought said in his post that several extensions were unnecessary and over budget.

“These renovations include terrace rooftop gardens, water features, VIP elevators, and premium marble. The cost per square foot is $1,923—double the cost for renovating an ordinary historic federal building. The Palace of Versailles would have cost $3 billion in today’s dollars!” he said.

In his letter, Vought dismissed Powell’s assertions during a Senate Banking Committee testimony on June 25 that the Eccles Building “never had” a serious renovation.

Vought said the building underwent a “comprehensive renovation between 1999-2003 that included a replacement of the roof and building systems.” He asked Powell to respond to a series of questions regarding the proposed renovation and related costs.

In its updated FAQ section, the Fed website states there were no new VIP dining rooms or a VIP elevator constructed as part of the project.

Meanwhile, President Donald Trump has been consistently criticizing Powell for not lowering interest rates. In a June 30 Truth Social post, the president said that Powell and the Fed Board “have one of the easiest, yet most prestigious, jobs in America, and they have FAILED—And continue to do so.”

The Fed should have set rates between 0.25 and 1.75 percent, like other nations such as Japan, Denmark, Cambodia, and Switzerland, Trump said.

At present, the Fed’s benchmark interest rate is in a range of 4.25 to 4.5 percent. In June, the Fed kept rates unchanged for its fourth straight meeting.

The Fed’s interest rate decisions significantly affect the economy, determining interest rates on debts undertaken by the government, businesses, and citizens.

Regarding the matter, Powell said that interest rates will be lowered once he is confident that inflation will not rise as a result of the Trump administration’s tariffs.