The Federal Reserve Act grants the central bank board significant flexibility regarding its facilities, including renovations and new constructions. The Fed states that several factors contributed to the increased project costs, such as changes to the original building design following reviews, as well as issues like asbestos removal, soil contamination, and water table challenges.
Ironically, inflation, Powell’s main reason for maintaining high interest rates, also contributed to higher-than-expected project expenses.
Scott Alvarez, the Fed’s former general counsel, mentioned it would be challenging to argue for Powell’s dismissal “for cause” without evidence of wrongdoing, criminal behavior, or neglect. Others highlighted that cost overruns are typical with renovations, especially involving older buildings in historic areas, such as the Fed headquarters on the National Mall.
Another complicating element is Trump’s frequent criticisms of the Fed chair regarding interest rates. Should the president attempt to use Vought’s findings or claims that Powell misled Congress to justify dismissing the chair, it would probably be seen as “obviously, totally pretextual,” according to a Wall Street executive, who spoke anonymously about the administration.
“I think the strategy is to put more pressure on Jay,” Alvarez said about Powell. “Anything that makes him uncomfortable, anything that the administration can do to criticize him, they likely feel could lead him to change his stance on inflation, lower rates sooner, or resign.”
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