The renovation of Fed's headquarters: a new means of pressure from White House on Jerome Powell

The White House has found a new angle of attack against Jerome Powell: the renovation of the Fed's headquarters. Several Trump administration officials are pointing to budget overruns. In short, the US president continues to criticize Jerome Powell for not cutting rates enough… and different candidates to succeed him are lining up.

The Trump administration is actively considering the possibility of dismissing Federal Reserve Chairman Jerome Powell, citing cost overruns relating to a major project to revamp the institution's headquarters in Washington, as said by White House economic adviser Kevin Hassett on Sunday.

For several weeks, Republicans have been using the renovation of the Fed's headquarters to step up their offensive against Jerome Powell. Criticism has intensified since Russell Vought last week denounced what he called the "ostentatious renovation" of the Fed complex, a project estimated to cost $2.5bn. In a message posted on X, he compared the project to the Palace of Versailles, citing hanging gardens, fountains, and exquisite marble.

No garden terrace, but asbestos

In response to these accusations, the Fed published a list of frequently asked questions on Friday defending the renovation, describing it as the first complete refurbishment of the buildings since they were built in the 1930s. The project includes the removal of lead and a larger-than-expected amount of asbestos.

Photographs of dilapidated pipes and roofs accompany these explanations, which also highlight the impact of rising material, equipment, and labor costs. The institution denies the existence of VIP dining rooms or luxury elevators. The project includes a "green roof" designed to improve rainwater management and energy efficiency, similar to other federal buildings, but without terrace access.

"There are no new fountains, no beehives, and no rooftop gardens," Powell told senators in June, refuting any claims of excessive spending.

He acknowledged cost overruns but insisted that the building, which is nearly 90 years old, was dilapidated and not waterproof. The Fed said the renovation, which includes an adjacent building, will consolidate staff on a single campus and reduce external rental costs. According to a February report by the Fed's inspector general, the total cost rose from $1.9bn to $2.4bn in two years.

Appearing on ABC's "This Week," Kevin Hassett said that President Donald Trump could remove Powell from office "for cause" if there were grounds to do so. He denounced it as "the most expensive project in the history of DC." He also said that any decision would depend on the Fed's responses to questions posed by Russell Vought, the White House budget director.

These comments confirm that the White House is exploring the possibility of using the renovation project as a legal basis for removing Powell, whose term expires in May 2026. Trump has repeatedly called for Powell's resignation, criticizing him for not reducing interest rates since he returned to the presidency in January.

Also on Sunday, Kevin Warsh, a member of the Fed's board of governors from 2006 to 2011, called for a "regime change" within the monetary institution, even beyond the presidency.

"The Fed has lost its way. It has lost its way in its supervision, in its monetary policy," he said on Fox's Sunday Morning Futures program. "There needs to be regime change at the Fed, and that doesn't just mean the chairman. It's a whole culture, a whole way of thinking and operating that needs to change. There are going to have to be some heads rolling, because this system is not working."

Vice President JD Vance added his voice to the criticism, writing on Sunday on X: "The Fed has completely lost control. As President Trump says, they are TOO SLOW — both in fighting inflation under Biden and in lowering rates today."

Succession

It is no coincidence that the criticism is mainly coming from the "two Kevins." According to the Wall Street Journal, Kevin Hassett and Kevin Warsh are the two candidates in the running to succeed Jerome Powell.

In principle, the Fed chair must be appointed from amongst the members of the board – the governing body which has seven governors appointed for a non-renewable 14-year term. A seat will become vacant in early 2026 when Adriana Kugler's term ends on January 31. Donald Trump could therefore appoint Warsh or Hassett on this occasion, who would then take over as head of the institution in May.

Jerome Powell himself would remain a board member until January 2028 - or at least in theory. When asked repeatedly in recent months about his presence after May 2026, he has always refused to give a clear answer.

Amongst candidates, Donald Trump could also choose a current Fed governor. The names of Christopher Waller and Michelle Bowman are circulating. In any case, both seem interested in the position, as they have spoken out in favor of immediate rate cuts in recent weeks.

What is certain is that the lucky winner would have to want immediate and substantial rate cuts. Donald Trump has been arguing for this for months, partly to ease the debt burden, which he says is costing the US "a fortune." "We should have the lowest interest rates on Earth," he said yesterday from Andrews Air Force Base.