The White House is pushing for an inspection of the US Federal Reserve headquarters in Washington after Donald Trump suggested the central bank had mismanaged funds for building renovations.
The scrutiny comes as Trump has unsuccessfully tried to pressure the Fed chair, Jerome Powell, to quit and demanded he and other officials lower interest rates. Powell has said that lowering rates prematurely could lead to higher inflation, and that Trump’s tariffs had contributed to price increases.
In response to the Fed chair’s resistance, Trump has threatened to fire Powell multiple times.
Yesterday, after reports that Trump floated the idea of firing Powell to House Republicans, Trump said: “I don’t rule out anything, but I think it’s highly unlikely unless he has to leave for fraud.”
The White House budget director, Russell Vought, told reporters on Thursday that the administration wanted to have an on-site inspection of the Fed’s troubled $2.5bn building renovations.
“I think the president was pretty clear yesterday: he’s unlikely to fire the chairman, but he has substantial concerns with regard to how he’s managed the Fed,” Vought said.
Trump faces many challenges to his desire to oust Powell. The supreme court in the spring went out of its way to say that, while Trump has the ability to fire certain officials, like those on national labor boards, the Fed is different.
“The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the court said in May.
Should Trump fire Powell, he is probably setting himself up for a complicated battle with the supreme court.
Meanwhile, Wall Street investors appear opposed to Trump firing Powell. US stocks dipped down on Wednesday afternoon directly after reports that Trump was once again floating the idea of firing Powell.
“The independence of the Fed is absolutely critical,” the JPMorgan Chase CEO, Jamie Dimon, said on Tuesday. “Not just for the current Fed chairman, who I respect, but for the next Fed chairman.”
But Powell’s term is set to end in May 2026, and Trump appears to be hopeful that recent renovations at the Fed make Powell an easier target. Renovations were initially slated to cost $1.9bn after it was budgeted in 2019, but costs have risen to $2.5bn. The Fed has said the renovations cover two buildings that have “not been comprehensively renovated since their construction in the 1930s”.
On Wednesday, Trump said that “it’s possible there’s fraud involved with the $2.5bn”.
Trump also said that Powell was a “terrible Fed chair” and that he “was surprised he was appointed”. Trump appointed Powell to the job in 2018. Biden extended Powell’s term in 2022.
