White House Criticizes Federal Reserve Chair Jerome Powell Over Fiscal Management

On July 10, the White House intensified its criticism of Jerome Powell, the Chair of the Federal Reserve, with a prominent official from the Trump administration branding him a poor manager of the central bank. Office of Management and Budget Director Russell Vought expressed this sentiment in a letter posted on social media, contending that instead of correcting the Fed's financial issues, Powell had focused on a lavish renovation of the central bank's Washington headquarters.

Vought's letter underscored the Fed's unprecedented operating deficit and noted that the renovation costs had ballooned to about $2.5 billion, approximately $700 million over the original budget. He pointed out luxurious elements included in the renovation, such as rooftop gardens and premium materials, emphasizing that the spending rate per square foot was extraordinarily high—more than double that of a typical federal building renovation.

In response to the accusations, Austan Goolsbee, president of the Chicago Fed, defended the renovation project, stating it was essential for upgrading the outdated structure rather than being a luxury enhancement. The Fed, which is bound by law to return any surplus earnings to the Treasury, has faced a significant deficit for approximately three years, attributed to rising interest rates that increased its payments to commercial banks beyond the income generated from its bond holdings.

During recent congressional testimony, Powell faced scrutiny regarding the renovations and acknowledged the budget overruns, although he refuted claims of extravagant features. He emphasized the importance of ensuring fiscal responsibility in managing public funds while justifying the necessity of upgrading the aging buildings used by the Fed.