U.S. President Donald Trump again demanded that former Federal Reserve Chair Jerome Powell resign from the central bank's board. The demand came on the same day the Fed's Office of Inspector General said it had found no evidence of wasteful spending in the renovation of the central bank's Washington headquarters. Trump pressed for the resignation anyway, citing missteps in the project despite the watchdog's findings.
Trump posted his position on social media on the 30th, local time, citing the inspector general's conclusion that the Fed had mismanaged the renovation, Bloomberg reported. He said he had instructed Attorney General Todd Blanche to review the report and "determine what to do."
"The building was over budget in record numbers, and 'Too Late' Powell, who was way behind schedule, should be forced to resign from the Board," Trump wrote, using a nickname he has long deployed to disparage the former chair's interest-rate policy. "This is Powell's fault and he should resign immediately," he added, saying that if Powell does not step down, the U.S. government should prosecute him to the fullest extent for corruption or incompetence.
The OIG report released the same day, however, said it had identified no administrative misconduct in the $2.4 billion project. The watchdog said it had never found reasonable grounds to believe that a federal criminal statute had been violated during the course of its evaluation. The findings effectively defuse a controversy that flared earlier this year when the Justice Department pushed to indict the former chair.
The report did cite several management failures that allowed costs to balloon from an initial 2020 estimate of $1.3 billion. The Fed's board failed to address cost overruns on an earlier project, did not implement a recommendation to specify a spending cap and did not request construction cost estimates, according to the report. No guaranteed maximum price had been set as of July, four years after construction began and after bidding had closed. The report also faulted a shortage of bidders for some portions of the work and internal governance that lacked the structure to manage a project of that scale.
Fed Chair Kevin Warsh said the central bank would implement the recommendations. Under the arrangement, the General Services Administration will take over as project manager and work with the Fed to complete the renovation, reporting to the board and to Warsh. Warsh also said he would appoint an independent auditor to review all costs incurred to date. Asked in the Oval Office whether he expected Warsh to help oust Powell, Trump said the new chair would "do his job."
Powell broke with convention in May by choosing to remain at the Fed as a governor after his second term as chair ended. His term as a governor runs through January 2028. A provision of the Federal Reserve Act bars the president from removing a governor except "for cause."
Mark Spindel, founder of Potomac River Capital, said Trump had not threatened to fire Powell but that the response showed the White House is keeping up pressure to reshape the rate-setting board. "Trump's grievance with Powell is as bottomless as his desire to control the Fed," he said, adding that the political actors who have backed the central bank, including Congress and the courts, are likely to maintain that stance.
