Fed’s $2.5 Billion HQ Renovation Revealed in Powell’s July Letter to Senators

Central bank splurges on marble while Main Street tightens belts.

The Paper Trail

Details of the Federal Reserve's massive headquarters overhaul landed on Capitol Hill last summer. A letter from Chair Jerome Powell to bipartisan senators laid out the blueprint for the $2.5 billion project—a figure that would make even a crypto whale blink.

Budget in the Billions

The renovation carries a price tag straight out of a tech unicorn's funding round. That's $2.5 billion earmarked for modernizing the institution that sets the cost of money itself. It's the ultimate office upgrade, funded by the very system it oversees.

Transparency on Tap?

The July correspondence signals an effort at congressional outreach. Explaining a multi-billion dollar facelift during economic uncertainty requires careful messaging. It's a masterclass in optics—justifying capital expenditure while managing public perception of fiscal prudence.

The Irony of Austerity

Here's the kicker: the same institution warning about inflation and preaching financial restraint is dropping $2.5 billion on its own digs. It's the financial equivalent of your accountant charging you for his new Porsche—a tidy reminder that in traditional finance, the house always wins, especially when it's renovating the house.

Justice Department presses Powell over June testimony

The investigation focuses on what Powell told senators about the size, cost, and changes tied to the Fed’s long-running construction effort. The Fed board approved the project in 2017, and the work covers the central bank’s main 1930s headquarters and a nearby building.

The project is now about $700 million over budget and is expected to wrap up next year.

President Trump and senior officials, including Office of Management and Budget director Russell Vought, have said the testimony did not fully cover the scale of the renovations.

On Sunday, Powell said the Justice Department asked a federal grand jury to subpoena the Fed, a MOVE that could eventually lead to criminal charges.

The probe is overseen by Jeanine Pirro, the U.S. attorney for the District of Columbia. She said her office requested subpoenas partly to get more details on “the chairman’s congressional testimony” tied to the renovation. Pirro also said her team had asked for information “multiple times” and was “ignored.”

A person familiar with the matter said the Fed received two emails over the holidays from staff at the U.S. attorney’s office in Washington. Those messages did not mention a criminal investigation, according to that person.

Powell details costs and briefed lawmakers after hearing

The July letter sent by Powell to the powerful Senate banking committee shows he provided extensive written answers after the June hearing. The letter was addressed to Tim Scott, the committee chair, and Elizabeth Warren, the top Democrat on the panel.

“The board believes it is of the utmost importance to provide transparency for our decisions and to be accountable to the public through the Congress for our work,” Powell wrote.

In another section, he added, “We take seriously our commitment to transparency. We respect the critical importance of the constitutionally-derived congressional oversight of our activities, and we are committed to working collaboratively and cooperatively with you.”

A spokesperson for Warren pointed back to the senator’s earlier response to the investigation. She accused the president of “abusing the authorities” of the Justice Department, “so the Fed serves his interests.”

The renovation budget has climbed due to several factors. Powell told senators in June that the Fed dropped earlier design ideas like water features, rooftop terraces, and beehives to rein in costs.

In the July letter, he listed rising prices for materials, equipment, and labor, along with unexpected building problems. Those included asbestos, toxic soil contamination, and a higher-than-expected water table beneath the site.

“We take seriously the responsibility to be good stewards of public resources as we fulfil the duties given to us by Congress on behalf of the American people,” Powell wrote, noting that the Fed’s inspector general has full access to project records.

Ten days after sending the letter, Powell hosted Trump, Scott, and other WHITE House officials for a July 24 tour of the renovation site. On Sunday, he said the Fed had “made every effort to keep Congress informed about the renovation project.”

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