The Federal Reserve Act affords the central bank board considerable leeway over its facilities, including remodels and new construction. According to the Fed, several factors drove up the cost of the project. There were changes to the original building design after review agencies were consulted. Asbestos removal, toxic contamination of soil and water table challenges were also at play.
Ironically, the project also faced higher-than-anticipated costs due to inflation — Powell’s main concern in keeping interest rates elevated.
Scott Alvarez, the Fed’s former general counsel, said it would be difficult to make a “for cause” case for Powell’s dismissal without evidence of malfeasance, criminal activity or dereliction of duty. Others noted that cost overruns are common on renovations, particularly when it comes to older buildings in historic districts. (The Fed headquarters is on the National Mall.)
Another complicating factor would be Trump’s repeated attacks on the Fed chair over interest rates. If the president were to use any of Vought’s findings — or claims that Powell had misled Congress — to attempt to dismiss the chair for cause it would likely be viewed as “obviously, totally pretextual,” said one Wall Street executive, who was granted anonymity to speak openly about the administration.
“I think the strategy is to put more pressure on Jay,” Alvarez said, referring to Powell. “Anything that makes him uncomfortable, anything that the administration can do to beat him up, I think they feel like that’s going to get him to soften his position on inflation and lower rates sooner — or get fed up and leave.”