US Trump Administration Reignites Fed Budget Waste... "Has the Power to Dismiss Powell"

[Financial News] The US Donald Trump administration, which is demanding a cut in the Federal Reserve's (Fed) interest rates, has reignited the controversy over Fed budget waste, pressuring Jerome Powell, the Fed chairman. A Trump administration official emphasized that there is much the Fed needs to explain and that the president has the authority to dismiss the Fed chairman.

Kebit Hassit, chairman of the White House National Economic Council (NEC), mentioned Powell during an appearance on ABC News on the 13th (local time). When asked if the cost of the Fed headquarters renovation could be a reason for Powell's dismissal, he said, "Whether the president decides in that direction will largely depend on how the Fed responds to the inquiry from Russell Vought, the White House budget director." He argued that the Fed's headquarters renovation was the second most expensive in US history after the FBI headquarters renovation, stating, "The Fed has a lot to explain." When asked if the president has the authority to dismiss the Fed chairman, he replied, "It's something we're looking into, but if there's a reason, the president certainly has that authority."

The Fed has been renovating its headquarters in Washington DC since 2021, and as of 2022, the cost has surged to $2.5 billion (approximately 3.4487 trillion won). The Fed operates its budget from revenue generated from its own assets, not relying on congressional appropriations, but has recently recorded a deficit due to interest expenses. Elon Musk, CEO of Tesla, who led the Trump administration's Department of Government Efficiency (DOGE), said in a meeting with reporters on April 30 that the Fed's renovation costs should be investigated.

The White House and Republican figures report that the Fed installed unnecessary luxuries such as rooftop gardens, artificial waterfalls, VIP elevators, and marble decorations, increasing the renovation cost by $700 million from the initial plan.

In response, Vought sent a protest letter to Powell on the 10th, demanding an explanation within seven business days on whether there were any regulatory violations related to the Fed headquarters renovation. US political media Axios analyzed that the Trump administration might oust Powell before the Fed decides on the interest rate on the 30th.

The Fed previously explained that the increase in renovation costs was due to a significant rise in material and labor costs caused by inflation. On the 11th of this month, the Fed created a 'Frequently Asked Questions' section on its website to explain the reasons for the increase in renovation costs.

Local media such as the New York Times (NYT) speculate that the Trump administration is repeatedly raising the issue of renovation costs to attack Powell. Trump, who criticized Powell even before his second term inauguration, has repeated harsh attacks but stated in an interview on the 11th that he has no plans to directly dismiss Powell. Powell's term as chairman is set to end in May next year.

The NYT pointed out that the Trump administration has launched a new attack focusing on renovation costs while criticizing Powell, who has held the interest rate steady for four consecutive times this year. The media claimed that suspicions have grown that the Trump administration has begun preparations to dismiss Powell. Citing experts, the media analyzed that the Trump administration is amplifying the renovation cost issue to undermine public trust in Powell.

 





pjw@fnnews.com Jongwon Park Reporter