Hassett says White House probing Fed renovation costs, authority to fire Powell

Reuters

a day ago

WASHINGTON, July 13 (Reuters) - U.S. President Donald Trump has the authority to fire Federal Reserve Chair Jerome Powell for cause if evidence supports that, White House economic adviser Kevin Hassett said on Sunday, adding that the Fed "has a lot to answer for" on renovation cost overruns at its Washington headquarters.
Hassett told ABC's "This Week" program that any decision by Trump to try to fire Powell over what the Trump administration calls a $700 million cost overrun "is going to depend a lot on the answers that we get to the questions that Russ Vought sent to the Fed."
Vought, the White House budget director, last week slammed Powell over an "ostentatious overhaul" of the Fed's buildings and answers to a series of questions about the $2.5 billion project. In a posting on X, he compared the project to France's Palace of Versailles, with rooftop gardens, water features and "premium marble."
Hassett's comments confirm that the Trump administration is actively exploring the renovation costs and Powell's testimony about the project as a possible avenue to try to fire the Fed chief well before his term as chair ends in May 2026.
Trump has repeatedly called for Powell's resignation for failing to lower interest rates since Trump returned to office in January.
Asked if Trump had the authority to fire Powell, Hassett, whose name has emerged as a potential candidate take over the Fed chair job, said: "That's a thing that's being looked into, but certainly if there's cause, he does."
Republican Representative French Hill, who chairs the powerful House Financial Services Committee, said Trump did not have the authority to fire the Fed chair, but Congress would continue to provide strong oversight of the central bank.
"Just because Congress created the Fed and that we believe that it should be independent in the setting of monetary policy, it doesn't mean that it's immune from criticism," Hill told CBS' Face the Nation. "Every president since World War Two has had choice words for the Fed chair when they've not been in sync with the direction of the president."
Powell in June denied that the Fed was spending money excessively on renovations, telling senators that the almost 90-year-old headquarters "was not really safe, and it was not waterproof" while acknowledging cost overruns.
The Fed has said that the project, which includes upgrades to an adjacent building, will consolidate staff into a single campus and reduce off-site lease costs. However, a Fed Inspector General report, opens new tabacknowledged in February that costs had risen to $2.4 billion from an estimate of $1.9 billion two years earlier.
"There are no new water features, there's no beehives, and there's no roof terrace gardens," Powell said in response to allegations from Republican senators.
Separately on Sunday, Kevin Warsh, a former Fed Board of Governors member who is considered a potential candidate to replace Powell, said the U.S. central bank needs "regime change" that goes beyond the chair position.
"The Fed has lost its way. It's lost its way in supervision, it's lost its way in monetary policy," Warsh said in a Sunday interview on Fox's Sunday Morning Futures program.
Asked whether he would accept a position on the Board of Governors when an expected vacancy opens in January, Warsh said "it's a great job" and that the institution needs major reform.
"We need regime change at the Fed, and that's not just about the chairman. It's about a whole range of people, it's about changing their mindset and their models, and frankly it's about breaking some heads, because the way they've been doing business is not working."