Fed Faces Backlash Over $2.5 Billion Headquarters Renovation—Powell Responds to White House

The Federal Reserve is under fire after details emerged about its $2.5 billion headquarters renovation project. Facing growing criticism over the scale and cost of the plan, Fed Chair Jerome Powell took the unusual step of writing directly to Shalanda Young, Director of the White House Office of Management and Budget, to explain the need for the upgrade and defend the project’s legitimacy.

The renovation targets the Fed’s main building in Washington, D.C., and an adjacent office facility on Constitution Avenue. These buildings, originally completed in the 1930s and 1951 respectively, have never undergone a full-scale modernization. According to Powell, both structures show significant signs of aging. Many of the electrical and mechanical systems date back to the original construction and can no longer meet the demands of a modern workplace.

The project includes the removal of hazardous materials like asbestos and lead, upgrades to HVAC, plumbing, electrical and fire safety systems, and structural reinforcements. The renovation will also add accessibility features and enhance overall security. Powell emphasized that this is not simply about preserving historic architecture—it’s about creating a safe, functioning environment for over 1,000 staff members and visitors.

Criticism over the project’s budget has been especially sharp. Some in Congress and the White House have labeled the renovation as excessive, with a few even implying it might be used as leverage to pressure Powell on interest rate policy. In response, Powell has submitted the full renovation plan to the Fed’s Inspector General for review. The review will assess cost effectiveness and oversight measures.

Under current U.S. law, the Federal Reserve has autonomy over its real estate decisions and does not require Congressional funding or approval for maintenance or renovations. Powell took care to underline that the renovation fully complies with existing legislation and has been independently authorized within the Fed’s mandate.

Beyond safety and modernization, Powell pointed out that the project is also expected to boost economic activity across the U.S. Contractors for the job are spread across 32 states, and many materials and systems will be sourced from local businesses—supporting jobs and strengthening supply chains.

While the Fed has implemented occasional repairs over the years, this upcoming overhaul marks its first comprehensive modernization effort since the building opened. Powell made it clear that the goal is to prepare the Fed’s headquarters for the next generation—maintaining its symbolic importance while ensuring it’s equipped for the demands of the modern financial system.

Despite the political noise, Powell concluded his letter by reaffirming the Fed’s commitment to transparency and accountability. He vowed that every dollar of the renovation will be used responsibly, with the ultimate vision of creating a facility that reflects the integrity and stability the Fed is meant to represent.