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President Trump and Jerome Powell, both in hard hats, walk through the Federal Reserve headquarters construction site.
Photo: Investing.com

Fed Renovation Overrun Tops $1B as Trump Demands Powell Resign

European Central Bank2 min read7 sources

Why did Trump demand Powell resign from the Fed?

Trump demanded on Wednesday that Fed Governor Jerome Powell resign after the central bank's inspector general found management failures behind a $1B renovation overrun but no grounds for a criminal referral.

Key numbers

Total project cost~$2.4B~$1B over budget
Construction cost estimate$2.018Bfrom $921M in Feb 2020 (per [2])
First builder cost estimateJan 20263.5 years after work began
Inspector general recommendations7no criminal referral (per [4])
Fed funds target range3.75%-4.00%+0.25 pt on Sep 16

What happened

Trump demanded on Wednesday that Fed Governor Jerome Powell resign after the central bank's inspector general found management failures behind a $1B renovation overrun but no grounds for a criminal referral. He also asked Attorney General Todd Blanche to review the 120-page report. The project to renovate the Fed's two Washington buildings now costs about $2.4 billion, though one outlet puts it near $2.5 billion. The Fed only got a cost estimate from its builder in January 2026, 3.5 years after work began.

Why it matters

The Federal Reserve sets U.S. interest rates, which affect mortgages, savings and stock prices, so pressure on its board matters beyond one building. Powell no longer leads the Fed, now chaired by Kevin Warsh, but can stay as a governor until January 2028 (per). The Fed raised rates on September 16 to a range of 3.75% to 4.00%, so who sits on its board is closely watched.

Who this affects

Marketneutral
Low impact
Investors watch Fed independence; no direct market move reported.
Companybearish
Medium impact
Fed faces audits and scrutiny; Powell under political pressure.
Competitorsneutral
Low impact
Other central banks, like ECB and BoE, not directly affected.
Industryneutral
Low impact
Large public building projects face closer cost scrutiny.

Federal Reserve vs European Central Bank, Bank of England

Federal Reserve—3.75%-4.00%Hike, Sep 163.4% (PCE, Aug)
European Central Bank—2.50%Hike, Sep 10—
Bank of England—3.75%Held, Sep 16 (6-3 vote)3.1% (CPI, Aug)

As of 2026-09-30

How we got here

  1. Fed Board first gets a cost estimate from its builder, 3.5 years into construction.

  2. Fed under Chair Kevin Warsh raises rates to 3.75%-4.00%.

  3. Inspector general report finds mismanagement but no grounds for criminal referral.

  4. Trump says Powell should be forced to resign; asks Attorney General Blanche to review.

What to watch

  • Attorney General Todd Blanche's review of the report and whether any action follows.TBD
  • Whether Powell leaves the Board; his governor term runs to January 2028 (per).2028-01
  • Fed audits of the project and any effort to recover overpayments under Chair Warsh.TBD

Educational content only. Not investment advice.

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