WASHINGTON — Federal Reserve Chairman Jerome Powell has a week to identify which federal law he violated, White House budget director Russ Vought informed him Thursday — using aggressive new tactics that could achieve President Trump’s goal of lowering interest rates.
Trump, 79, has struggled to find a way to strong-arm Powell, 72, into lowering interest rates, and Republicans believe his testimony to Congress about an ongoing $2.5 billion DC office renovation may be a way to force him to comply or step aside.
Powell, who has rebuffed Trump’s pressure to lower rates despite inflation nearing the Fed’s 2% annual target, told lawmakers June 25 that the central bank’s headquarters won’t feature lavish upgrades, despite planning documents indicating otherwise.
Critics say Powell lied — a potential crime — and Vought upped the stakes by pointing out that the Fed chairman would have broken a different law if his testimony was accurate.
“Instead of attempting to right the Fed’s fiscal ship, you have plowed ahead with an ostentatious overhaul of your Washington D.C. headquarters,” Vought wrote.
“Cost overruns aside (about $700 million and counting), the plans for this project called for rooftop terrace gardens, VIP private dining rooms and elevators, water features, premium marble, and much more. You stated that ‘there’s no VIP dining room. There’s no new marble … There are no special elevators… There are no new water features. There’s no beehives and there’s no roof terrace gardens.’”
Vought wrote that Powell’s denial “raises serious questions about the project’s compliance with the National Capital Planning Act [NCPA], which requires that projects like the Fed headquarters renovation be approved by the National Capital Planning Commission [NCPC].
“Your testimony appears to reveal that the project is out of compliance with the approved plan with regard to major design elements,” the budget chief wrote.
“This would bring the project outside of the NCPC’s approval and thus in violation of the NCPA, and require the Fed to immediately halt construction and obtain a new approval from the NCPC before proceeding any further.”
The White House Office of Management and Budget tweeted out the letter, adding of Powell: “In his recent testimony, he slipped up and revealed he might also be violating the law. The Trump Administration is demanding answers, and we’re going to hold him accountable.”
In addition to Vought’s letter, Trump on Thursday appointed three new members to the NCPC, which has five voting members.
The president’s staff secretary Will Scharf, deputy chief of staff James Blair and OMB analyst Stuart Levenbach form a new majority on the commission.
It’s unclear what potential actions the commission could take — though its members or Vought could ask the Justice Department to review the matter, bypassing the need for a congressional criminal referral and heightening the stakes further for Powell.
Trump commented on Powell’s allegedly false testimony for the first time Tuesday at a Cabinet meeting, telling The Post that the chairman should “resign immediately” if the allegations are true.
The president has for months attempted to hector Powell into slashing interest rates, arguing that his decision not to do so is politically motivated and causing the federal government, businesses and consumers to pay more than is necessary.
Trump recently said he has decided against a legally dubious attempt to fire Powell and instead plans to appoint a more like-minded chairman when Powell’s term expires in May 2026.
The president said that Powell’s obstinance has added an extra $600 billion annually in interest payments on the national debt and is keeping the cost of loans — including mortgages, car rentals and credit card balances — artificially high.
Powell has cited Trump’s tariffs as a primary reason for his refusal to cut rates this year, theorizing that they could stoke further inflation.
A spokeswoman for Powell declined to comment.
