Inside the Fed’s Bloated $2.5 Billion Renovation
Historic makeover sparks political firestorm and fierce debate over cost, scope, and priorities.
The Federal Reserve’s grand headquarters in Washington, D.C., once an austere symbol of financial stability, has become the center of a storm. What began as a $1.9 billion renovation project to modernize the 1930s-era Marriner S. Eccles Building and the adjacent Federal Reserve East Building has ballooned into a $2.5 billion saga of construction delays, political attacks, and mounting controversy.
President Donald Trump and Federal Reserve Chair Jerome Powell, who rarely agree on much these days, now find themselves locked in a public feud over the project’s costs.
A Historic Fix That Turned Into a Political Flashpoint
Planning for the renovation started in 2017, but the work itself began in 2022. The aim was simple: bring two aging federal buildings up to modern safety, security, and accessibility standards while preserving their historic architecture.
As crews stripped back walls and floors, hidden hazards appeared. Beneath the marble façades, they uncovered crumbling mechanical systems from the 1930s, asbestos, lead, toxic soil contamination, and even a sinkhole. Water problems caused by the swampy ground under Constitution Avenue only added to the complexity.
Instead of a clean overhaul, the Fed now faces a sprawling effort that includes deep underground excavation, blast-resistant windows, a tunnel connecting the two structures, and a parking garage.
Video Tour of Renovation of Two Historic Buildings
Source: Federal Reserve YouTube
Powell Defends the Price Tag
The price spike has fueled a narrative that the Fed has lost control of its budget. Powell disputes that, insisting the numbers reflect unavoidable realities, not extravagance.
“There’s no new marble,” Powell told senators during a June hearing. “There’s no special elevators. They’re old elevators that have been there. There are no new water features. There’s no beehives, and there’s no roof garden terraces.”
He added that no one “wants to do a major renovation of a historic building during their term in office. We decided to take it on because, honestly, when I was the administrative governor, before I became chair, I came to understand how badly the Eccles Building really needed a serious renovation.”
Powell has repeatedly emphasized one crucial point: this is not taxpayer money. The Fed is self-financing, paying for the work with earnings from its portfolio and fees it charges financial institutions.
Read Now: The Small Cap Gold Market is Breaking Out Aggressively — Here’s What to Do
Trump Tours the Construction Site
The president, who has long been critical of Powell for holding interest rates higher than he prefers, toured the construction site last week. Wearing a hard hat and accompanied by close advisers, Trump seized on the price overruns as evidence of mismanagement.
Reporters who joined the tour saw hundreds of workers operating around the clock, grinding through dusty, noisy conditions to meet a fall 2027 completion deadline.
Trump did not hold back during the visit. Confronting Powell directly, he said, “Generally speaking, what would I do? I’d fire him,” when asked how he would handle a project manager responsible for cost overruns of this size.
Trump Clashes With Powell During Renovation Project Tour
Source: Bloomberg Television YouTube
How the Costs Got Out of Hand
Much of the $600 million increase comes down to labor and materials. The pandemic-era surge in steel prices and shortages of specialized trades such as plumbing and electrical work dramatically increased costs. Preservation requirements also made everything more complicated.
Architects initially considered using glass to modernize parts of the building, but Trump-appointed design commissioners insisted on using domestic white marble, a far costlier choice. Historic protections required that much of the original façade be carefully dismantled and restored, not replaced.
Then came the site-specific challenges. Higher-than-expected groundwater forced contractors to install dozens of dewatering wells. Toxic soil had to be removed. The foundation under one building even had to be lowered and supported while workers dug out new basement levels below.
Shalom Baranes, an architect familiar with federal projects, explained:
Almost every project that involves existing buildings, especially historic buildings, has these kinds of issues. There are always unforeseen conditions and changes.
What Comes Next
Despite fierce criticism, the Fed says the renovations will pay for themselves over time by eliminating the need for leased office space and improving energy efficiency. Employees are expected to return to the renovated buildings by early 2028.
The political battle, however, shows no signs of ending soon. For Trump, the construction project has become a symbol of government waste. For Powell, it is a necessary but thankless task he inherited.
Whether the final bill stays at $2.5 billion—or climbs even higher—will depend on what else lies hidden beneath the nearly century-old walls of America’s most powerful financial institution.
Small Cap News Movers & Winner Deep Dive – By WealthyVC.com
We scan over 10,000 publicly listed stocks across all seven North American exchanges to uncover the market-moving news that actually matters—focusing on high-quality, liquid, growth-oriented companies in sectors attracting serious capital, like AI, blockchain, biotech, and consumer tech.
Each week, we publish Small Cap News Movers, a curated roundup of small and micro-cap stocks surging on meaningful catalysts. We break down what’s driving the move, tap into rumors swirling on social media, and surface sharp insights from both industry experts and retail sleuths.
From this list, we select one standout stock for our Small Cap Winner Deep Dive, released the next day, where we take a closer look at the fundamentals, narrative, and technicals that suggest this winner could keep running.
Powered by our proprietary 4-element, AI-driven analysis system, our goal is simple: cut through the noise, remove the emotion, and help investors dominate the small-cap market with momentum-driven strategies—completely free.
Sign up for email alerts to get the moves before our social media followers.
Read Next: Is This Tiny Biotech Stock Ready for a Massive Breakout?
Join the Discussion in the WVC Facebook Investor Group
Do you have a stock tip or news story suggestion? Please email us at: invest@wealthyvc.com.
Disclaimer: Wealthy VC does not hold a position in any of the stocks, ETFs or cryptocurrencies mentioned in this article.
