Fed Under Fire

By Ryan Boyle

Many of us end our weekends with a bout of the "Sunday scaries," a sense of dread about the workload looming in the days ahead. This week, a source of significant distress appeared in our newsfeeds Sunday night. The Federal Reserve disclosed that Chair Jerome Powell had been served with a grand jury subpoena, the first step toward a criminal indictment related to his testimony before the Senate Banking Committee.

Powell responded with a concise but resolute public statement and accompanying video. Until this point, Powell had been steadfast in not responding to any provocative statement from President Trump, across both presidential terms. In this week's release, Powell changed his tone, calling the charges pretextual matters of political pressure.

The specific issue in question is the cost overrun for the reconstruction of the Marriner S. Eccles Building, the Fed's Washington headquarters. The project is massive: gutting the 90-year-old structure, remediating asbestos and digging new basement levels below the foundation. All construction costs have risen in the recent inflationary cycle. These factors pushed the estimated cost up 30% to $2.5 billion.

Allegations of mismanagement of the Eccles project reached a peak last summer, as the Trump administration sought a reason to dismiss Powell for cause. The saber-rattling led to Powell and Trump donning hard hats for a tour of the construction site. Afterwards, consensus took hold that, whatever its shortcomings, the project was not cause for termination. The matter had quieted down, until this weekend.