The Federal Reserve’s $2.5 Billion Office Upgrade

If a private bank that had some $180 billion in losses in the last two years was lavishing $2.5 billion on an office renovation project, the shareholders would likely put management out on its ear. Not so at the Federal Reserve, though, which faces charges of “arrogance,” as Senator Lummis puts it, for plowing ahead with the reconstruction of its office complex at Washington despite mounting losses. Now Elon Musk is vowing to investigate, calling it an “eyebrow raiser.”Will the Fed let in the auditors, though? President Trump’s DOGE cost-cutting guru reckons that “since at the end of the day, this is all taxpayer money, I think we certainly — we should definitely — look to see” if the Fed “is spending two and a half billion dollars on their interior designer.” The project, about which the Fed declines to comment to the press, will “overhaul three adjacent office buildings,” per the Wall Street Journal, “into a state-of-the-art campus.”Yet the undertaking to doll up what the Journal calls the central bank’s “stately digs,” an undertaking launched in 2019 with a price tag of $1.9 billion, has surged in cost. That’s in part because of the price inflation that the Fed has failed to tame in recent years. The bank laments that “significant increases” in such costs as steel and cement “far exceed standard cost escalations,” bringing the project’s cost up at least 34 percent above the initial estimate.Part of the problem, it seems, is that the Fed appears to spare no expense when it comes to the amenities enjoyed by its cossetted staff. The renovated building will feature “new rooftop garden terraces, skylights, and ornate water features” and a “new elevator system” that whisks board members directly to their “VIP dining suite,” the Post reports. The roof sports two Italian beehives, the Journal says, and the basement hosts a private art collection.Such largesse might have been excusable when the Fed was making money for the taxpayers — as it did for most of its history. Yet the bank’s monetary experiments caught up with it after it racked up trillions of dollars in assets for Quantitative Easing while keeping interest rates artificially low. When the bank had to raise rates to combat inflation, it started to lose money on its deposits. Our Alex Pollock has pointed out that the Fed is now technically insolvent.The soaring costs of the project are prompting a furor on Capitol Hill. About time, it would seem, for the solons to start taking a closer look at the central bank that tends to shroud its doings in a cloak of secrecy. Senator Scott of Florida says the project reflects how the bank’s chairman, Jerome Powell, is running “a wildly unaccountable Fed that is wasting tax dollars.” The Sunshine State senator avers: “Congress must hold him accountable.”That sounds reasonable. While they’re at it, why not take a closer look at the Fed’s stewardship of the dollar, the stability of which the bank was, upon its creation in 1913, tasked with protecting? At the time, America was on the gold standard and a dollar was convertible on demand into the monetary metal at the legal rate of a 20.67th of an ounce. Since then, the value of the dollar has plummeted. A dollar fetches but a 3,200th of an ounce of gold in trading today.We wish Mr. Musk and the solons luck at the Fed, particularly seeing how allergic the central bank has been to oversight from the elected branches — refusing even so much as an audit of its operations. The Fed “hasn’t earned a dime in years, but somehow found $2.5B to build a modern-day Palace of Versailles,” Ms. Lummis gripes. The hapless French eventually tired of the decadence and unaccountability of their royals. Is the Fed next?

The Federal Reserve’s $2.5 Billion Office Upgrade

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