Trump Threatens Lawsuit Against Fed Chair Powell Over Renovation Costs

2025-12-30 economy

Washington D.C., Tuesday, 30 December 2025.
On Monday, President Trump escalated tensions with the Federal Reserve by threatening to sue Chair Jerome Powell for “gross incompetence” regarding the central bank’s headquarters renovation. While Trump cited contested construction costs as the primary grievance—claiming figures significantly higher than official estimates—the move has alarmed financial markets concerned about the erosion of the Fed’s historical autonomy. Bank of America CEO Brian Moynihan recently warned that markets would “punish” the U.S. if this independence is compromised. With Powell’s term ending in May 2026, the President indicated he will announce a successor in January, adding another layer of uncertainty to the economic outlook as investors weigh the risks of political interference in monetary policy.

A Dispute Over Costs and Competence

During a press conference on Monday with Israeli Prime Minister Benjamin Netanyahu, President Trump characterized the central bank chief as a “fool” and suggested he might file a lawsuit for “gross incompetence” [2]. The President’s grievances centered on the renovation of the Federal Reserve’s headquarters, which he claimed had ballooned to $4.1 billion [2]. However, this figure contradicts the $2.5 billion cost cited by Chair Powell earlier this summer—a discrepancy of 1.6 billion [2]. Trump contrasted the project with his own construction efforts, specifically a new ballroom at the White House, claiming the Fed’s project represents the “highest price in the history of construction” [2].

The Economic Stakes of Autonomy

The friction between the White House and the Federal Reserve carries tangible economic risks. Bank of America Chairman and CEO Brian Moynihan emphasized this danger on Sunday, stating that the financial markets “will punish people if we don’t have an independent Fed” [5]. Moynihan argued that the U.S. economy is fundamentally driven by the private sector rather than marginal interest rate adjustments, warning that the country has “gotten out of whack” by overemphasizing the Fed’s every move [5].

Succession Plans Take Shape

With Jerome Powell’s term set to expire in May 2026, the administration is actively preparing for a leadership transition [5]. President Trump confirmed on Monday that he plans to announce his nominee for the next Fed Chair sometime in January [2][4]. While the President admitted he would “love to fire” Powell immediately, he acknowledged that they are “pretty close” to the natural end of the term, suggesting he may allow Powell to finish his tenure [3].

Sources

Monetary Policy Central Banking