Donald Trump: Jerome Powell, former Chair and current Governor, should resign from the Federal Reserve Board immediately
U.S. President Donald Trump posted on social media, demanding that Jerome Powell, who has stepped down as Chair but remains a Governor, resign from the Federal Reserve Board immediately, and that Attorney General Todd Blanche review the Inspector General's report to decide the next steps.
He stated that the renovation of the headquarters has severely exceeded budget and is behind schedule, with the Inspector General identifying flaws in project management, claiming Powell "cannot manage a building, let alone high-interest rate policy." If he refuses to resign, the federal government should prosecute him for corruption or incompetence. He also specified that he does not wish for the building to be named after him. The Inspector General's report indicated that throughout the assessment, there was no reasonable basis to suggest federal criminal violations occurred, nor was there any administrative misconduct identified; the issues were focused on cost control. The current estimated cost for renovating two historic buildings is about $2.4 billion to $2.5 billion, approximately $1 billion over the original budget. The Board will not receive the construction manager's cost estimate until January 2026, three and a half years after the project began, and by that time, over $2 billion in construction contracts had already been awarded. Powell's side previously attributed the overruns primarily to post-pandemic inflation, mandatory redesigns by the planning committee, and asbestos handling.
Powell's term as Chair ends in May, with Kevin Warsh set to take over as Chair. Powell chose to remain as a Governor until January 2028, making him the first former Chair to stay on the Board since 1948. He stated that he stayed on due to legal threats against the Federal Reserve that jeopardized monetary policy independence and that he would wait for the investigation to conclude transparently and definitively. In April, the Department of Justice concluded its criminal investigation into the overruns, promising not to reopen the case unless the Inspector General made a criminal referral. In March, Federal Judge James Boasberg had blocked subpoenas, ruling that their purpose was to pressure for interest rate cuts or force resignations. Senator Thom Tillis had previously stalled Warsh's nomination on grounds of independence, but released it after the investigation shrank.
Since 2025, the White House has used the renovation overruns as leverage to pressure for interest rate cuts or to force resignations. Budget Office Director Russell Vought has sent accountability letters. Democratic Senator Elizabeth Warren stated that the accusations of overruns are an excuse to fire the Chair. Among the seven seats on the Board, Trump's appointees already hold a significant proportion, and Powell's continued presence occupies one voting seat.
There are no new monetary policy decisions affecting liquidity, with pressure falling on the Board's seats and litigation threats. The buyers are the White House, which wants a faster narrative for interest rate cuts, while the seller is Powell, who is using his term and voting rights to block seats. The incident was triggered by the Inspector General's report stating "no crime, management flaws." The beneficiaries are the nomination team hoping to free up seats; the pressured parties are the former Chair, who has tied his independence to his own tenure, and the market pricing that uses overruns as leverage for monetary policy. The report closed the door on criminal matters while opening doors to political and civil pressures.
Source: Public Information
ABAB AI Insight
Trump nominated Powell as Chair in 2017 and has publicly attacked him since 2018 for not lowering interest rates as the President wished. The second term has turned the headquarters renovation into a second front: first a Department of Justice investigation, which concluded in April, and Powell announced he would stay; in May, Warsh took over as Chair, and Powell continued to vote as a Governor. In September, the Inspector General's report provided a middle conclusion of "management flaws, no crime," and the President demanded immediate resignation and further review by the Attorney General. The path shifted from "removing the Chair" to "clearing the Governor seat," as changing the Chair did not take away that vote.
Capital and interest rate expectations are tied to the composition of the Board. Long-term Treasury bonds have just reached a 20-year high, with the market pricing in term premiums and interest rate paths; the White House wants to frame the overruns as incompetence, thereby rewriting "who is eligible to vote." Money has not flowed from the renovation account to new policies, but rather from political capital to seat contention. The motivation is interest rates, and the tool is project audits. Resource mobilization includes the Attorney General, letters from the Budget Office, and public nicknames for pressure. Judges have ruled that some subpoena purposes are improper, indicating that this path has a high legal friction coefficient.
Comparing to Roosevelt's court expansion, Nixon's pressure on the Federal Reserve, and Trump's first term where he criticized Powell but did not remove him. The new variable in 2026 is the former Chair actively remaining as a Governor, making his personal tenure a anchor for institutional independence. The industry phase has shifted from changing the Chair to competing for the remaining voting rights: in a seven-member Board, every vote lost to opposition brings policy closer to the White House's preferences. The control mechanism is audit plus prosecution threats, not explicit removal under the Federal Reserve Act.
The essence is regulatory change. Monetary policy independence relies on terms and "only removed for cause" support, with project overruns framed as cause. The mechanism is: the criminal door is closed, while civil and political doors remain open; whoever can elevate management flaws to incompetence may potentially remove that vote before 2028. As the market reprices long bonds, it is simultaneously pricing the voting structure of the Board. The building's cost is an excuse, while the voting rights are the target.
ABAB News · Cognitive Laws
- The Chair has changed, but the voting rights can still be seized.
- Audits that cannot be closed will shift to targeting seats.
- No crime can still become a political tool for forcing resignations.