The Federal Reserve Board is different than the Unitary Executive Director at the CFPB as well as the FHFA, and that may be enough to different the Federal Reserve funding from the CFPB case (and FHFA?).
Personally, I think it's important to have a Federal Reserve independent from the Appropriations Oversight Review Process of Congress, otherwise there could be a real danger if politicians control monetary policy, it's practically an invitation for inflation.
Btw, $2.5B for a Federal Reserve HQ, may be a bit pricey, No?
From yesterday's WSJ:
The cost to renovate three downtown Washington office buildings has swelled to $2.5 billion
What Will Be Harder for the Fed? Taming Inflation or Its Office Renovation Expenses? The cost to renovate three downtown Washington office buildings has swelled to $2.5 billion
WASHINGTON—Anyone with a recent home renovation project that suffered from rising costs, shortages and delays now has distinguished company: The Federal Reserve, the U.S. institution charged with controlling inflation, is also struggling to hold down expenses on its stately digs.
The central bank is in the middle of a long-running project to overhaul three adjacent office buildings overlooking the National Mall into a state-of-the-art campus. The price tag for the endeavor has swelled to nearly $2.5 billion, up from an estimate of $1.9 billion in 2019—an increase of about 34%.
Budget documents released at the end of last year show the cost of the overall project has inflated due to "significant increases" in the cost of steel, cement, wood and other materials that "far exceed standard cost escalations."
Most of the overruns are for gutting and refurbishing two buildings: the Fed's headquarters, finished in 1937 and named for then-Fed Chairman Marriner S. Eccles, and a neighboring building known as "FRB-East" for now. The Fed acquired that building, which opened in 1933, from the Interior Department five years ago. Renovations on both began last year and are expected to run until 2027.
Until then, the Fed's senior brass has decamped for a third building that overlooks its headquarters from the north: the William McChesney Martin Jr. Building. It originally opened in 1974 and reopened at the end of 2021 after a top-to-bottom refurbishment that includes bathroom door sensors for touchless opening and a pair of hives of Italian honey bees on the roof.
Fed officials say their aim is to bring the majority of the board's staff to offices that are closer together and to reduce the central bank's leased space in downtown Washington.
The end result will serve most of the 3,000 economists, lawyers and professionals who support the central bank's seven-member board of governors, who set interest rates to manage economic growth and who oversee the nation's financial system.
The massive construction project has largely flown under the radar, unusual in a city where regulators sometimes encounter stiff congressional protest over such facelifts. Last decade, Republican lawmakers pilloried the $145 million retrofit of brutalist-style offices that house the Consumer Financial Protection Bureau near the White House.
In the 1990s, two Democratic senators who were unhappy with the Fed's campaign to pre-empt inflation with stiff rate increases raised a stink over its budget , including the construction of a towering new headquarters for the regional Fed bank—there are 12 scattered across the country—in Dallas.
The Fed has been here before. Amid rising inflation in 1969, it delayed plans to construct what eventually became the Martin building, then at an estimated cost of more than $30 million, and asked other regional Fed banks across the country to consider doing their part to combat high prices by deferring planned construction activity. "This has been done to minimize competition for scarce goods and services during the current inflationary period," the Fed said at the time .
The New York Fed's plans to construct a new building in lower Manhattan in the 1920s ballooned to more than $25 million, far above an initial $10 million estimate. One banking regulator lamented in the New York Times at the time that the "luxurious and lavish appointments of marble and brass" would make "Solomon's temple of old seem quite cheap in comparison."
This time around, costs also have gone up because of design changes demanded by local planning officials. While the Fed can move trillions with the click of a mouse, erecting a building in the District of Columbia is a different matter.
"We've got a built-up country, and it's hard to get zoning," Fed Chair Jerome Powell said last November. While he was addressing a source of higher home-building costs, he might as well have been talking about the project in his own backyard.
The National Capital Planning Commission and the U.S. Commission of Fine Arts, century-old government agencies that review building proposals for federal property in the region, signed off on the Fed's renovations only after the central bank toned down certain design flourishes, particularly to the FRB-East building.
Members of the fine arts commission, for example, criticized in 2020 the proposed addition of a five-story "brightly glowing glass box" on FRB-East, saying it would look unsightly at night and clash with an older, more modest Depression-era building. The Fed agreed to reduce the height and to add a pattern of semi-opaque glass panels to make the addition more compatible with the original building. To make up for some of the lost space, the new plans have more square footage below ground level, which the Fed said sent up the price tag.
The Eccles building, constructed in a "stripped classicism" style with white Georgia marble, was designed by French-born Philadelphia architect Paul Philippe Cret after legislation backed by President Franklin D. Roosevelt moved the central bank out of the Treasury Department. Its boardroom, which features 26-foot-high ceilings, briefly hosted U.S. and British military advisers during World War II because it was one of the largest air-conditioned rooms in the city.
Over time, the building had become rundown, say current and former staffers and policy makers. They described leaky ceilings, antiquated electrical systems, and inefficient heating and cooling systems.
The recently completed renovations on the Martin building were plagued by delays. In 2015, the Fed sacked the initial architectural and engineering firm hired for the job over what an internal watchdog described as shoddy work. Costs went up again when workers had to remove more asbestos than anticipated.
For several years, those renovations were managed by Mr. Powell, who served as a governor before becoming chair in 2018 . Lael Brainard, who left the Fed last month to become the director of the White House National Economic Council, took over that responsibility after Mr. Powell became chair. His signature adorns an exposed piece of a steel beam inside a top-floor cafeteria that features panoramic views of the D.C. skyline. In the 1990s, Fed Chairman Alan Greenspan hosted lawmakers, Supreme Court justices, and reporters for a Fourth of July fireworks-viewing party from an adjoining terrace.
The new building boasts luxe amenities: The boardroom where the Fed's rate-setting committee meets has a special tap with still, sparkling or chilled water, and the basement holds artwork from the Fed's private collection and other works on loan, including by Andy Warhol and Alexander Calder.
But the open-office design led to grumbling from some Fed staffers, including those who work with confidential bank data or other classified information.
Unlike other federal agencies, the Fed isn't subject to annual funding from Congress and instead pays for its operations through the interest it earns managing the nation's money supply, so its renovations didn't require outside approval from lawmakers.
The Fed is expected to run a loss this year for the first time in its 110-year history, however, because as it raises rates, it is paying more money in interest to banks and other financial institutions on cash held at the central bank than it will earn on $8.3 trillion in securities and other assets it owns.
The Fed raised rates at the fastest pace last year since the early 1980s to combat inflation that also hit 40-year highs. The appearance of a 10-foot construction barrier around the Eccles building last year fueled speculation among some market watchers—erroneously—that it was a new security measure deployed to fortify the central bank's headquarters against public protest.
The Fed added a short explanation about the construction project last fall to a longer list of "frequently asked questions" on its website to head off such confusion.
The Fed is open for business, it says, "and Federal Reserve operations are not affected."
