Powell probe: The politics of marble could weigh heavily on the Federal Reserve as an institution

Subscribe to enjoy similar stories. Washington has discovered a new scandal and it involves neither classified documents nor foreign donors. It involves marble.

We now have quantitative easing in Carrara. The US Department of Justice has initiated a criminal investigation of actions taken by US Federal Reserve chair Jerome Powell. The alleged offence: a $2.5 billion renovation of the Fed’s Marriner S.

Eccles headquarters and adjacent 1951 Constitution Avenue building. The director of the Office of Management and Budget has likened it to Versailles and denounced its cost overruns—placed at about $700 million—as “outrageous." Louis XIV, one gathers, would have blushed. The implication is that central bankers have mistaken monetary policy for interior design.

A professor of law and finance at Columbia University offers a less theatrical view: “A renovation that goes over budget is not malfeasance. Renovations go over budget all the time." This is not an exotic claim. The Fed project’s bill—roughly $2,000 per square foot—looks extravagant until one glances at precedent.

By federal standards, this is expensive but not aberrant. The Smithsonian’s National Museum of the American Indian cost about $800 per square foot when it was completed in 2004, or nearly $1,400 in today’s dollars. Some of the Fed’s budgetary excess is self-inflicted.

The central bank reportedly chose to add square footage for an underground staff car park and a tunnel linking the two buildings. Critics note that 500 parking spaces could have been leased nearby for roughly $30 million. Instead, the subterranean option is estimated to cost nearly 10 times that.