Exclusive | Central bankers blow $2.5BN on Fed 'Palace of Versailles' HQ

The Federal Reserve is pushing ahead with an eye-watering $2.5 billion revamp of its Washington, D.C.HQ despite mounting losses as one ex-official accused its bureaucrats of behaving like French royalty over their frivolous spending.The glorified vanity project, first rubber-stamped by government pen-pushers in 2021, is now effectively being subsidized by American taxpayers because the Fed has not made a profit since 2022.“The Federal Reserve is building the Palace of Versailles on the National Mall,” said Andrew T.

Levin, professor of economics at Dartmouth College in New Hampshire, referring to the long-deposed French monarchy’s official residence just outside Paris.“Congress must put its foot down and take a closer look at this to determine what authority the Fed has to spend this on its buildings,” Levin, who served with the Fed’s board from 1992 to 2012, added.The expensive makeover is controversial after the Fed posted operating losses of $77.5 billion last year.That is still down from losses of $114.6 billion in 2023 when the central bank sank into the red for the first time in its 100-year history.Officials there insist that losing money in no way impacts their ability to operate and conduct monetary policy.The Fed’s interest costs surged and outstripped its earnings on bonds it owns when Fed Chair Jerome Powell hiked rates in trying to tame rampant inflation during the Biden administration.When the Fed makes a profit, that money is then passed on to the US Treasury to become part of the federal government’s budget.Its mounting losses, currently some $178 billion, are bundled together in what is known as the Fed’s “deferred asset” that is must pay down before money can be spent on other things such as defense, education, and Medicare.A 2023 study by experts at the St Louis Fed forecast that it will not happen until mid-2027 at the earliest.It means the the costly renovations, ten times what was spent on the nearby Ronald Reagan buildi...