Billionaire says the Fed's finances are an 'eyebrow raiser,' setting the stage for potential escalation in tensions between the central bank and the Trump administration
Elon Musk, whose Department of Government Efficiency (DOGE) has imposed a dramatic series of cuts to the federal government since January, says he’s considering sending his team to examine costs at the Federal Reserve.
The billionaire told reporters Wednesday at the White House that renovation costs at the Fed’s headquarters – which spiraled to about $2.5 billion as of 2022 – merited further investigation as a possible government overspend.
“Since at the end of the day this is all taxpayer money, I think… we should definitely look to see if indeed the Federal Reserve is spending $2.5 billion on their interior designer,” Musk said. “That’s an eyebrow raiser.”
The central bank says refurbishing costs have swelled because the project commenced in 2021, around the time inflation began to spike, leading to higher building material and labor costs.
But Musk’s suggested investigation would likely further complicate an already fraught relationship between the Fed and the Trump administration, with chair Jerome Powell facing pressure in recent weeks from the president to bring interest rates lower.
Trump even indicated that Powell should be removed from his post, saying his termination “cannot come fast enough” and suggesting he had the power to fire the Fed chair, although he later walked back those comments.
The Fed funds its operations through income from its own balance sheet securities rather than via Congress, but interest expenses have seen it fall into deficit in recent years.
US real gross domestic product (GDP) suffered its worst quarter in Q1 2025 since early 2022 as businesses raced to import products with the Trump administration’s “Liberation Day” tariffs looming.https://t.co/L5gPbWRAgJ
— Mortgage Professional America Magazine (@MPAMagazineUS) April 30, 2025
Fed investigation would mark fresh escalation by DOGE
Musk, who was tapped by Trump to helm his administration’s efforts to trim government fat in January, has introduced sweeping cuts across a host of federal agencies, including key mortgage industry regulator the Consumer Financial Protection Bureau (CFPB).
Efforts to gut the CFPB by laying off nearly 90% of its workforce hit a judicial roadblock in April when US district judge Amy Berman Jackson said she was “deeply concerned” about the move to ax about 1,500 employees.
But DOGE has become a highly visible symbol of Trump’s first 100 days in power, culling scores of federal employees and shrinking or dismantling prominent agencies – including USAID, which administers civilian foreign aid and development assistance – in the name of government efficiency.
Could a DOGE war on the Fed push mortgage rates higher?
Musk is expected to step back from his role at the head of the department in the coming months amid growing pressure from investors in Tesla, the company he leads as chief executive officer, for him to move away from his government focus.
The Wall Street Journal reported yesterday that the company’s board had discussed beginning the search for an executive to replace Musk, although Tesla chair Robyn Denholm described that report as “absolutely false” in an X post.
Trump’s April broadside on Powell and demand that the Fed cut rates sent tremors through bond markets and saw Treasury yields rise on the back of an apparent attack on the central bank’s independence.
It remains to be seen whether bond yields would jump again if Musk pushes ahead with an investigation into the Fed’s independence – but mortgage market watchers will be anxiously watching for that possibility, with a surge in Treasury yields usually meaning mortgage rates are also set for a climb.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
