Hi everybody.
Hello.
Hey, we had a great visit to the Fed to see the renovation. Um, I think we got a lot of progress in being able to see on the ground what's occurring. Um, developed theories of the case. We're gonna keep at it. The president was very clear. Interest rates need to come down. Um, the country is exploding, and there's this one part that could allow it to go even and- higher to h- have relief for families that want to get new mortgages.
Very, very important. Um, we're gonna keep asking the questions. Um, a lot of f- still things that we could have done better, a lot cheaper. Um, w- we kind of got- you know, we've seen the paper now. You kinda get to see the tunnels, the, um, the atriums that didn't exist before. And we're gonna continue to ask those kind of questions.
Russ, you guys have avoided linking the idea of lowering interest rates to the president's scrutiny of this project. Uh, but the president's talking about them both at the same time. You're talking about them both at the same time. How much does the administration's concern about this project have to do with frustration that Jay Powell won't do what the president said?
I, I think he's- uh, the president's a builder. I mean, we've learned- the three of us have learned more in this afternoon, seeing him on a job site, going around and, uh, talking about how he would've done things differently, uh, the expensiveness of something. Um, and you just can't take that away from someone.
Bill's the same way. Um, and so we, we want this to go- we want this thing to get done cheaply. Um, and we wanna make sure the taxpayers have as much information about what the state of the facts are.
[Crosstalk]
From what you were told with what you saw today at the ground, uh, at the Federal Reserve, do you believe that there- it's fraud happening there like the president [Inaudible]
We're taking a look. Look, uh, S- Senator Scott's gonna continue to have a, a major, uh, document request that either went up tonight or, or this- earlier this week or last night and earlier this week. Um, we still have questions that we want answered. Uh, we want the facts, uh, but we're taking a look at it and that, that will continue.
But I think what was helpful about today is that we got to see on the ground, when you see something on paper, what's that referring to, and the extensiveness of what they really embarked on. Uh, really dug- digging out an entire new basement, a tunnel. You know, we, we don't have a tunnel here, uh, between our buildings.
Uh, they have, uh, atriums that never existed before, just the extent to which they put up h- wood on all of the panels. Uh, the extent to which air condition was flowing throughout the job. There's a lot of things about this that, uh, I think would raise questions, and we're gonna keep working at it and do this in a very deliberative approach.
The president said that he would fire a project manager who went over budget like this. Uh, do, do you believe this is cause for Jerome Powell's [Inaudible]
You guys have always tried to make it as metaphysical a conversation about the Fed, and it's not. The president has policy views. He wants lower interest rates. Uh, you are asking him about- you're asking him about tariffs. You're asking about all sorts of things that thing- he gets to talk about lower interest rates.
At the same time, he gets to talk about his opinions about how he would do a building cheaper.
[Crosstalk]
[Inaudible] project 3.1 billion versus 2.5, and Trump and Powell both went back and forth on it?
The headquart-
[Inaudible] the discrepancy?
The headquarters is three buildings. The two that are still in progress are the Eccles and the one that's next door to it with the tunnel, right? That is a $3 billion and counting project that started at 1.8. It is massively overrun. It's massively overrun if you take just the two buildings. Uh, nearly a billion dollars of, of cost overrun.
So, um, again, we've got a lot of questions. Those questions were not satisfied, but we certainly have a better sense of what's going on.
[Crosstalk]
They decide to do this almost historic tour given that's how rare it is for a president. And also, does this tour today do anything to change dynamic or improve th- on that dynamic, between the federal chair -- Chair Jerome Powell and President Trump?
President is a world-class builder. And when, when he learns that his team is gonna go and do a tour of the Federal Reserve that's literally like three blocks down, he's gonna wanna be a part of it. And we were thrilled that he wanted to come along.
[Crosstalk]
How was Trump's demeanor? Did you find him to be open in your inquiries, find him to be cordial? How would you describe it?
I mean, much of it was on television. I think they had good conversations. Um, and, uh, some of it we weren't privy to, and, uh, we're able to really, uh, go through the tour and, and see and get a sense of what each other we're looking at.
[Inaudible] right now is about the price tag of these renovations. Do you know for certain right now how much this has cost, uh --
No, I don't know for certain, and I'm going off, uh, third party, uh, information that's been released. Um, and that information search is gonna continue. We still wanna get to the bottom of the plans, um, that were submitted, uh, and how they have changed. Uh, those never came back into the National Capital Planning Commission.
I don't even think they know the costs. I don't even think they know the costs.
And the, and the, the 3.1 billion is important. There's a cost overrun, you can look. These are the Fed's own internal documents that were FOIAed and are published online. It went from 1.8, 1.9 to 2.5 and now to 3.1 for the capital expenditures within their own budget, uh, for the total renovation and build of the complex.
So the, the chair's really splitting hairs there when he's saying, well, that's this building. Okay, if you take that building out of it, it's still an inflation from 1.4 billion to 2.5 billion. There's no way around it. The cost overrun is massive. That's their own document.
If he does find fraud through this investigation, does that give the President [Inaudible] fire Chair Powell?
We are where we are, which is we want the lower interest rates. The President, that is his policy view. Uh, he thinks it's vital to the country economically. And we are also on a host of issues, this one being one that is front and center today, trying to do things cheaper on behalf of the American taxpayer.
And there's a lot of ways you could have done this differently.
If the Fed cuts rates, if the Fed cuts rates, is the President gonna drop this inquiry? If the Fed cuts rates, will he drop the inquiry?
This is, he's, he's approaching this as a builder. Uh, we wanna get this done. So we want a project to get done unrelated to interest rates. That's what's important. Um, you know, it's on the National Mall. Um, it's needs to get done as soon as possible, and we can't have the situation where this is hanging over the country's head.
[Inaudible] said the President would have the power to fire a Fed chair if he chose to or is that a-
I think the President every day almost at this point, answers that. He is not really thinking about that right now. I mean, I, I, how many press conferences this week, has that question been posed to the President?
[Inaudible] with reviewing it, looking at [Inaudible]
No, I think he's a builder. He cares about the costs. The costs of gotten out of control. And then separately, you know, we run, the President runs Fannie Mae and Freddie Mac. In his first term, people were able to buy a mortgage for 3%. These days after Biden's inflation and what happened with rates, now you're looking at 7% mortgages.
So this is of great concern to the President. Um, but I view them very differently as two different things. You can't help be a builder and be the President of the United States and see these cost overruns and not ask a bunch of questions.
Is the President trying to pressure Chair Powell to lower interest rates? Is that what this is about? I mean, he stood right next to him and said, "I think rates should be lower." At the same moment you guys are there investigating the Fed. Is this a pressure tactic?
Again, can answer it the same way many different times. The President has a policy view about lower interest rates that, as Bill said, are, is vitally important to the country, economically and for the pocketbooks of the American people. And he is a builder that looks at largess and just automatically starts to think about how, what he would do in that situation.
I think the Fed learned a lot today based on those conversations. We certainly learned a lot. And it's gonna inform the questions that we're gonna continue to ask to get to the bottom of it.
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Did you see today, what did you see today that surprised you?
[Inaudible]
What did, what did you see today that surprised you?
I think the extent to which, uh, the degree to which they had to build down, uh, into the basement, uh, and really essentially jack the entire building up to do some of these things. I mean, remember this was a building that was renovated between 1999 and, and, uh, over a three or four year period. Uh, so the, the notion that you know this, it's never seen any kind of renovation since the 1930s, uh, there's more to that story.
Um, and so that, and that's still in, there's, they're still at the, at the very beginnings of that renovation. So this is a long way to go. Uh, but that's what I was mostly [Inaudible]
Go ahead, right here.
Thank you sir.
Thank you.
[Inaudible] and that is exactly what y'all been talking about, the President has been talking about. Who is responsible for giving the President accurate information about what the cost is? Fed Chair Jerome Powell was correcting them on live TV.
No, he wasn't. What the President pulled out of his pocket-
[Inaudible]
No, the President pulled out of his pocket a page from the FOIA request of the Fed's own internal documents. It is available on their website. It's available for, their --
[Inaudible]
No. What he, what, what the president is saying is the entire construction project that's going on, which is a build-in renovation project over the last number of years, is currently at $3.1 billion. And what the Fed Chair was saying was, "No, no, you have to take one of the buildings out of it." Well, no. It's all one project, uh, uh, the, on the whole complex.
If the building was already done, it's not part of what your, your issues are right now?
I, I, I don't know what you're saying. If you go back and look, and the President's looked at the forms, they're right there. You can see every single year, they put out the forms for every single year, and every single year, the numbers have gone up for this project.
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[Inaudible] -- that is accurate in your, in your assessment?
I think what the Fed Chair is doing is splitting hairs in that moment to try to drive down the top line costs for what we're talking about.
Sir, if the president-
And yes, we believe our numbers are accurate. [Laughs]
Go ahead, let's go.
They're their numbers. Again, the President was citing their numbers from their forms that they have published.
The document you FOIA-ed, just to be clear-
We did not FOIA. It's available right now on the Fed's website.
[Inaudible]
Go ahead, go ahead, go ahead. Right here.
You want this project sped up and go faster. What are the specific actions to take next? Does that mean you're not going to stop the project? And who will have the ultimate decision over the next?
The Pre- the President said that, you know, we are where we are. The project has to be done. Now, it'd be nice if they, uh, don't have more cost overruns, but I mean, Bill's got a long way to go and at this point it's just, kind of, gotta get done. [Inaudible]
This building's got a long way to go. It's got a long way to go.
Great. And the cost of this renovation are two separate things, but are you concerned about the message it sends to the market to have a President visiting the Fed, something that hasn't happened in 20 years and publicly saying on television, "Lower interest rates," [Inaudible] independent?
No, I think, I think the market should like it. You have a president who's engaged, he's a builder, and he also understands interest rates. Remember, building and construction is also very much tied to interest rates. This is a president who understands interest rates better than any president before. He's crushed inflation.
In his first term, we had 3% mortgages. Now we have 7% mortgages. Costs have doubled. People can't afford mortgages because of the last four years under Biden. And so we need to get these rates down. We can get rates down and that would have a booming effect on the housing market and the mortgage market.
Thank you.
And, and as, and as for the market reaction, I mean, this is not a new concept. This is a very public discussion. The market continues to go up. The revenue of the country continues to go up. There is a, uh, a budget surplus last month of $28 billion. Just yesterday, or two days ago, the president announced a huge trade deal with Japan.
I mean, let's stop speaking in hypotheticals. Let's just look at what's happening. This conversation's being had in public. The market is reacting every day. The market is going up, the job numbers are improving. Every economic indicator is going in the right direction. And if we can just look back to last year, go back to last summer.
Every Democrat that's now silent was calling for the interest rates to be lowered. Every single one of them. Now they're completely silent, now that President Trump is in office. But one year ago they said the rates are too high and they were calling all, for it all the way leading up until the election.
The economy is, is markedly better now than it was then. So our question would be, where are the Democrats on this? Mortgage rates are too high. Credit card interest rates are too high. All loan rates are too high. They felt that way a year ago. Everything is better now. Why don't they feel that way today?
It doesn't make any sense.
The Democrats own, the Democrats own the high rates and they own the mortgage rates and them not coming out and saying, "We need lower mortgage rates," when the data says otherwise, it's crazy.
Last year a [Inaudible] Federal Reserve, he told an undercover reporter that Jerome Powell, "Wants to be remembered in history for [Inaudible] the Trump Administration [Inaudible] interest rates." Does that sound accurate?
This is a policy debate that we're having with the Federal Reserve. Uh, the president's put out his, his, his viewpoints very clearly. H- he's done that. He's never been shy about doing that. And I think the American people who are struggling in the mortgage that they're in right now are wanting to have their first, uh, home appreciate their leader in this town and this country articulating many of the things that they wish would occur.
And that's a policy debate. Um, and we're just gonna keep it there.
The president has been pretty clear that he wants interest rates lower, but will he, uh, perhaps recommend changes to the pro- the, the project as a real estate developer? He's touched on that little bit today, both in his [Inaudible] about [Inaudible] in office and on camera. Will he recommend any changes today?
You know, we're at the beginning of this. You know, we sent our, my letter up to the Fed. Um, you know, we don't necessarily accept all of the responses that were in there. Uh, the National Capital Planning Commission, I won't speak for, but they are, uh, looking at this as well. Um, and you know, we wanna continue.
This is our first site visit. We want to get to the bottom of, uh, what we can learn from it and how to do it better, and we're gonna continue to ask questions and, uh, we won't get ahead of anything else.
[Crosstalk]
Shifting gears just a bit. Uh, there's some estimates floating around that the, uh, renovations at Alcatraz would cost $2 billion. Is that something that [Inaudible] responsible, that the administration should [Inaudible]
We're at the very beginning of the, the planning process. You know, we had two of our, uh, cabinet members out visiting, uh, the site. Um, and, you know, we're at the beginning of this process, but you guys always kinda ask these types of questions, and my response is always, we have priorities as, as an administration that we believe is important to spend money on, and we can do cheaply, and we will do it as efficiently as possible.
And that process really hasn't gotten going. Uh, our, our office hasn't been able to really get a, get a handle yet on, uh, the, those costs yet. Uh, but we'll be able to pay for it, and it's an important, uh, investment for the country, and we're excited to do it, um, and get that thing done.
Director Vought, um, on the rate cuts, the Fed has projected rate cuts this year, but the president wants to see substantially larger rate cuts. What is the case for a 300-basis rate cut?
Well, if you look at the inflation for the last three months, you look at the run rate for the last three months, it's 1.6, 1.5%. The fed fund rate is at 4.5%. So if you lower it by 3%, you're really matching where the run rate of inflation is with where the fund fed funds rate is. So it's just math. And that's what's so ironic about this, is that, you know, the Fed has always said, "We're data driven.
We're data driven." This is the data, and it's hurting real people. It's hurting people with car loans, mortgage loans, you name it.
And it's hurting the country, and it's hurting the country. It's costing taxpayers. We're transferring enormous amounts of money outta the pockets of taxpayers because of the higher interest rates to pay interest on the debt. The president talks about that every single day.
Last vote was unanimous. Is he objecting to the entire Fed board right now?
Once again, this time last year, everybody was calling for rate cuts on all sides of the aisle, Democrats included, the economy has gotten better, and I'd pose the same question in reverse. What is the argument for keeping the rates where they are? There's a very ambiguous argument. Well, we're not really sure what tariffs.
Well, I don't know how, you're not sure what tariffs. The president talks about it every single day. The plan is very transparent, and what the president predicted would happen with tariffs is happening. Money's coming into the country, prices are not going up, inflation is not going up. We run it... Again, we ran a surplus last month.
Uh, it's just, uh, it's a, um, very arbitrary argument, I think in our view that they've been making to keep rates where they are.
Last question.
[Inaudible] focused on this particular project in the Federal Reserve, but it costs more in the United States to build infrastructure more than any other comparable nation in the country... in the world. Are you looking into a system-wide problem, or is it system a one, one-project plug?
We always can, uh, we're, we're very interested in infrastructure, the president's always been infrastructure president. Um, those policy process like NEPA reform are always a part of our deregulatory agenda and priorities. There is something unique about this project and some of the decisions that were made, uh, that has caused a kind of a different level, uh, a heightened level of concern, uh, that we're gonna keep asking questions about.
Um, and, you know, I only expect that to continue, but thanks guys.
[Inaudible]
As on, on what?
On changing the way the federal government spends money to build things.
Um, we're always in, in working with conjunction with Congress. Um, they just passed One Big Beautiful Bill. All sorts of things that allow us to have, uh, cheaper energy, lower, uh, better tax regime. Um, you know, our view right now with this project is that, uh, there are things that, uh, can certainly be done better.
Uh, and we still wanna get to the bottom of unanswered questions that we have. So, thank you guys.
Thank you.
Thank you.