Elon Musk Considers Sending Team to Examine the Fed

According to a report on May 1st, a billionaire said he was considering sending his government efficiency department team to the Federal Reserve. He cited the costly renovation project of the Fed's Washington, D.C. headquarters as an example of potential government waste.

On April 30th, he said, "Ultimately, it's all taxpayers' money. I think we really - we absolutely should - look into whether the Fed has really spent $2.5 billion on their interior designers."

As of 2022, the cost of the Fed's multi - year headquarters renovation project had increased to $2.5 billion. The Fed said this was because the project started in 2021 when inflation soared, and since then, the costs of building materials and labor have risen.

He said, "This is shocking."

The report noted that the Fed does not rely on Congress for funding but finances itself through the income generated by the securities on its balance sheet. However, in recent years, with the increase in interest expenses, the central bank has run a deficit, which has caught his attention.

He suggested that the government efficiency department review the Fed. This is the latest example of an attempt to exert more political control over the independent central bank. This move may unnerve investors who rely on the Fed to control inflation.

Before these remarks, there was public consideration of whether to fire the Fed Chairman Jerome Powell.

For years, the Fed's income had exceeded its operating expenses and it had remitted huge profits to the U.S. Treasury, helping to narrow the government's budget deficit. However, as interest rates rose, the situation reversed: the Fed had operating losses in 2023 and 2024 and had to stop remitting profits to the Treasury.

The Fed has said that its headquarters renovation project will consolidate most employees into one office area, reduce leasing elsewhere, and modernize the office space.

Previously, he had criticized the Fed. He wrote on a social platform that the central bank responsible for safeguarding the world's largest economy was "severely overstaffed". This comment was part of a series of remarks that began with someone else's post discussing the Fed's latest policy decision. At that time, he did not elaborate further on this statement.

A professor introduced that the Fed is composed of 12 regional Federal Reserve Banks and the Board of Governors. The 12 regional Federal Reserve Banks are legally non - profit private organizations owned by member banks (private commercial banks), but the shareholders do not have traditional corporate control or general dividends. The Board of Governors in Washington is authorized by Congress to perform public duties such as formulating monetary policies and financial supervision. Its seven governors are nominated by the president and approved by the Senate, and are directly responsible to Congress.

Part of the Fed's funds comes from the reserves deposited by these commercial banks. However, these commercial banks have no decision - making power over the appointment of the Fed Chairman or monetary policies, which avoids the manipulation of the Fed by Wall Street financial giants.

The professor added, "The term of the Fed Chairman is staggered from that of the president. For example, Powell's current term is from the middle of Biden's term to the middle of the previous term, which can prevent the Fed from being manipulated by the president."

Meanwhile, the Fed's financial independence ensures that the government cannot interfere with it through means such as appropriations. Even the audit of the Fed by the U.S. Government Accountability Office, a congressional auditing unit, is limited. The quarterly financial reports that the Fed started publishing in August 2012 still have not been audited.

As history has developed, the Fed's statutory goals have gradually become clearer and expanded. Nowadays, people usually summarize the Fed's core mission as the "dual mandate": 1. Maintain price stability: Keep inflation at a low and stable level (usually around 2%). 2. Promote full employment: Try to keep the economy operating as close to full employment as possible.