Federal Reserve investigators want to know why renovation costs for the Consumer Financial Protection Bureau's headquarters building have soared to more than three times the original estimate, the Washington Examiner learned. “We have received a request ... to conduct a review of the CFPB’s renovation project. We have agreed to conduct such a review,” a spokesman for the Federal Reserve inspector general said.
The request came from Rep. Patrick McHenry, chairman of the House Financial Services Committee's subcommittee on oversight and investigations. The North Carolina Republican's request followed a stormy Jan. 28 oversight hearing with CFPB Director Richard Cordray.
The Comptroller of the Currency, the prior occupant of the building at 1700 G St. NW, had previously estimated renovation costs for the building at $55 million. But last July, the CFPB announced that the renovation cost estimate had nearly doubled to $95 million. Then, at the Jan. 28 hearing, Cordray stunned lawmakers with an admission that the renovation costs had ballooned further, to $145 million.
Cordray declined to provide an explanation for the spiraling costs. The CFPB has also refused to provide documents on the renovation requested last year by the Examiner in a Freedom of Information Act request.
During the Jan. 28 hearing, Rep. Jeb Hensarling challenged Cordray, “Explain to me, Mr. Director, why I should be, why I shouldn't be outraged, and why the American people shouldn't be outraged.”
A Texas Republican, Hensarling is chairman of the financial services committee. He compared the building, which was built in the 1970’s, to Trump World Tower in New York, the Bellagio casino in Las Vegas and the Burj Khalifa in Dubai — the tallest man-made structure in the world.
The Examiner reported in July that CFPB hired Burj Khalifa's architectural firm, Skidmore, Owens and Merrill, to design the agency headquarters' renovation. The elite architectural firm is based in Chicago, President Obama's hometown.
Cordray bristled at the suggestion that the rising renovation costs were an inappropriate expenditure. “The notion that we would try to build some palace that we don’t even own or control doesn’t make much sense to me,” he said.
Technically, the General Services Administration, the federal government's housekeeping agency, owns the building, not the CFPB. The controversial consumer agency was established by the Dodd-Frank Act in 2010.
McHenry said the $145 million in renovation costs almost equals the GSA’s assessed value for the building of $154 million. In his request for the review, McHenry told inspector general Mark Bialek that he "should evaluate the budgeting process for the renovations, determine if the renovation expenses were subject to a competitive bidding process and conclude whether these dramatic increases are justified."
Cordray has said the building is deteriorating, with inadequate electrical, phone and elevators. However, a Washington Business Journal article reported Jan. 30 that the upgrades are more ambitious, including a rooftop play yard to serve the basement child care center, a “green” roof, interior renovations and a new lobby redesign, as well as new landscaping to create a “public plaza.”
By placing CFPB under the Federal Reserve, Congress exempted the bureau from congressional oversight of its budget. But the Federal Reserve IG can investigate CFPB.