Fed Watchdog Finds No Crime in Costly Renovation, Sparks Political Firestorm
Fed Watchdog Finds No Crime in Costly Renovation, Sparks Political Firestorm
A new report on the Federal Reserve's nearly $2.5 billion headquarters renovation reveals poor management and massive cost overruns, but no criminal activity. Ex-President Trump slams former Fed Chair Powell.
The Federal Reserve's inspector general has concluded that a massive, nearly $2.5 billion renovation project at the central bank's headquarters suffered from significant management and oversight failures, leading to substantial cost overruns. However, the long-awaited report, released on Wednesday, found no reasonable grounds to suggest that federal criminal law had been violated, thus making no referrals to the U.S. Attorney General.
The report details how the project's estimated cost soared from $1.3 billion in 2020 to a staggering $2.4 billion by August 2026. Construction costs alone have escalated by $960 million.
While some of these increases were attributed to inflation, the IG noted that certain costs, like plumbing and heating, ventilation, and air conditioning, surged by an alarming 223%, far outpacing the overall producer price inflation of 16% during the renovation period.
A key finding was the Fed's failure to enforce a guaranteed maximum price for the project.
Furthermore, the report criticized the process design, which did not effectively escalate rising costs to senior leadership's attention.
A multitude of committees was found to be responsible for overseeing the building project, suggesting a lack of clear accountability.
Despite the lack of criminal findings, former President Donald Trump quickly seized on the report to renew his attacks on former Fed Chair Jerome Powell. In a Truth Social post, Trump argued that Powell should be “forced to resign” from the Board of Governors, claiming he
can’t manage a Building, and he certainly shouldn’t be allowed to manage his High Interest Rate Policy.
Trump has consistently criticized Powell over this renovation and his interest rate policies.
Trump’s administration had previously launched a criminal investigation into Powell concerning the renovations, which was only dropped when it complicated the nomination of his preferred successor, Kevin Warsh. Powell himself had stated in April that he would remain on the board until the investigation was “well and truly over, with transparency and finality.” Trump has now stated he has asked Attorney General Todd Blanche to “study” the IG report for potential action against Powell, suggesting he should be sued for “corruption or incompetence.” The IG's office reviewed materials related to Powell's June 2025 testimony to the Senate, which some critics alleged involved perjury, but made no claims about misconduct related to that testimony.
