Watchdog: Mistakes, but No Crimes in Fed Renovation

The Federal Reserve's internal watchdog said Wednesday that the central bank has broadly mismanaged an expansive building renovation project but did not find any criminal violations, as alleged by Trump administration prosecutors.

• A variety of missteps by the Fed's Board of Governors and staff inflated the cost of the $2.4 billion renovation, the Fed's inspector general said. The board did not secure a comprehensive cost estimate at the beginning of the project, nor did it nail down a maximum overall cost, a step that could have forced the building contractor to absorb the impact of inflation, the IG said in a 120-page report. Prices spiked after construction began in 2022.
• The report said that the construction costs to renovate two Fed buildings more than doubled from an original estimate of $921 million in February 2020 to $2.018 billion by December 2024. Construction is expected to last until December 2027, long past its originally slated completion date of mid-2024.

• The building project became a high-profile flashpoint in the Trump administration's efforts to pressure the Fed into cutting its key interest rate. President Trump even visited the construction site at the Fed's headquarters last July, when then-Chairman Jerome Powell corrected Trump's estimate of the project's expected costs as the two stood in hard hats before TV cameras.
• Criticism of the project also mounted in Congress, leading Powell to request in July 2025 that the inspector general, Michael Horowitz, investigate the renovation. The building project then became the focus of a criminal investigation by Trump's Justice Department, specifically into whether Powell had committed perjury during brief testimony about the renovation before a Senate committee. That investigation was dropped in April after a judge quashed subpoenas issued by Jeanine Pirro, the US attorney for the District of Columbia. Pirro said then she would await the outcome of the inspector general's investigation before deciding whether to take any further action.
• "At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred requiring a referral to the US Attorney General," the IG's report said. Tim Lauer, a spokesperson for Pirro's office, said the report is under review.
• The Fed has long blamed a range of factors for the cost overruns, including a spike in inflation that occurred as the economy emerged from the COVID-19 pandemic, unexpected expenses such as asbestos remediation, and additional demands from review agencies. For example, Trump appointees to a planning commission from his first term pushed the Fed to add more marble to the exterior of the renovated buildings, in keeping with Trump's preference for classical architecture.

• Powell's term as chair ended in May, but he took the highly unusual step of remaining on the board as one of seven governors. His term as a governor lasts until January 2028. Powell said earlier this year he would remain on the board at least until he is convinced that Pirro's investigation is done. By keeping his seat, Powell has also prevented the Trump administration from filling another spot on the board.
• Trump on Wednesday afternoon seized on the report to renew his call for Powell to resign from the Fed. "He can't manage a Building, and he certainly shouldn't be allowed to manage his High Interest Rate Policy," Trump wrote on Truth Social. "And no, I do not want this Building named after President Donald J. Trump, ME!" Trump claimed he could have done a "far better Renovation" for $25 million, with "money left over."
• Massachusetts Sen. Elizabeth Warren, the top Democrat on the Senate Banking Committee and a frequent critic of Powell's, said the report "confirmed that Trump lapdogs US Attorney Jeanine Pirro and Attorney General Todd Blanche have no basis to restart the President's witch hunt against former Fed Chair Jerome Powell."
• Current Fed Chairman Kevin Warsh, who took office in May, welcomed the IG's findings in a letter and said the General Services Administration, a federal agency that oversees most government buildings, would take on a consulting role with the Fed to help oversee the project.