US Fed watchdog finds no criminal wrongdoing in Powell-era renovation costs

The Federal Reserve's inspector general said in a report released Wednesday that it found no grounds to refer former Chair Jerome Powell for criminal prosecution and identified no administrative misconduct tied to the central bank's headquarters renovation, according to CNBC and Al Jazeera. The watchdog did find that management and oversight failures contributed to major cost overruns on the project, CNBC reported.

The renovation of the Fed's Washington buildings became a centerpiece of President Donald Trump's pressure campaign against Powell over interest rates, and the Justice Department had opened a criminal investigation into Powell and the project before dropping it earlier this year, Al Jazeera reported. The inspector general's report said it found no reasonable grounds to believe a violation of federal criminal law had occurred that would require referral to the attorney general.

According to CNBC, the Fed estimated in 2020 that the renovation would cost $1.3 billion, and by August 2026 the board-approved budget had risen to $2.4 billion, with construction costs alone up by $960 million. Axios reported that construction costs more than doubled to $2.5 billion. CNBC reported producer price inflation rose 16% overall during the renovation while plumbing and HVAC costs rose 223%, and Axios reported two major mechanical, electrical and plumbing contracts jumped to $539 million from an earlier estimate of $178 million. Al Jazeera reported the watchdog found that design features criticized by the White House, including marble, water features and a garden terrace, "did not materially contribute" to the overruns, and Axios reported the Fed removed four planned fountains in June 2025 after officials worried about "external stakeholders, such as Congress and the media, raising concerns about the design." Trump's response

Trump used the findings to renew his call for Powell to leave the Fed's Board of Governors, writing on Truth Social, "He can't manage a Building, and he certainly shouldn't be allowed to manage his High Interest Rate Policy (only on 'TRUMP!')" according to CNBC. He added, "This is Jerome Powell's fault, and he should be forced to resign, IMMEDIATELY!" and said Powell should be sued "for either corruption or incompetence, both of which are completely unacceptable" if he refuses to step down, CNBC reported. Trump said he had asked Attorney General Todd Blanche to "study" the report and "make a determination" on the construction project, per CNBC. Powell has said he intends to remain on the Fed's board, where he can serve through January 2028, until the investigation into him is "well and truly over, with transparency and finality," CNBC reported.

The Justice Department investigation centered on Powell's June 2025 congressional testimony about the renovation, and U.S. Attorney for the District of Columbia Jeanine Pirro opened a criminal probe in December, CNBC reported. Chief Judge James E. Boasberg of the D.C. Circuit quashed subpoenas Pirro had issued to the Fed in March, finding evidence they were meant to "harass and pressure Powell" over interest rates but no evidence of wrongdoing by Powell, according to CNBC. Pirro agreed in April to drop the investigation to clear the way for Kevin Warsh's confirmation as Fed chair, though she said she was awaiting the inspector general's report and might reopen the case, adding, "I will not hesitate to restart a criminal investigation should the facts warrant doing so." Pirro's office said Wednesday it was reviewing the new report, CNBC reported. Reaction

White House spokesman Kush Desai said in a statement reported by CNBC, "Today's IG report reinforces the gross mismanagement that President Trump has repeatedly highlighted by the Federal Reserve's prior leadership," adding that "Financial markets and hard-working Americans alike deserve a Federal Reserve with competence and accountability." Sen. Elizabeth Warren, the ranking Democrat on the Senate Banking Committee, said Pirro and the Justice Department "have no basis to restart the President's witch hunt against former Fed Chair Jerome Powell," according to CNBC, and said the report underscored the need for more transparency at the Fed. Sen. Tim Scott said in a statement that he welcomed the report, saying, "Inflation does not change the Fed's responsibility to manage its resources prudently and be accountable to Congress," per CNBC. The Fed's Board of Governors declined to comment on the report, CNBC reported.

In a letter accompanying the report, Warsh said he welcomed the findings and that the Fed would adopt the report's recommendations, CNBC reported. According to CNBC, Warsh said he intends to fully audit the renovation and has asked the General Services Administration, which manages other federal building projects, to take on the role of project executive. The investigation was led by Fed Inspector General Michael Horowitz, whom Powell appointed in June 2025; Powell requested the investigation the following month, CNBC reported.