Fed watchdog clears Jerome Powell over $2.4bn HQ renovation cost overruns
The Federal Reserve's inspector general found the central bank badly mismanaged its $2.4bn headquarters renovation but identified no criminal wrongdoing or administrative misconduct by Jerome Powell.
The Federal Reserve’s inspector general has cleared former chair Jerome Powell over the cost overruns of the central bank’s $2.4bn headquarters renovation, finding “no reasonable grounds to believe that a violation of federal criminal law had occurred” and no administrative misconduct.
The 120-page report, released on Wednesday, was nonetheless sharply critical of the Fed’s project management: the board never established a comprehensive cost estimate at the outset or a guaranteed maximum price, and took a hands-off approach to its Construction Manager at Risk contract, the watchdog found. Costs rose from an estimated $1.3bn in 2020 to about $2.4bn, driven also by inflation, limited subcontractor bidding and late design changes.
The overrun had become a weapon for President Donald Trump in his campaign to oust Powell and gain influence over monetary policy, Reuters reported; Trump toured the construction site in July 2025. Powell disclosed in January that the Department of Justice was investigating his congressional testimony about the project. A federal judge quashed the resulting subpoenas in March and the DOJ closed its investigation in April, awaiting the inspector general’s findings.
New chair Kevin Warsh, who took over in May, said he would follow the inspector general’s recommendations, hire an independent auditor to verify all awarded costs, and hand management of the remaining work to the General Services Administration. Powell declined to comment on the report.
Sources
- Reuters: https://www.reuters.com/world/us/watchdog-finds-deficiencies-no-fed-misconduct-powell-era-renovation-project-2026-09-30/
- AP (via Washington Sun): https://www.washingtonsun.com/agencies/federal-reserve-building-renovation-mismanaged-not-criminal
- Wall Street Journal: https://www.wsj.com/economy/central-banking/fed-watchdog-releases-long-awaited-audit-of-building-cost-overruns-1d2b1efb
- American Banker: https://www.americanbanker.com/news/fed-watchdog-finds-no-criminal-violations-in-hq-project
- Washington Examiner: https://www.washingtonexaminer.com/news/investigations/4748622/federal-reserve-watchdog-finds-no-illegal-conduct-jay-powell-building-renovations/
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