Fed watchdog clears Powell of crimes in $2.4B renovation

The Federal Reserve's inspector general concluded Wednesday that former Chair Jerome Powell did not break the law in overseeing the central bank's headquarters renovation, rejecting criminal allegations that fueled a Trump administration pressure campaign. The 120-page report found no reasonable grounds to believe federal criminal law was violated and identified no administrative misconduct warranting disciplinary action.

Costs for the project nearly doubled from the initial $1.3 billion estimate in 2020 to roughly $2.4 billion today. The watchdog cited multiple management failures: the Board of Governors never secured a comprehensive cost estimate or maximum price cap, failed to act on problems identified in earlier projects, and lacked governance structures equipped for a project of this magnitude. Design changes, site conditions near the Tidal Basin, and inflation also drove up expenses.

“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 U.S. Attorney General.”

The renovation became a flashpoint in President Donald Trump's efforts to pressure the Fed on interest rates. Trump visited the construction site in July 2025, where Powell publicly corrected his cost estimates. The Justice Department briefly opened a criminal probe into Powell for alleged perjury before a Senate committee, but suspended it in April 2026 after a judge quashed subpoenas.

Current Fed Chair Kevin Warsh, who took office in May, concurred with the findings and committed to an independent audit of the project's contractor. Powell's term as chair ended in May, but he remains on the Board of Governors as a governor until January 2028.