The Federal Reserve’s Office of the Inspector General announced on Wednesday that it found no grounds for a criminal referral or evidence of administrative misconduct tied to massive cost overruns during the renovation of the central bank’s two historic buildings on the National Mall in Washington.
However, the watchdog’s conclusion that the project suffered from lax oversight immediately triggered a fresh push from President Donald Trump for the resignation of former Federal Reserve chief Jerome Powell. The renovation project, which spans the central bank’s headquarters facilities, has seen its price tag balloon to roughly $2.4 to $2.5 billion, more than doubling from initial estimates of about $921 million when work began in February 2020.
Inspector General Findings and Project Cost Overruns
Investigators determined that there were never any valid reasons to suspect any breaking of federal criminal statutes that would necessitate notifying the US attorney general, as stated in the IG’s review. The watchdog added that while the report outlines deficiencies in project management that led to formal recommendations for corrective action under the Inspector General Act, investigators "did not identify administrative misconduct."
According to the findings, the steep cost escalations were driven by a combination of inflation, limited subcontractor bidding, substantial interior fit-out design changes, and challenging site conditions. The watchdog also noted that the Fed’s board "had not effectively executed" the renovation contract. The project is still ongoing and is not expected to be completed until 2027, three years behind its original schedule.
White House Pressure and Legal Threats
President Trump, who has frequently clashed with Powell over monetary policy dating back to 2018, seized upon the watchdog’s criticisms of the building’s management to escalate his campaign against the former Fed chief.
"At a minimum, ‘Too Late’ Powell should be forced to resign from the Board," Trump wrote on Truth Social. "He can’t manage a Building, and he certainly shouldn’t be allowed to manage his High Interest Rate Policy."
Trump added that if Powell refuses to step down, he should face a federal lawsuit for corruption or incompetence. The president also stated that he had directed Attorney General Todd Blanche to study the watchdog’s report and determine the next steps. The White House pressure campaign follows an earlier Justice Department criminal investigation into the renovation costs that was dropped earlier this year after a federal judge blocked grand jury subpoenas issued against Powell.
Congressional Reactions and Leadership Changes
Reaction on Capitol Hill broke along predictable partisan lines following the release of the watchdog’s findings. Republican Senator Tim Scott of South Carolina, who chairs the Senate Banking Committee, characterized the cost overruns as "egregious" and promised rigorous oversight.
Scott remarked that the central bank’s obligations to wisely handle its assets and answer to lawmakers remain unaffected by rising prices.
Conversely, Senator Elizabeth Warren of Massachusetts, the panel’s top Democrat, argued that the report’s conclusions provided "no basis to restart the president’s witch hunt" against Powell.
Meanwhile, Kevin Warsh took over as Fed chairman from Powell in May, following a confirmation process that had been temporarily snagged by political friction over the prior DOJ probe. Warsh stated that the central bank would comply with the IG’s recommendations and hire an independent auditor to verify the accuracy and compliance of all construction costs awarded to date.
