The Federal Reserve’s internal watchdog has formally cleared former Chair Jerome Powell of criminal conduct while simultaneously tearing into the central bank’s handling of a headquarters renovation that has swallowed $2.5 billion.
Inspector General investigators wrapped a 120-page review that found “no reasonable grounds to believe that a violation of federal criminal law had occurred” by Powell, according to the report released Wednesday. The probe was ordered after revelations last year that the overhaul was proceeding despite massive losses.
The project, which President Donald Trump has labeled “disgraceful,” began with a $921 million price tag before costs metastasized. Fed officials adopted what the report called a pay-as-you-go approach, never establishing a firm spending ceiling even as bills mounted.
“This failure to establish an expected total project cost and spending limit allowed a pay-as-you-go approach to develop,” the Inspector General wrote. “Without a cost ceiling, senior officials and oversight entities lacked a true measure of this critical performance metric.”
The central bank had already committed roughly $2 billion by the time it finally obtained a basic cost estimate in January 2026, three-and-a-half years after construction started. The report said bluntly that the Fed had “not successfully managed and executed” the work.
Mechanical and plumbing expenses alone surged by nearly $500 million. Contractors repeatedly failed to secure the required three competitive bids, yet Fed bureaucrats approved the payouts anyway.
One particularly costly reversal came mid-project when leadership abruptly abandoned open workspaces for private offices, freezing design progress for 21 months. The initial draft had included marble interiors and a rooftop garden terrace, though the report claimed these elements did not “significantly contribute” to the higher price tag. Luxury water features were scrapped in June of last year after “external stakeholders, such as Congress and the media, raised concerns about the design.”
The spending carries a direct consequence for taxpayers. The Fed typically sends its surplus profits to the Treasury, but money diverted to this renovation reduces those transfers and leaves American workers covering the gap.
Trump, 78, responded swiftly on TruthSocial, announcing he had asked Attorney General Todd Blanche to “study the report.” The president also demanded Powell step down from the Board entirely.
“Powell should be forced to resign from the Board,” Trump posted. “He can’t manage a Building, and he certainly shouldn’t be allowed to manage his High Interest Rate Policy.”
Some members of Trump’s inner circle had previously pushed to fire Powell, accusing him of lying to Congress in testimony where he denied that splashy design plans existed. The Department of Justice attempted to investigate the alleged false statement, but judges quashed subpoenas against the former chair.
Senator Tim Scott, 59, chair of the Senate Banking Committee, issued a statement that appeared to swat away earlier Fed efforts to pin overruns solely on pandemic-era material inflation.
“Inflation does not change the Fed’s responsibility to manage its resources prudently and be accountable to Congress,” Scott said.
The Post’s initial exclusive last year triggered the Inspector General review by revealing the renovation was advancing despite ballooning losses. That reporting also prompted the eventual elimination of the water features two months later.
The White House and the Federal Reserve did not immediately respond to requests for comment.
The DOJ is expected to review the Inspector General’s findings as it weighs any further action.