Fed inspector general finds no criminal violations in $2.4bn renovation

Watchdog blames project mismanagement, not luxury features, for cost overruns

The Federal Reserve’s inspector general released a 120-page report on Wednesday concluding that the central bank’s board of governors broadly mismanaged a $2.4bn renovation of two Fed buildings, but found that no federal criminal law was violated in the project’s execution. The report said the board failed to secure a comprehensive cost estimate at the start of the renovation and did not set a maximum overall cost that could have forced the contractor to absorb the impact of inflation. Prices spiked after construction began in 2022.

“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 US attorney general,” the inspector general’s report said.

The findings bring to a close a controversy that became a high-profile flashpoint in the Trump administration’s attempts to pressure then-Fed chair Jerome Powell and the central bank into cutting its key interest rate. The Justice Department in April dropped its own investigation into whether Powell had committed perjury in brief Senate testimony about the renovation, after a federal judge quashed subpoenas issued by Jeanine Pirro, the US attorney for the District of Columbia. Pirro had said she would await the outcome of the inspector general’s investigation before deciding whether to take any further action.

The construction costs to renovate the two Fed buildings more than doubled from an original estimate of $921m in February 2020 to $2.018bn by December 2024, according to the inspector general. Construction is now expected to last until December 2027, well past the project’s originally slated completion date of mid-2024. Former Fed chair Powell requested the inspector general’s review of the renovation project last year.

Trump had publicly criticized the $2.4bn renovation while the administration sought to pressure Powell into lowering the Fed’s key interest rate. In July 2025, Trump visited the construction site, where Powell corrected the president’s estimate of the project’s expected costs as the two stood before TV cameras in hard hats.

The Justice Department subsequently launched an investigation into whether Powell had committed perjury during his brief Senate committee testimony on the building renovation. That investigation was dropped in April 2026 after a judge quashed the subpoenas issued by Pirro.

The inspector general’s report said the board of governors “has not effectively managed and executed its … contract and repeatedly deviated from its cost-management provisions.”

Some aspects of the project that the Trump administration and Republican members of Congress criticized as luxurious — including water fountains, private elevators and marble facades — were not significant drivers of the excessive costs, the report found.

Instead, the inspector general said a 2023 design change by the Fed from a mostly open workspace to one with mostly closed office space caused a significant delay in the project’s design. That change also delayed the Fed from seeking a maximum cost ceiling for the project at that time.