Fed Watchdog Finds No Crime in Powell's $2.5 Billion Renovation, but Faults Management

The Federal Reserve's inspector general found no criminal wrongdoing and no administrative misconduct in the central bank's renovation of its Washington headquarters, a project that has swelled to about $2.5 billion and that President Donald Trump has called "disgraceful." The report was released on Wednesday.

"At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred," Inspector General Michael Horowitz wrote in the 121-page report. The finding clears former Fed Chair Jerome Powell of the allegations Trump had used in his effort to push him out.

The report is still critical of how the project was run. It found that the Fed did not obtain a construction cost estimate from the general contractor at the start, did not share cost limits with contractors early, had thin internal project governance, and saw cost increases beyond inflation. The Fed also never set a guaranteed maximum price, which would have shifted the risk of overruns to the contractor.

The design features the White House has criticized, including marble, private elevators, water features and a garden terrace, "did not materially contribute" to the overruns, the report said. Instead it points to design changes, rising material and labor costs, and surprises on site such as soil contamination and asbestos. The original estimate was $1.9 billion. The work began in 2024 and is expected to finish in 2027.

Trump responded by asking Attorney General Todd Blanche to review the report. The Justice Department's own criminal investigation of Powell's congressional testimony about the renovation was closed in April after prosecutors found no wrongdoing. A federal judge had agreed with Powell that the probe was a pretext for pressuring the Fed chair to lower interest rates.

The renovation became a political weapon in the administration's campaign over who controls the central bank. Trump has repeatedly demanded lower rates and attacked Powell over the building's cost. Powell is no longer chair, but the dispute over Fed independence has continued.

The report gives Congress and the public a detailed account of a project that went well past its budget without evidence of lawbreaking. For the Fed, the lesson in the report is about procurement discipline. For the White House, the finding removes the legal basis for the claim that the renovation was a crime, though the argument that it was wasteful can continue on its own. The work is still scheduled to finish in 2027, so the final bill has not yet been settled.