The Federal Reserve’s own watchdog says poor management, not crime, let the cost of the Fed’s headquarters renovation nearly double, and President Trump now wants Jerome Powell forced off the Fed board over it. The inspector general, the in-house investigator who checks an agency’s spending and conduct, found that the board “did not take numerous actions available to it that could have better controlled costs.”
Story Snapshot
- The Fed’s inspector general released its report on the headquarters renovation on Wednesday, September 30.
- Management and oversight failures helped push the cost estimate from $1.3 billion in 2020 to $2.4 billion in 2024, the report found.
- The watchdog found no grounds for a criminal referral.
- Trump said Powell “should be forced to resign from the Board” and asked Attorney General Todd Blanche to review the report.
What the Watchdog Found About the Fed Renovation
The report says the board did not get a full cost estimate at the start or set a ceiling on what it would pay. A 2023 design change, from open office space to closed offices, added delays. The total cost estimate grew from about $1.3 billion in February 2020 to about $2.4 billion in December 2024. The inspector general also wrote, “At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred.” That means no criminal referral, which is a formal request asking prosecutors to look at a possible crime.
Some of the extra cost came from things outside anyone’s control, the review said, such as higher prices for materials and labor, asbestos, contaminated soil and a high water table. But it also faulted weak contracts, too little bidding on major work and loose oversight by top leaders. Powell finished his term as chair in May 2026 and still sits on the board as a governor, with a term that runs to January 2028. The new chair, Kevin Warsh, said the Fed will carry out the report’s recommendations. He also said the General Services Administration, the agency that manages federal buildings, will take over running the project.
How the Justice Department Probe Began and Ended
The renovation also drew a criminal probe. In January 2026, the Justice Department sent subpoenas tied to Powell’s June 2025 testimony to the Senate Banking Committee about the project’s costs. A subpoena is a legal order to hand over records or testify. In March, federal Judge James Boasberg quashed, or canceled, the subpoenas. At a closed hearing that month, a prosecutor admitted the government had not found evidence of wrongdoing.
In April, U.S. Attorney Jeanine Pirro ended the probe and said the inspector general would review the project instead. Her office said it could reopen the case depending on what that review found. The September 30 report found no grounds for a criminal referral.
Trump’s Ongoing Critique and What May Come Next
Trump answered the report on Truth Social. “At a minimum, ‘Too Late’ Powell should be forced to resign from the Board,” he wrote. He said Powell “can’t manage a Building, and he certainly shouldn’t be allowed to manage his High Interest Rate Policy.” Trump said he asked Attorney General Todd Blanche to “study the report, and make a determination as to what to do.”
Trump also said he could have done the job for “$25 Million Dollars, completely maintaining the MAGNIFICENCE of the structure.” The next step on the legal side is Blanche’s review. On the building side, the watchdog told the Fed to set clear measures of success for the project and to use the audit rights written into its contracts.
Why This Episode Hits a Nerve Across the Spectrum
The Fed sets the interest rates that reach mortgages, car loans and savings accounts, and its own investigator found the board let its building costs nearly double. Many Americans see a familiar pattern: a big agency overspends, and the people in charge stay in place. Others worry that pressure on Fed officials could reach into how rates are set. The report gives both sides something to point to. It documents waste and weak oversight, and it finds no crime.
Sources:
cnbc.com, nbcnews.com, scotsmanguide.com