Federal Reserve watchdog finds no wrongdoing by former chair Powell in renovation investigation

<p>A Federal Reserve watchdog found no criminal wrongdoing by former chair Jerome Powell in its investigation of the central bank's headquarters renovation, according to a report released on September 30, 2026.</p><p>The findings effectively clear Powell after the Justice Department opened a criminal investigation into him, which became public in January.</p><hr /><p>The Office of Inspector General stated in the report, "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 U.S. Attorney General."</p><ul><li>The watchdog added that it "did not identify administrative misconduct during our evaluation."</li></ul><p>While the report clears Powell, it criticizes Federal Reserve management and oversight of the renovation project, noting that construction costs more than doubled to $2.5 billion.</p><ul><li>The report indicates that the Fed "did not take numerous actions available to it that could have better controlled costs and mitigated some of the significant construction cost increases."</li></ul><p>The renovation became a focal point in President Trump's campaign against Powell and the Federal Reserve. Trump toured the construction site with Powell in July 2025 and publicly challenged him regarding the project's rising costs.</p><ul><li>The Justice Department's investigation focused on Powell's testimony to Congress in June 2025 about the renovation and its escalating costs. Powell denied any wrongdoing and suggested that the investigation was part of a broader effort to pressure the Fed over interest rates.</li><li>The DOJ closed its investigation in April as the Fed's inspector general continued its review.</li></ul><p>The watchdog noted that inflation alone could not account for the project's increased costs. For example, two major mechanical, electrical, and plumbing contracts rose significantly from an initial estimate of $178 million to $539 million, far exceeding the general rise in construction costs.</p><p>Powell has remained on the Fed's board after his term as chair ended in May, an unusual decision he attributed to wanting to see the investigation through to its conclusion.</p>