Federal Reserve renovation mismanaged, but no criminal wrongdoing found, says watchdog

The Federal Reserve's internal watchdog reported on Wednesday that the agency mismanaged a significant building renovation project but did not identify any criminal violations. The inspector general's 120-page report indicated that the Board of Governors failed to secure a comprehensive cost estimate at the project's outset and did not establish a maximum overall cost, which could have mitigated the impact of inflation on the $2.4 billion renovation. Construction costs increased significantly after work commenced in 2022. The report stated, "Our review found that the Board has not effectively managed and executed its ... contract and repeatedly deviated from its cost-management provisions." Former Chair Jerome Powell had requested the inspector general's review last year. The renovation project became a focal point during the Trump administration's efforts to influence the Fed's interest rate decisions. President Trump visited the construction site in July 2025, where he and Powell discussed the project's costs. Following this, the Justice Department initiated an investigation into whether Powell had committed perjury during testimony before a Senate committee regarding the renovation. This investigation was closed in April after a judge dismissed subpoenas related to the case. The inspector general's report concluded that there were no reasonable grounds to believe that a violation of federal criminal law had occurred. The renovation costs for two Fed buildings have escalated from an initial estimate of $921 million in February 2020 to $2.018 billion by December 2024, with completion now expected in December 2027, extending beyond the original mid-2024 timeline. The report noted that criticisms of certain luxurious features, such as water fountains and private elevators, did not significantly contribute to the cost overruns. Instead, a design change in 2023 from an open workspace to a closed office layout caused delays in the project's design and in establishing a maximum cost ceiling.