No ‘misconduct’ in Fed building renovation, watchdog finds 

There is no evidence of any legal wrongdoing associated with the renovation of the Federal Reserve's headquarters in Washington, D.C., according to a report released this week by an independent watchdog agency.

The report delves into the causes of the project's ballooning costs, which some members of the Trump administration and the president himself previously cited as a potential reason to remove former Fed Chair Jerome Powell from his post.

What the watchdog found

The Office of Inspector General for the Board of Governors of the Federal Reserve System (OIG) released its report on Sept. 29. Powell requested the probe in July 2025 after comments he made about the renovation in a June congressional hearing raised questions about the jump in costs.

The report noted that the project's approved budget climbed from $1.32 billion in early 2020 to $2.38 billion by the end of 2024, with the construction segment alone more than doubling in that time. Last summer, President Donald Trump questioned why the costs were skyrocketing, telling reporters that it was "possible there's fraud involved" — and that Powell may have to be fired if that was the case.

But the OIG's report found "numerous factors that contributed to the significant construction cost increases, including inflation, limited subcontractor bidding, substantial Board design changes, and site conditions."

That isn't to say that the project has been handled perfectly. "We also found that the effect of some of these factors could have been mitigated by more effective project management and contract execution decisions," the report said.

However, the OIG did not "find reasonable grounds to believe that a violation of federal criminal law had occurred requiring a referral to the U.S. Attorney General in accordance with the Inspector General Act" and "did not identify administrative misconduct during our evaluation."

How the Fed is responding

The Fed's new chair, Kevin Warsh, "concurred with the findings and recommendations and conveyed the Board's commitment to addressing the items outlined in our recommendations," the OIG's report said. Those recommendations include auditing the project's construction costs and creating an oversight group to monitor its progress, among other suggestions.

The report included a copy of the letter that Warsh sent the watchdog in response to its findings. In it, Warsh said he and his fellow board members "strongly agree on the necessity of completing the work in the most efficient and transparent way possible."

As the renovation project continues, the OIG said it "will follow up with the Board quarterly" to ensure that its recommendations "are fully addressed."

How we got here

The OIG has previously conducted audits of the renovation, which was first greenlit in 2017. But the project began making headlines last summer after Trump and the director of the Federal Housing Finance Agency raised the possibility that fraud was involved — and that Powell himself might be to blame.

The allegations heightened a public feud between Trump and the Fed as the president repeatedly urged the central bank to quickly lower short-term interest rates. The dispute further intensified in January when Powell announced that the DOJ was investigating the renovation — a probe Powell suggested was actually prompted by the Fed's monetary policy decisions during Trump's second term in office.

The DOJ ultimately dropped its investigation in April, though U.S. Attorney for the District of Columbia Jeanine Pirro said at the time that she "will not hesitate to restart a criminal investigation should the facts warrant doing so." While Powell's term as Fed chair has since ended, he has said that he intends to remain on the Board of Governors until he is certain that the DOJ's probe is over for good.