The Federal Reserve's inspector general reported on Sept. 30 that a 120-page review found no evidence of criminal violations related to the $2.5 billion renovation of the Fed's Washington headquarters. The report attributes cost overruns to weak project management and planning rather than criminal activity and recommends corrective steps to strengthen oversight. A brief DOJ probe into then-Chair Jerome Powell was dropped in April amid political controversy tied to a confirmation fight; Kevin Warsh was later confirmed and sworn in.
Fed Watchdog Clears $2.5B Headquarters Renovation of Criminal Wrongdoing
A worker walks at the construction site of the Federal Reserve headquarters, after U.S. President Donald Trump renewed his threat to bring a lawsuit against Federal Reserve Chair Jerome Powell over Powell's management of renovations of the building, in Washington, D.C., U.S., January 12, 2026. REUTERS/Kevin Lamarque
The Federal Reserve's independent inspector general announced on Sept. 30 that a 120-page review found no evidence the $2.5 billion renovation of the Fed's Washington headquarters violated federal criminal law. The report concluded that while project management failures likely increased costs, there were no reasonable grounds to allege criminal conduct.
Key Findings
The inspector general's report attributes cost growth mainly to weak project oversight, planning deficiencies and scope changes rather than criminal activity. The review highlights management and governance shortcomings and recommends corrective actions to strengthen controls on future capital projects.
"While our report outlines deficiencies in the management of the renovation project, resulting in our recommended corrective actions in accordance with the Inspector General Act, we did not identify administrative misconduct during our evaluation."
Background And Aftermath
The expensive overhaul drew public scrutiny from then-President Donald Trump and prompted a short-lived Department of Justice criminal inquiry into the Fed and its then-chair, Jerome Powell, who remains on the Fed's Board of Governors. Several former Fed chairs criticized the probe as an attack on the central bank's independence. Powell described the investigation as a "pretext," suggesting political motives tied to disagreements over monetary policy.
The DOJ dropped the criminal inquiry in April amid political controversy connected to the confirmation process for Kevin Warsh, who had been nominated to replace Powell. Senator Thom Tillis (R-N.C.) had cited the investigation as a reason for withholding support; after the inquiry was ended, Tillis backed the nomination and Warsh was sworn in in May. Following the DOJ decision, officials in the District of Columbia indicated the Fed's inspector general would examine the renovation's cost overruns.
The inspector general's recommendations focus on improving project governance, budgeting transparency and oversight to reduce the risk of future cost escalations. The report stops short of alleging administrative misconduct but calls for reforms to prevent similar management lapses.
Contact: Rachel Barber at [email protected]. This article originally appeared on USA TODAY.
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