The final verdict is in for the Fed's troubled renovation and Jerome Powell

The inspector general's investigation into the Federal Reserve's costly renovation project determined that there was no administrative misconduct after the cost overruns prompted an investigation of former Federal Reserve Chair Jerome Powell amid criticism from President Donald Trump.

The Office of Inspector General for the Federal Reserve's Board of Governors began investigating the cost overruns at Powell's request in July 2025. Powell, then the Fed chair, disclosed in January that the Department of Justice opened a criminal probe into his June 2025 testimony before Congress about the renovation project. The U.S. Attorney's Office closed the investigation in April as the inspector general continued its probe into the matter.

"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 in accordance with the Inspector General Act," the IG report states. 

"Further, 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," the report added.

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President Donald Trump repeatedly criticized Powell over the project last year, accusing him of "gross incompetence" and threatening to sue the Fed leader at the time. The president also said he was considering firing Powell over the project and urged him to resign, while also calling on the central bank to cut interest rates.

In January, U.S. Attorney for the District of Columbia Jeanine Pirro issued subpoenas to the Fed's Board of Governors regarding Powell's testimony on the project. 

Powell responded by releasing a video statement saying that the "unprecedented" move was politically motivated, arguing that the "threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President."

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The controversial project involved the renovation of the Fed's Marriner S. Eccles and 1951 Constitution Avenue NW buildings. The approved budget grew from $1.317 billion in February 2020 to $2.381 billion in December 2024, which the IG noted was the Fed board's most recently revised renovation budget. The Fed board also received a proposed construction cost of $2.135 billion from its construction manager in January.

Critics of the project took issue with a number of design elements in the renovation project, such as the inclusion of a garden terrace, marble and water features. However, the IG "determined that these features did not materially contribute to subsequent construction cost increases."

The Fed attributed some of the cost increases to higher costs of construction materials, equipment and labor; changes to original designs after consulting with review agencies; and unforeseen issues like more asbestos than anticipated, contaminated soil, and a higher-than-expected water table.

The IG's report acknowledged that those issues all contributed to the overall cost increases, but emphasized that project management and contract execution decisions also played a role. Among those decisions were not establishing a guaranteed maximum price contract that would make the contractor responsible for cost overruns.

Additionally, the IG noted that substantial cost increases were caused by four price packages, of which three didn't receive at least three bids, and said the Fed didn't effectively use its outside construction representative or have sufficient internal project governance. It also noted the construction phase of the project is expected to end by December 2027.

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President Trump responded to the IG report in a post on his Truth Social platform, saying that "'Too Late' Powell should be forced to resign from the Board. He can't manage a Building, and he certainly shouldn't be allowed to manage his High Interest Rate Policy (only on ‘TRUMP!’)."

"I have asked Attorney General Todd Blanche to study the report, and make a determination as to what to do about relatively small Building Complex that is Hundreds of Millions of Dollars over budget, and is now going to cost, according to the Report, at least 2.5 Billion Dollars, with no end in sight," Trump continued, criticizing the management of the project. 

"I could have done a far better Renovation for 25 Million Dollars, completely maintaining the MAGNIFICENCE of the structure, and had money left over," Trump claimed. "They completely destroyed the Beauty and Glorious History of the Building."

"This is Jerome Powell's fault, and he should be forced to resign, IMMEDIATELY! If he doesn't resign, he should be sued, at the highest level, by the United States Government, for either corruption or incompetence, both of which are completely unacceptable…And no, I do not want this building named after President Donald J. Trump, ME! Thank you for your attention to this matter," the president wrote. 

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Fed Chair Kevin Warsh succeeded Powell in May after his nomination was allowed to advance following the DOJ's decision to drop its investigation into Powell, which prompted resistance to Warsh's nomination in the Senate. 

Powell remains a member of the Fed's Board of Governors after signaling he would stay on until the investigation into him was over with finality due to his concerns about threats to the independence of monetary policy.

The Warsh-led Federal Open Market Committee voted unanimously earlier this month to raise interest rates for the first time since 2023 due to stubborn inflation.