No criminal wrongdoing in Federal Reserve building renovation, watchdog says, but it was mismanaged

The Federal Reserve's internal watchdog has concluded that while the agency's $2.4 billion building renovation project was mismanaged, there were no criminal violations as alleged by Trump administration prosecutors. According to the Federal Reserve's inspector general, the Board of Governors failed to secure a comprehensive cost estimate at the project's inception and did not establish a maximum overall cost, which could have mitigated the impact of inflation on the project's budget.

Prices increased significantly after construction began in 2022. The board did not effectively manage the contract, repeatedly deviating from its cost-management provisions, according to the 120-page report. Former Chair Jerome Powell requested the IG review the renovation project last year, and the project's high-profile status became a point of contention in the Trump administration's attempts to pressure the Fed to lower interest rates.

President Donald Trump even visited the construction site in July 2023, and his Justice Department launched an investigation into potential perjury by Powell during a Senate committee testimony. However, that investigation was dropped in April after a judge quashed subpoenas issued by U.S. Attorney Jeanine Pirro. The main factors contributing to the excessive costs were a design change in 2023, which delayed the project's design, and the Fed's failure to seek a maximum cost ceiling for the project.