Watchdog finds deficiencies but no Fed misconduct in Powell-era renovation project

The Federal Reserve's Inspector General found no evidence of misconduct or criminal wrongdoing by the Federal Reserve (Fed) during the renovation project of its historic buildings on the National Mall in Washington, despite a significant cost overrun of around $1 billion. President Donald Trump had criticized the project, which now has a total cost of approximately $2.4 billion, as a reason to oust then-Fed chief Jerome Powell and exert influence over monetary policy.

Trump also sought to dismiss Fed Governor Lisa Cook over alleged wrongdoing in an unrelated matter. The Inspector General's report highlighted extensive management deficiencies in the renovation project, recommending corrective actions, but it did not identify any administrative misconduct. Powell declined to comment on the report, while Fed Chairman Kevin Warsh pledged to follow its recommendations for project management and hire an independent auditor to verify all awarded costs to date.

The cost overruns on government projects are not uncommon, and similar issues have arisen in other budget overruns, such as Trump's own budget for White House ballroom renovations, which initially estimated at least $400 million and doubled from initial estimates. Trump had long been unhappy with Powell's leadership, publicly berating him for not lowering interest rates.

The project's cost escalation began early in Trump's second term and became a focal point for White House attacks on Powell.