The Federal Reserve's inspector general concluded Wednesday that the multibillion-dollar renovation of the central bank's headquarters did not violate federal law.
The project had been attacked by President Donald Trump and his allies, and it was the basis for a criminal investigation of former Fed Chair Jerome Powell, and the inspector general also reviewed Powell's June 2025 testimony to the Senate Banking Committee about the project and found no criminal wrongdoing, reported CBS News.
"At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred," the 121-page report said. Inspector General Michael Horowitz also wrote that his office "did not identify administrative misconduct."
Powell's congressional testimony had been the focus of grand jury subpoenas issued by Jeanine Pirro, the U.S. attorney for the District of Columbia, earlier this year. A federal court later quashed those subpoenas, finding they were a pretext to pressure Powell into cutting interest rates or resigning.
Pirro dropped the investigation in April, and she told CBS News on Wednesday that she would review the IG report.
Russell Vought, director of the Office of Management and Budget, had objected to features he called ostentatious, and Trump called the $2.5 billion price tag "disgraceful," but Horowitz found that the chair's private elevator, the extensive marble, a garden terrace and skylights "did not materially contribute to the construction cost increases."
The watchdog did find serious management failures, however. The Fed never got a construction cost estimate from its general contractor or told the contractor its budget limit at the outset. As of July, four years after construction began, the Fed still had not set a guaranteed maximum price, and the IG called the project's internal oversight "insufficient."
Fed officials pointed to inflation as the main cause of the rising costs. The IG agreed inflation played a part but found the overruns went beyond it. The project's estimated cost has grown from $1.9 billion to nearly $2.5 billion.
The inspector general made seven recommendations. Kevin Warsh, who succeeded Powell as Fed chair, told Horowitz on Tuesday that the General Services Administration will take over management of the project. He said the Fed will also run a full audit and seek reimbursement for any work it paid for but didn't receive.
Powell requested the review in July 2025. The renovation was approved in 2017 and is expected to be finished in 2027.
