The Federal Reserve’s inspector general concluded the central bank has not effectively managed a $2.4 billion building renovation, but the review found no grounds to refer a criminal violation, according to a 120-page report cited by the source article.
What the watchdog found
“Our review found that the Board has not effectively managed and executed its … contract and repeatedly deviated from its cost-management provisions,” the inspector general’s report said, per the article.
The report faulted the Fed’s Board of Governors and staff for failing to secure a comprehensive cost estimate at the outset and for not establishing a maximum overall price—steps the IG said could have shifted inflation risk to the contractor. Prices rose after construction began in 2022, the report noted.
According to the report, construction costs to renovate two Fed buildings more than doubled—from an original estimate of $921 million in February 2020 to $2.018 billion by December 2024. Completion is now expected in December 2027, well past an original mid-2024 target.
The report also said a 2023 design change—from mostly open workspace to mostly closed offices—significantly delayed the project’s design and hindered efforts to establish a maximum cost ceiling. Overall, the IG said management and contract decisions effectively turned the deal into “a cost-plus reimbursement contract with a pay-as-you-go approach.”
What did—and didn’t—drive costs
The report, as summarized in the article, said items criticized as “luxurious”—such as water fountains, private elevators, and marble facades—were not significant cost drivers. The Fed has cited inflation after the COVID-19 pandemic, asbestos remediation, and review-agency demands as factors. The article also states that Trump-era appointees to a planning commission pushed for more marble to align with a preference for classical architecture. The IG said such factors played a role but did not account for the effects of key project-management choices.
No criminal referral; subpoenas quashed
“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,” the report said, per the article.
The article says the building project drew a criminal investigation by the Trump administration’s Justice Department into whether then–Fed Chair Jerome Powell committed perjury during brief Senate testimony. That investigation was dropped in April after a judge quashed subpoenas issued by Jeanine Pirro, identified in the article as the U.S. attorney for the District of Columbia. A spokesperson for Pirro’s office, Tim Lauer, said the report is under review, according to the article.
Politics and fallout
According to the article, criticism in Congress led Powell in July 2025 to request an IG investigation. The article further says Powell’s term as chair ended in May, but he remained on the Board of Governors and has said he would stay at least until he is satisfied the investigation is finished. By keeping his seat, the article states, Powell has prevented the administration from filling another board spot; his governor term runs until January 2028.
In a social media post quoted by the article, former President Donald Trump urged Powell to resign: “He can’t manage a Building, and he certainly shouldn’t be allowed to manage his High Interest Rate Policy… And no, I do not want this Building named after President Donald J. Trump, ME!”
Massachusetts Sen. Elizabeth Warren said the report “confirmed that Trump lapdogs U.S. Attorney Jeanine Pirro and Attorney General Todd Blanche have no basis to restart the President’s witch hunt against former Fed Chair Jerome Powell,” according to the article.
What the Fed says it will do
The article reports that current Fed Chairman Kevin Warsh welcomed the IG’s findings in a letter and said the General Services Administration will consult on the project. The Fed will also hire an independent auditor to evaluate the project and its costs, review all contracts with the GSA, and “pursue appropriate remedies,” including reimbursement for any paid but unperformed work, according to the letter cited by the article.
“Inflation does not change the Fed’s responsibility to manage its resources prudently and be accountable to Congress,” said Senate Banking Committee Chairman Tim Scott, R-S.C., as quoted in the article.
