A Federal Reserve inspector general report cleared Jerome Powell of misconduct on a headquarters renovation that soared past $2 billion, even as President Trump presses for his resignation.
Fox Business reported that the Office of Inspector General for the Federal Reserve’s Board of Governors found no administrative misconduct in the management of the renovation of the Marriner S. Eccles building and the 1951 Constitution Avenue NW buildings. The same evaluation found no reasonable grounds to believe a federal criminal law violation had occurred that would require a referral to the attorney general.
That verdict closes a long-running fight over cost overruns at Fed headquarters. It does not erase the ballooning price tag, the management failures the watchdog listed, or the political clash that followed. Jerome Powell has signaled he will remain on the Fed Board of Governors after leaving the chairmanship. Kevin Warsh took over as chair in May.
The approved renovation budget grew from $1.317 billion in February 2020 to $2.381 billion by December 2024. A construction manager later put proposed construction costs at $2.135 billion. President Donald Trump, responding on Truth Social, put the figure even higher and demanded action.
The inspector general opened the review in July 2025 at Powell’s request after sharp criticism of the project. The report outlined clear deficiencies and recommended corrective actions. It still drew a bright line on the two charges that had driven the loudest attacks.
The IG stated:
"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,"
And:
"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 Washington Examiner likewise noted the watchdog found no grounds for a criminal probe into Powell and that the Fed did not effectively manage the Washington headquarters renovations. Design features such as a garden terrace, marble, and water features “did not materially contribute” to later cost spikes, the IG determined.
What did drive the increases, according to the evaluation, included higher materials, equipment, and labor costs; design changes after reviews by outside agencies; asbestos; contaminated soil; and a higher-than-expected water table. Project management and contract choices also played a role. Officials did not lock in a guaranteed maximum price contract. Four price packages produced substantial cost growth, and three of those packages failed to draw at least three bids. The Fed also failed to make effective use of an outside construction representative and lacked sufficient internal project governance. The construction phase is expected to run through December 2027.
Taxpayers are left with a project that more than doubled in budget while basic contracting discipline lagged. That is a governance failure even when no criminal case follows, much as other federal matters turn on whether process and proof hold up under scrutiny, including when a high-profile case ends without a clean verdict.
Trump had repeatedly criticized Powell over the renovation last year, accused him of gross incompetence, and raised the possibility of firing him or suing. He visited the construction site last summer with Powell and Senate Banking Chair Tim Scott, R-S.C. After the IG findings, Trump posted a lengthy response on Truth Social calling for Powell to leave the Board at once.
Trump wrote 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!’).”
He said he had asked Attorney General Todd Blanche to study the report and decide what to do about a “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 claimed he “could have done a far better Renovation for 25 Million Dollars, completely maintaining the MAGNIFICENCE of the structure, and had money left over,” and added that the work “completely destroyed the Beauty and Glorious History of the Building.”
He closed by saying the overruns were “Jerome Powell's fault” and that Powell “should be forced to resign, IMMEDIATELY,” or else “sued, at the highest level, by the United States Government, for either corruption or incompetence.” He also said he did not want the building named after him.
Those demands keep the focus on stewardship of public money. Large federal projects invite the same questions of accountability that surface when prosecutors bring cases and courts weigh the evidence, whether the file involves public officials or other defendants facing federal charges and sentencing.
Separately, the Justice Department opened a criminal probe into Powell’s June 2025 congressional testimony on the renovation. In January, U.S. Attorney for the District of Columbia Jeanine Pirro issued subpoenas to the Fed Board of Governors related to that testimony. Powell disclosed the investigation and released a video statement calling the move “unprecedented” and politically motivated.
In the video, Powell said 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.”
The U.S. Attorney’s Office closed its investigation in April. After that decision, Senate resistance to Warsh’s nomination eased and Warsh succeeded Powell as Fed chair in May. Powell has indicated he will stay on the Board of Governors and will not act as a “shadow Fed chair.”
The sequence matters. A closed probe is not the same as a finding of perfect management. It does, however, mark the end of the criminal track that had hung over the transition, a reminder that federal investigations can end in clearance, referral, or neither, as when a federal judge refers a public official for criminal investigation in a separate matter.
Under Warsh, the Federal Open Market Committee voted unanimously earlier this month to raise interest rates for the first time since 2023, citing stubborn inflation. That decision lands in the same political climate that produced the renovation fight: a president focused on borrowing costs, a central bank insisting on its own reading of the data, and a former chair still sitting on the Board.
Powell’s decision to remain gives him a continued vote and voice inside the institution he led. It also keeps a high-profile target of Trump’s criticism inside the building whose renovation costs became a national argument. The IG report separates criminal exposure from managerial performance. The budget numbers, the weak bidding on major packages, and the absence of a firm price ceiling remain on the public record either way.
Federal cases often turn on exactly that distinction between hard proof of a crime and documented failure of oversight. Readers see the same pattern when candidates or officials face charging decisions that later define careers, including episodes such as a GOP candidate hit with federal conspiracy charges or other matters that test how far an inquiry goes.
The renovation itself is still underway. Corrective actions recommended by the inspector general have not been detailed in full public form in the available reporting. Trump has asked his attorney general to review the findings and decide next steps. No lawsuit has been described as filed. Powell remains on the Board. Warsh is running the committee that just raised rates.
Cost control at a powerful public institution is not a side issue. When a headquarters project jumps from roughly $1.3 billion to more than $2.3 billion, when major packages move without full competition, and when governance gaps are written into an official evaluation, the public is entitled to more than a shrug, even after investigators decline a criminal referral.
Clear of misconduct is not the same as a clean bill of health on spending. Taxpayers still foot the bill for every change order and every weak contract the Fed accepted along the way.