Federal Reserve Inspector General Reports No Laws Broken in $2.5 Billion Renovations

Washington — The Federal Reserve's inspector general announced on September 30, 2026, that the renovations of the Fed's headquarters, which have been criticized by former President Trump, did not violate federal law. However, the report indicated that poor project management significantly increased costs. "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," stated the 121-page report. The inspector general also did not find fault with features that the White House had described as "ostentatious" and noncompliant with approved plans. The report highlighted deficiencies in project management and included recommendations for improvement, but concluded that there was no administrative misconduct. Michael Horowitz, the inspector general, noted that the investigation was initiated at the request of then-Federal Reserve Chairman Jerome Powell in July 2025. A separate investigation by the Justice Department was announced in January 2026, following grand jury subpoenas related to Powell's testimony before the Banking Committee about the renovation project. Bill Pulte, head of the Federal Housing Finance Agency, urged Congress to investigate Powell, alleging deceptive testimony without providing evidence. The inspector general reviewed Powell's testimony and found no criminal wrongdoing. The criminal investigation was reportedly linked to Trump's dissatisfaction with Powell's decisions on interest rates. In January 2026, Trump nominated Kevin Warsh to succeed Powell, but Warsh's confirmation faced challenges due to the ongoing investigation. In April 2026, the investigation was concluded, allowing Warsh's confirmation to proceed. The inspector general's report identified four areas contributing to cost overruns and issued seven recommendations. It noted that the Fed did not obtain a construction cost estimate from its contractor and lacked sufficient internal governance for the project. While inflation was cited as a factor in cost increases, the report assessed that cost overruns exceeded inflation rates. The Fed's Board of Governors was asked for an analysis of inflation's impact but did not provide a detailed assessment. Warsh informed Horowitz that the General Services Administration would now oversee the project, and a full audit would be initiated to evaluate the value of services not received. As of July 2026, the Board had not established a guaranteed maximum price for the project, which was first approved in 2017 and is expected to be completed in 2027, with costs rising from $1.9 billion to nearly $2.5 billion due to design changes, material costs, and unforeseen conditions.