Fed Inspector General Finds No Criminal Wrongdoing in Powell-Era Headquarters Renovation But Cites Major Management Failures

The Federal Reserve's inspector general released a long-awaited 120-page report on September 30 finding no reasonable grounds to believe federal criminal law was violated in the renovation of the central bank's Washington headquarters, a project that ballooned beyond $2 billion under former Chair Jerome Powell. The watchdog explicitly stated it did not identify violations of Board policy warranting an administrative misconduct finding against Powell, who now serves as a Fed governor after being succeeded by Chair Kevin Warsh in May.

While clearing Powell of criminal wrongdoing, the inspector general sharply criticized him and the Fed's board for management and oversight failures that contributed to major cost overruns on the project, which has grown to an estimated $2.5 billion. The report's conclusions undercut months of pressure from President Donald Trump and his allies, who had accused Powell of criminal negligence over the renovation and used those allegations as part of a broader campaign to push him out. U.S. Attorney for the District of Columbia Jeanine Pirro had previously closed a separate criminal probe of Powell, saying her office would review the inspector general's findings and could restart that inquiry if warranted.

Current Fed Chair Kevin Warsh said the central bank concurred with the report and would adopt its recommendations.