The Federal Reserve’s inspector general released a report on Wednesday concluding that while management and oversight failures contributed to massive cost overruns in the central bank’s headquarters renovation, there were no grounds to refer the matter for criminal prosecution.
The independent watchdog 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.”
The findings serve as a partial vindication for former Fed Chair Jerome Powell, who faced intense scrutiny from President Donald Trump and other critics. These detractors had accused Powell of mismanaging the construction project and allegedly misleading Congress during his June 2025 Senate testimony. Some critics went so far as to allege that Powell committed perjury, though the inspector general’s office noted it did not specifically set out to assess that claim, merely reviewing materials related to the testimony without making formal accusations regarding misconduct.
However, the report was critical of the former chair’s leadership. It detailed how the renovation of the Washington D.C. facility ballooned by approximately $1 billion beyond initial estimates due to design changes and other operational issues. The inspector general acknowledged Powell’s responsibility for the management of the project given his role as head of the organization.
The report also clarified the role of the Fed’s board of governors, noting that it was not involved in day-to-day decisions regarding the construction. “Indeed, we would expect the board to delegate the day-to-day management of a large construction project,” the report said.
President Trump has frequently criticized the Federal Reserve, recently blaming an interest-rate increase on a “hostile” board. This criticism persists despite the rate hike being supported by Kevin Warsh, Trump’s newly appointed Fed chair. Current Fed officials have anxiously awaited the release of this report, which is expected to shape the central bank’s future administrative protocols. Warsh indicated that the central bank would adopt the report’s recommendations.
Interesting that they didn’t specifically assess the perjury claims. Seems like they dodged the harder questions.
So management failed, costs exploded, but nobody goes to jail? Standard federal construction project stuff, honestly.
I wonder if the board’s hands-off approach will actually change now, or just become more documentation-heavy paperwork?
A billion-dollar overrun with no accountability? That’s not oversight failure; that’s negligence plain and simple.
Finally, some vindication for Powell. The criminal referral was always a political fishing expedition.