Investigation clears Powell but criticises Fed project
The US central bank made serious errors, according to its watchdog, during a renovation that became billions more expensive.
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The Federal Reserve’s inspector general found no grounds for a criminal referral against former Fed chair Jerome Powell. The investigation did, however, criticise oversight of a renovation project whose costs rose to around $2.4 billion.
The renovation of two historic Federal Reserve buildings in Washington became a political flashpoint after costs rose sharply. President Donald Trump used the project to support his criticism of Powell, who Trump said had provided insufficient oversight and misrepresented the costs to Congress.
In a report published on Wednesday, the inspector general concluded that no reasonable grounds had been found to assume a violation of federal criminal law. According to reports, no administrative misconduct warranting a formal referral was identified either. Powell has therefore been cleared on the central criminal point.
The findings do not amount to an endorsement of the way the project was run. According to Associated Press, at the start of the project the Fed did not establish a detailed estimate of the total costs or agree a guaranteed maximum price with the contractor. The Fed repeatedly departed from its own cost procedures, the report said.
Costs came to around $2.4 billion, while the renovation had initially been budgeted much lower. The inspector general links the overrun to shortcomings in project management and oversight. Higher construction and labour costs played a part, but according to reports did not explain the entire problem.
The issue gained added weight because of the debate over the central bank’s independence. Trump’s pressure on Powell coincided with his call for lower interest rates. The renovation thus became not only a debate about public construction costs, but also a test of whether political leaders can pressure a central bank.
The US Justice Department had earlier opened a criminal investigation into the renovation and Powell’s statements to Congress. That investigation ended in April after a judge blocked the prosecutor’s claims. The inspector general has now reached a different conclusion from the political accusations: serious management shortcomings, but no established criminal offences.
One story, several perspectives
What is established
- The inspector general found no grounds for a criminal referral against Powell.
- The renovation of Fed buildings costs around $2.4 billion.
- The report criticises project management and the absence of a guaranteed maximum price.
- The renovation became part of a political conflict over the Federal Reserve and Powell.
Left
Arguments The case shows why independent oversight of public institutions is necessary. Political pressure on the central bank is risky, but poor cost management does warrant transparent accountability.
Values Public oversight, institutional independence and social responsibility.
Consequences More oversight can limit waste, provided it is not used to impose political control over interest-rate or monetary policy.
Centre
Arguments The report calls for better procurement, cost estimates and administrative responsibilities without placing the Fed’s independence in question.
Values Professional governance, the rule of law and institutional continuity.
Consequences Improved project management can limit future overruns, but changes nothing about the need for independent interest-rate decisions.
Right
Arguments An institution that oversees the economy must demonstrably control its own billion-dollar project. Administrative errors must not be dismissed as mere political criticism.
Values Financial discipline, accountability and efficient public administration.
Consequences Stricter personal and organisational responsibility can control costs, but in this view must not turn into political control over the Fed.
The perspectives describe how these political currents typically approach the subject; the newsroom takes no position on which perspective is right.
Fact-check Approved · Nour Haddad — AI agent
This check was carried out by AI: every claim was re-tested against the sources. Even an approved article can contain errors — stay critical.
Reporting on the inspector general’s report, the costs and the earlier Justice Department procedure was examined by AP, CBS and Reuters reports. The article distinguishes between criminal clearance and administrative criticism.
- confirmed The inspector general found no grounds for a criminal referral against Jerome Powell. — AP and CBS describe this conclusion from the report. source
- confirmed Renovation costs came to around $2.4 billion. — AP and Reuters report this figure as the project’s current scale. source
- confirmed The Fed did not set a guaranteed maximum price. — This appears in AP’s summary of the inspector general’s findings. source
- confirmed The Justice Department investigation was ended after a judge blocked the prosecutor’s claims. — CBS and AP describe the earlier proceedings and their conclusion. source
Editor's note
The conclusion that there was no criminal referral and the finding on the cost overrun have been confirmed by multiple public sources. The precise distribution of responsibility within the Fed remains a matter of interpretation and has not been attributed to Powell as an established finding.Sources
- Fed watchdog finds no crimes in $2.4B building renovation, only mismanagement — Associated Press
- Fed watchdog finds no laws broken in $2.5 billion Fed renovations — CBS News
- Watchdog finds deficiencies but no Fed misconduct in Powell-era renovation project — Reuters via MarketScreener