Fed watchdog clears former chair Powell in renovation probe
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Trump delivering remarks alongside then-Federal Reserve chair Jerome Powell as they toured the central bank's headquarters renovation last year. Photo: Chip Somodevilla/Getty Images
A Federal Reserve watchdog found no criminal wrongdoing by former chair Jerome Powell in its investigation of the central bank's expensive headquarters renovation, according to a report released on Wednesday.
Why it matters: The findings effectively clear Powell after the Justice Department opened an unprecedented criminal investigation into then-Fed chair, which became public in January.
What they're saying: "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," the Office of Inspector General wrote in the report.
- The watchdog added that it "did not identify administrative misconduct during our evaluation."
Yes, but: While the report clears Powell, it faults Fed management and oversight of the project as construction costs more than doubled to $2.5 billion.
- The Fed "did not take numerous actions available to it that could have better controlled costs and mitigated some of the significant construction cost increases," the report says.
Flashback: The renovation became a flashpoint in President Trump's broader campaign against Powell and the Fed.
- Trump toured the construction site with Powell in July 2025 and publicly challenged him over the project's soaring costs.
Zoom out: The Justice Department's investigation centered on Powell's June 2025 testimony to Congress about the renovation and its rising costs.
- Powell denied wrongdoing and argued at the time that the investigation was part of a broader effort to pressure the Fed over interest rates.
- DOJ closed the investigation in April as the Fed's inspector general continued its review.
Zoom in: The watchdog said that inflation alone could not explain the project's higher costs.
- For instance, the report shows that two major mechanical, electrical and plumbing contracts more than tripled to $539 million from an earlier $178 million estimate, far outpacing the broader rise in construction costs.
Of note: The report says that the key design features that drew scrutiny from Congress and other critics — including marble, water features and a garden terrace — did not materially contribute to the project's cost increases.
- The Fed removed four planned new fountains in June 2025 because officials worried about "external stakeholders, such as Congress and the media, raising concerns about the design," according to the report.
What to watch: Powell has remained on the Fed's board after his term as chair ended in May — an unusual move that he said was tied to seeing the investigation through to its conclusion.
Editor's note: This story has been updated with additional details.
