The Federal Reserve’s inspector general has found no evidence of illegal conduct related to the central bank’s ongoing renovation project, effectively closing the door on a Justice Department investigation that had scrutinized Federal Reserve Chair Jerome Powell. The report, released this week, was commissioned by Mr. Powell in July 2025 amid mounting criticism over cost overruns and allegations of potential wrongdoing.
The renovation, which began years ago, has seen expenses exceed $2 billion without a guaranteed maximum price established, contributing to rising concerns in Congress and elsewhere. However, the inspector general's review, led by Michael Horowitz—who previously served as Justice Department inspector general—concluded that neither Mr. Powell nor other senior Fed officials engaged in any criminal acts. The report also clarified that the Board of Governors did not manage the renovation’s day-to-day operations, which were overseen by the Federal Reserve’s Facility Services team.
The Justice Department’s investigation into whether Mr. Powell misled Congress about the project was dropped in April following numerous legal hurdles. Still, the U.S. attorney for the District of Columbia, Jeanine Pirro, who had threatened to reopen the probe based on the inspector general's findings, confirmed she is currently reviewing the new report.
Despite the report’s exoneration, former President Donald Trump renewed his calls for Mr. Powell’s resignation in a social media post, alleging incompetence and demanding that the attorney general investigate the findings further. Mr. Trump criticized both the renovation management and Mr. Powell’s monetary policy decisions, asserting that the chair should be sued for corruption or incompetence if he does not step down.
The report also shed light on certain controversial design elements from a 2021 proposal, including new marble fixtures, a rooftop terrace, and private dining rooms for senior policymakers. Mr. Powell had denied the inclusion of several of these items at a congressional hearing in mid-2025. The investigation found that cost estimates were not secured until January 2026, three and a half years after construction began, a factor that contributed to the substantial budget overruns.
Congressional leaders weighed in with divergent responses. Senator Tim Scott, Republican of South Carolina and chairman of the Senate Banking Committee, condemned the Fed’s fiscal management as “egregious” and pledged continued oversight to ensure transparency and accountability. Meanwhile, Senator Elizabeth Warren, the committee’s top Democrat, said the inspector general’s findings confirmed there was no justification for further pursuit of what she characterized as a politically motivated effort against Mr. Powell.
In response to the report, Fed Governor Kevin M. Warsh, who succeeded Mr. Powell as chair in May, announced plans to collaborate with the General Services Administration and an independent auditor to finalize the renovation promptly and establish a guaranteed maximum price. Mr. Warsh also emphasized the importance of setting fixed budget and schedule metrics consistent with the report’s recommendations.
Mr. Warsh’s leadership has seemingly eased tensions between the Federal Reserve and the White House, with Mr. Trump refraining from criticism since taking office. However, broader scrutiny remains on other members of the Board of Governors, including Governor Lisa D. Cook, who is engaged in ongoing legal disputes with Mr. Trump, and Michael S. Barr, whose tenure as vice chair for supervision coincided with the 2023 failure of Silicon Valley Bank. An external report last month found that regulators, including those at the Fed, were aware of the bank’s vulnerabilities but failed to act adequately due to concerns about potential accountability.
The Federal Reserve continues to navigate complex challenges both in its operational management and in the political pressures surrounding its monetary policies and regulatory responsibilities.