Fed watchdog finds no criminality in renovation probe
Fed watchdog finds no criminality in renovation probe
Max Rego Wed, September 30, 2026 at 9:58 PM UTC
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Former Federal Reserve Chair Jerome Powell and Fed officials did not violate criminal law during their handling of the central bank’s ongoing multimillion-dollar renovation project, the Fed’s internal watchdog said in a Wednesday report.
The office of Fed Inspector General Michael Horowitz acknowledged the central bank “has not effectively executed” the construction management risk contract for the renovations of two of its buildings in Washington.
But while the 121-page report highlighted “numerous deficiencies” in the Fed’s management of the project, nothing rose to the level of criminality.
“At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred,” the report stated.
Horowitz opened a probe into Powell’s handling of the project in April, at the recommendation of U.S. Attorney for the District of Columbia Jeanine Pirro — who oversaw her own three-month investigation into the former Fed chair.
Powell defended himself when Pirro’s office opened the probe, saying it was a pretext to pressure the Fed to lower interest rates. President Trump has repeatedly urged the central bank to lower rates.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” Powell said in a video message announcing the probe.
The Justice Department’s investigation centered around Powell’s remarks to the Senate Banking Committee in June 2025, when he defended the rising costs of the project to panel Chair Tim Scott (R-S.C.).
“There’s no VIP dining room. There’s no new marble. We took down the old marble, we’re putting it back up. We’ll have to use new marble where some of the old marble broke,” Powell said at the time.
The cost of the renovations to the Fed’s Marriner S. Eccles and Federal Reserve Board East buildings, set to conclude in 2027, rose from roughly $1.3 billion in February 2020 to nearly $2.4 billion as of August, per the IG report.
The Fed itself says that changes to the original building designs made after consultation with federal and D.C. review agencies along with rising costs of materials, equipment and labor resulted in the higher price tag.
The costs associated with the marble, water and garden terrace features, though, did not contribute to the increase, the report from Horowitz’s office noted.
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The Fed does not use taxpayer dollars, instead deriving most of its income from interest on U.S. government securities it has purchased.
After Horowitz released his report, Scott said in a statement that inflation “does not change the Fed’s responsibility to manage its resources prudently and be accountable” to Congress.
The Banking Committee chair added his panel “will continue rigorous oversight to ensure” the central bank is “transparent and stays focused on its mission.”
Sen. Elizabeth Warren (D-Mass.), the ranking member on the committee, said the IG report “confirms that Trump lapdogs,” referring to Pirro and Attorney General Todd Blanche, have “no basis to restart the President’s witch hunt against” Powell.
The president, meanwhile, blasted Powell after Horowitz issued his report, saying he should resign from his post as a Fed governor.
Trump, in a post on Truth Social, also wrote he was instructing Blanche to “study” the report and “make a determination as what to do” regarding the cost overruns.
Horowitz gave first-year Fed Chair Kevin Warsh seven recommendations on oversight of the project, with Warsh saying in a letter to the IG he wants to finish the renovations “in the most efficient and transparent way” possible.
“Board staff in coordination with the Project Executive will establish fixed metrics for the project’s budget and schedule, to ensure that all remaining costs are set, solid numbers understood by all,” Warsh wrote, after saying the General Services Administration will serve as project executive.
Powell, who ceded the chair role to Warsh in May, vowed to remain at the Fed as Horowitz’s probe was ongoing.
The former central bank chair, whose term as a governor ends in early 2028, still sits on the interest rate-setting Federal Open Market Committee — which voted unanimously earlier this month to hike rates by a quarter point.
at 5:57 p.m. EDT
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