Watchdog finds problems but no Fed misconduct in Powell-era renovation project - Reuters

The U.S. Federal Reserve’s Office of Inspector General released a report on the renovation of two historic Fed buildings in Washington, D.C., concluding that there was no criminal wrongdoing or administrative misconduct tied to the project. The investigation found no reasonable grounds to refer the matter to the Department of Justice, and it determined that federal criminal law had not been violated.

The renovation, which began during former Fed Chair Jerome Powell’s tenure, has exceeded its original budget by roughly $1 billion, bringing the total estimated cost to about $2.4 billion. The inspector general’s review highlighted several management shortcomings, including the Fed’s failure to establish a “guaranteed maximum price” contract that would have shifted responsibility for cost overruns to the contractor.

The report also noted that the project’s cost overruns and oversight issues were not the result of intentional fraud or malfeasance. While the audit identified weaknesses in planning and cost‑control processes, it did not find evidence of deliberate deception or violations of federal statutes.

Former President Donald Trump repeatedly cited the renovation expenses in a public campaign to pressure Powell to lower interest rates while he was chair of the central bank. A separate Department of Justice investigation into the project and Powell’s congressional testimony was closed earlier this year after a federal judge agreed with Powell that the inquiry was being used as a pretext to influence monetary policy.

Overall, the watchdog’s findings underscore that, although the Fed’s management of the renovation was flawed, the shortcomings did not rise to the level of criminal conduct or administrative misconduct. The report recommends improvements in project oversight and contractual arrangements to prevent similar overruns in future federal construction initiatives.