Fed Watchdog Clears Powell of Crimes in $2.4 Billion Renovation, Finds Real Management Failures

The Federal Reserve's inspector general, Michael Horowitz, released a report Wednesday on the central bank's headquarters renovation. NBC News put the report at 120 pages; The Hill put it at 121 pages. The verdict: no crimes, no administrative misconduct, but real mismanagement.

"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 report states, according to CNBC and The Hill.

The Numbers

The renovation of the Fed's Marriner S. Eccles Building and Federal Reserve Board East building was budgeted at roughly $1.3 billion back in February 2020. As of August 2026, the board-approved cost has climbed to nearly $2.4 billion, according to the IG report cited by The Hill and NBC News. Construction costs alone rose by $960 million, per CNBC.

Horowitz's team found the Fed never established a "guaranteed maximum price" with its contractor, a mechanism that would have shifted responsibility for overruns away from the Fed. Internal project governance was "insufficient" for a project of this size, the report found.

But the specific accusations that fueled the political fight over this project didn't hold up. The report found that marble, water features and a garden terrace, the design elements President Trump and his allies repeatedly pointed to, "did not materially contribute" to the cost increases, according to NBC News and Al Jazeera. One official told investigators that even removing four water features wouldn't save meaningful money, since landscaping costs would replace them anyway.

Horowitz's office attributed the overruns to inflation, limited subcontractor bidding, substantial interior design changes, and difficult site conditions. A mid-project shift from closed offices to open workspace was singled out as a clear example of costly design churn, per NBC News.

How This Started

The renovation became a flashpoint after Powell testified before the Senate Banking Committee in June 2025, telling Chairman Tim Scott (R-S.C.) there was "no VIP dining room" and "no new marble," just old marble being reinstalled where it had broken.

Trump, locked in a sustained campaign to pressure the Fed into cutting interest rates, seized on the renovation as a vehicle to go after Powell personally. At the recommendation of U.S. Attorney for D.C. Jeanine Pirro, Horowitz opened this probe in April. Separately, the Justice Department ran its own three-month criminal investigation into Powell's testimony. According to Al Jazeera, that DOJ probe was closed earlier this year after a federal judge agreed with Powell that it amounted to a pretext for pressuring him on rates.

Powell said in April he would remain on the Fed's Board of Governors, where he can serve through January 2028 even though his chairmanship ended in May when Kevin Warsh took over, until the investigation was "well and truly over, with transparency and finality."

Trump's Response

Horowitz's report was supposed to be that finality. Trump did not treat it that way.

Within hours, Trump posted on Truth Social that Powell "should be forced to resign, IMMEDIATELY," and that if he refuses, "he should be sued, at the highest level, by the United States Government, for either corruption or incompetence, both of which are completely unacceptable." He said he's asked Attorney General Todd Blanche to "study" the report and "make a determination" on what to do about the project, according to CNBC, NBC News and Al Jazeera.

An attorney for Powell did not immediately respond to NBC News's request for comment.

Tim Scott, whose committee has jurisdiction over the Fed, took a narrower and more defensible line. He said inflation "does not change the Fed's responsibility to manage its resources prudently and be accountable" to Congress, and pledged continued oversight, per The Hill.

A public institution overseeing a $2.4 billion project with no guaranteed maximum price and admittedly weak governance deserves scrutiny, regardless of who's running it or what party is doing the criticizing. The IG's own findings back that up. Cost overruns on government construction aren't unique to the Fed, either. Al Jazeera noted Trump's own White House ballroom project has also seen its budget roughly double from initial estimates.

What's unresolved is whether Blanche's DOJ opens any new line of inquiry, and whether Trump pursues a civil suit or a for-cause removal fight to push Powell off the Board before his term ends in January 2028. Powell has said the investigation needed to end with "finality." Wednesday's report gave him a legal clearance. It didn't end the political fight.