$2.4B Fed Renovation Project Found to be Mismanaged, Not Criminal

The Federal Reserve's internal watchdog has released a report on the $2.4 billion renovation of two Fed buildings, finding that the central bank broadly mismanaged the project but did not commit any crimes as alleged by Trump administration prosecutors.

The inspector general said that the Board of Governors and staff made several key mistakes that inflated the cost of the project. They failed to secure a comprehensive cost estimate at the beginning of the project, which could have forced the building contractor to absorb the impact of inflation. Prices spiked after construction began in 2022.

The report found that the Board deviated from its cost-management provisions repeatedly throughout the project, causing costs to more than double from an original estimate of $921 million in February 2020 to $2.018 billion by December 2024. The project's expected completion date was also pushed back from mid-2024 to December 2027.

The investigation into possible perjury by former Fed Chair Jerome Powell was dropped after a judge quashed subpoenas issued by U.S. Attorney Jeanine Pirro, but the inspector general's report does not find any evidence of wrongdoing. The report's findings have sparked criticism from President Donald Trump and some Republican members of Congress.

The General Services Administration will take on a consulting role with the Fed to help oversee the project, and an independent auditor will be brought in to evaluate the building project and its costs. The Fed will also review all contracts related to the project and pursue remedies if necessary.