Fed Watchdog Finds $2.4B Renovation Project Marred by Mismanagement

The Federal Reserve's internal watchdog has released a report on the central bank's $2.4 billion building renovation project, finding widespread mismanagement but no evidence of criminal activity.

The inspector general's investigation found that the Fed's Board of Governors and staff failed to secure a comprehensive cost estimate at the beginning of the project, leading to price spikes after construction began in 2022. The report also stated that the board deviated from its cost-management provisions repeatedly, causing costs to inflate.

The renovation project was a high-profile flashpoint during the Trump administration's efforts to pressure the Fed into cutting interest rates. President Donald Trump even visited the construction site last July, where he was corrected by then-Chairman Jerome Powell on the project's expected costs.

Criticism of the project mounted in Congress, leading Powell to request an investigation from the inspector general. The Trump administration's Justice Department also launched a criminal investigation into whether Powell had committed perjury during Senate testimony about the renovation. However, that investigation was dropped after a judge quashed subpoenas issued by U.S. Attorney Jeanine Pirro.