Fed's $2.4 Billion Renovation Project Mismanaged, Says Watchdog

The Federal Reserve's internal watchdog has released a report on the central bank's $2.4 billion building renovation project, finding that while no criminal wrongdoing occurred, the project was mismanaged and subject to cost inflation.

According to the inspector general's 120-page report, the Fed's Board of Governors and staff made key mistakes in managing the project, including failing to secure a comprehensive cost estimate at its inception or establish a maximum overall cost. This allowed prices to skyrocket after construction began in 2022.

The report stated that 'the Board has not effectively managed and executed its contract' and that it 'repeatedly deviated from its cost-management provisions.' The project, originally estimated to cost $921 million in February 2020, ballooned to $2.018 billion by December 2024.

Former Fed Chair Jerome Powell, who remained on the board despite his term as chair ending in May, was cleared of any wrongdoing by the report. However, current Fed Chairman Kevin Warsh has welcomed the findings and announced that the General Services Administration will take over management of the project.