The Federal Reserve's internal watchdog has released a 121-page report finding no criminal wrongdoing or administrative misconduct in the central bank's $2.4 billion headquarters renovation. While clearing former Fed Chair Jerome Powell of criminality, Inspector General Michael Horowitz sharply criticized the Fed Board for poor project management, including failing to set a price ceiling. President Donald Trump seized on the findings to demand Powell's immediate resignation from the Board of Governors.
Inspector general report findings
- ▪The Federal Reserve's internal watchdog concluded that design features in the Federal Reserve's headquarters renovation criticized by Donald Trump and congressional Republicans, including water fountains, garden terraces, and marble restoration, did not materially contribute to construction cost increases
- ▪The Federal Reserve's Office of Inspector General released a 121-page report on September 30, 2026, finding no evidence of criminal violations or administrative misconduct in the central bank's headquarters renovation.
Renovation cost overruns and delays
- ▪The estimated cost of the Federal Reserve headquarters renovation project has risen from an initial $1.3 billion in 2020 to approximately $2.4 billion as of August 2026.
- ▪The Federal Reserve Board of Governors failed to establish a guaranteed maximum price or secure a comprehensive cost estimate from the general contractor for its headquarters renovation project, effectively turning the renovation project into a pay-as-you-go contract
- ▪A design change in 2023 from a mostly open workspace to closed office spaces delayed the Federal Reserve's $2.4 billion headquarters renovation project and extended its exposure to inflationary pressures
- ▪Construction costs for the Federal Reserve headquarters renovation rose from an initially budgeted $921 million in February 2020 to $2.018 billion by December 2024, with completion delayed from mid-2024 to December 2027.
Federal Reserve's response
- ▪Federal Reserve Chairman Kevin Warsh announced on September 29, 2026, that the central bank will initiate a full audit of the $2.4 billion headquarters renovation to seek reimbursement for unperformed work
- ▪Federal Reserve Chairman Kevin Warsh announced that the General Services Administration has been retained to advise on and help oversee the completion of the Federal Reserve's $2.4 billion headquarters renovation project
Trump's reaction to the renovation
- ▪Donald Trump posted on Truth Social on September 30, 2026, that former Federal Reserve Chair Jerome Powell should be forced to resign immediately from the Board of Governors due to cost overruns in the Federal Reserve's $2.4 billion headquarters renovation
- ▪Donald Trump stated on September 30, 2026, that he has asked Attorney General Todd Blanche to study Inspector General Michael Horowitz's report and make a determination regarding the Federal Reserve's $2.4 billion headquarters renovation construction project
Political and legal pressure on Powell
- ▪Former Federal Reserve Chair Jerome Powell decided to remain on the central bank's Board of Governors until January 2028 to protect the Fed's monetary policy from political pressure and legal attacks.
- ▪The U.S. District Court in Washington, D.C., quashed grand jury subpoenas issued to the Federal Reserve by D.C. U.S. Attorney Jeanine Pirro, finding they were a pretext to pressure Jerome Powell over interest rates.
Debatable claims
- ▪Jerome Powell should resign from the Federal Reserve Board of Governors over the renovation cost overruns
- ▪The Justice Department's criminal investigation into Jerome Powell's management of the Fed renovation was justified
- ▪Jerome Powell bears the primary responsibility for the Federal Reserve's renovation cost overruns
- ▪The Federal Reserve's multi-billion-dollar headquarters renovation was an unnecessary waste of resources
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