No criminal wrongdoing in $2.5Bn Federal building renovation but it was mismanaged, watchdog finds
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Membership today.
An expansive building renovation project at the Federal Reserve was broadly mismanaged by the central bank, according to an internal watchdog report released Wednesday, though investigators uncovered no evidence of criminal wrongdoing despite previous allegations from Trump administration prosecutors.
A 120-page report published by the Fedβs inspector general detailed how multiple errors by the Board of Governors drove up the cost of the $2.4 billion overhaul.
The board failed to establish a comprehensive expenditure estimate before starting work or set a maximum total cost, which would have forced contractors to absorb inflationary pressures when expenses surged after construction began in 2022.
"Our review found that the Board has not effectively managed and executed its ... contract and repeatedly deviated from its cost-management provisions," the report noted.
The review was requested last year by former Chair Jerome Powell.
The construction initiative emerged as a high-profile flashpoint amid efforts by the Trump administration to push the central bank into lowering its key interest rate.
President Donald Trump toured the construction site last July, prompting Powell to publicly correct Trump's figure regarding expected costs while both stood before television cameras in hard hats.
Following that interaction, the Justice Department under Trump opened an inquiry into whether Powell had committed perjury during brief Senate committee testimony concerning the building project.
Federal prosecutors dropped the probe in April after a judge quashed subpoenas issued by U.S. Attorney Jeanine Pirro, who stated she would await the watchdog's findings before deciding on further action.
Addressing those allegations, the report confirmed: "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."
According to the findings, construction costs to renovate two central bank facilities more than doubled, climbing from an initial estimate of $921 million in February 2020 to $2.018 billion by December 2024.
Project completion has now been delayed until December 2027, far beyond its original mid-2024 target.
Elements highlighted by Republican lawmakers and the Trump administration as extravagant expenditures, such as marble facades, private elevators, and water fountains, were not primary drivers of the escalating financial costs.
Instead, the inspector general stated that a 2023 decision by the Fed to alter floor plans from a mostly open layout to primarily enclosed offices caused major delays in project design, preventing officials from securing a maximum spending limit at that time.
