Watchdog finds no criminality in Fed renovation that drew Trump’s scrutiny

The Federal Reserve Board Building is undergoing a major renovation, with work expected to be completed in late 2027. Mehmet Eser / Anadolu via Getty ImagesShareAdd NBC News to GoogleSept. 30, 2026, 1:00 PM EDT / Updated Sept. 30, 2026, 1:11 PM EDTBy Ryan J. Reilly and Steve KopackWASHINGTON — The Federal Reserve’s independent watchdog said Wednesday it found no reasonable grounds to believe there was a violation of federal law in a multibillion-dollar renovation project that drew criticism from President Donald Trump and short-lived scrutiny from federal prosecutors.

But the central bank’s board “had not effectively executed” a contract and its cost-management provisions, according to a 120-page report from the Office of the Inspector General for the Board of Governors of the Federal Reserve System.

Even after four years of construction and over $2 billion in awarded construction costs, the Fed board had “not established a guaranteed maximum price” for the project, and had set up “insufficient” internal project governance to manage a project of such “magnitude and complexity,” the watchdog said.

Still, the report “did not identify administrative misconduct” nor any “reasonable grounds to believe that a violation of federal criminal law had occurred.”

The closure of the investigation follows a more than yearlong review into the construction site on the central bank’s Washington, D.C., campus, which became a fixation of the Trump administration as the president also pressured Jerome Powell, who was the Fed chair until Kevin Warsh took over in May, to cut interest rates.

Several components of the renovation’s design that drew scrutiny — the building’s marble, water features and a garden terrace — “did not materially contribute to subsequent cost increases,” the watchdog found. The removal of four water features from the renovation plans would not result in significant cost savings, one official told the watchdog, because landscaping and other costs would be needed to replace the fountains.

The watchdog said cost overruns resulted from “inflation, limited subcontractor bidding, substantial Board interior fit-out design changes, and challenging site conditions.”

Moving from a design that focused on closed offices over open workspaces after construction began, the watchdog found, was a “clear example of the consequences of ineffective project management” and “extended the project’s duration and its exposure to inflationary pressures.”

In a letter to Inspector General Michael Horowitz, Warsh wrote that as chairman of the board he agreed about the need to complete the work “in the most efficient and transparent way possible” and said the General Services Administration would be the project executive, effective immediately.

Warsh, who had also been a critic of the renovation, said the American people were owed “a prudent and conscientious use of public funds.”

The GSA is the federal agency tasked with overseeing the federal government’s office buildings, technology services and real estate.

The renovation became a point of contention during a June 25, 2025, Senate hearing. Sen. Tim Scott, R-S.C., asked Powell about the Fed’s renovation project, which caught the White House’s attention.

Scott accused Powell of having “spent billions on lavish renovations” that included “rooftop terraces, custom elevators that open into VIP dining rooms, white marble finishes and even a private art collection.”

“There’s no [VIP] dining room. There’s no new marble. We took down the old marble, we’re putting it back up. We’ll have to use new marble where some of the old marble broke. But there’s no special elevators. There’s just old elevators that have been there. There are no new water features. There’s no beehives, and there’s no roof terrace gardens,” the then-Fed chair said.

On Wednesday, Scott responded to the inspector general’s report saying that he welcomes its findings. “Inflation does not change the Fed’s responsibility to manage its resources prudently and be accountable to Congress,” he wrote in a statement. The Senate Banking Committee, which Scott chairs, “will continue rigorous oversight to ensure the Fed is transparent and stays focused on its mission,” he added.

Shortly after the June hearing, Trump’s Office of Management and Budget director, Russell Vought, wrote Powell a letter saying that the president was “extremely troubled by your management of the Federal Reserve System,” citing the renovation.

“Comparable federal building renovations cost many orders of magnitude less than the office you are building for yourself on the taxpayer’s dime,” Vought added. He later likened the office building renovation to “a palace.”

The Federal Reserve System is not funded by taxpayer money. It is self-funded by the fees it charges on services such as processing checks. It is also funded by the interest it earns on its vast bond portfolio.

Powell denied Vought’s allegations, saying that the central bank had “taken great care to ensure the project is carefully overseen since it was first approved by the Board in 2017.”

As noted by Powell, the project was first approved by the Fed’s entire seven-member Board of Governors. Powell became Fed chair in 2018 after Trump nominated him in late 2017.

The Trump administration did not let up on its campaign against Powell. On July 24, Trump himself made an unprecedented and surprise visit to the Fed’s construction site.

Touring the project alongside Powell and Scott, the president began suggesting that the price tag had ballooned even further. Powell sharply responded, “I haven’t heard that.” Handed a piece of paper by Trump, Powell said that Trump was including a previously completed building project in his new, higher cost estimate.

President Donald Trump points to a cost sheet as he tours the Federal Reserve with then-Chair Jerome Powell on July 24, 2025.Andrew Caballero-Reyonds / AFP via Getty Images fileThe Fed also launched a website, which noted that the price tag of the project had risen beyond its first estimate due to changes to the design after voluntarily consulting review boards, and the rising cost of materials, equipment and labor. It also said unforeseen circumstances, such as “more asbestos than anticipated,” contributed.

Still, throughout the year, Trump openly mused about firing Powell, which sometimes rattled markets. A Federal Reserve chair has never been fired before.

FOR SUBSCRIBERSTrump’s new America.gov AI chatbot often links to a site launched under Clinton 26 years agoFOR SUBSCRIBERSAt MAHA summit, industry CEOs the movement once vilified take the stageFOR SUBSCRIBERSThis Paralympian has two goals: Win medals and give away $500,000 to her teammatesFOR SUBSCRIBERSCornell rape allegation spotlights stringent New York state laws that have long drawn criticismFOR SUBSCRIBERSThe debate over AI’s future rages on both coastsFOR SUBSCRIBERSDecades-old march dispute reignites in Northern Ireland, threatening political crisisFOR SUBSCRIBERSMore oil is getting out of the Middle East. Why is it still so expensive?FOR SUBSCRIBERSKey DOJ lawyers departed Trump ‘grand conspiracy’ probe amid pressure to produce, source saysFOR SUBSCRIBERSThe complicated bargain between ‘looksmaxxing’ influencer Clavicular and the women in his orbitFOR SUBSCRIBERSSenators unveil bipartisan bill to deliver essential newborn supply kits to new momsFOR SUBSCRIBERSAI agents promise to run your errands. Websites are fighting back.FOR SUBSCRIBERSDemocrats face a staggering spending disadvantage in Georgia’s tight race for governorFOR SUBSCRIBERSObama boosts Senate Democrats with October fundraiserFOR SUBSCRIBERSTheir owner is suspended, their draft picks taken. The Clippers still believe they can win.FOR SUBSCRIBERSMLB wants a salary cap for competitive balance. Does the playoff field already have it?For SubscribersFOR SUBSCRIBERSTrump’s new America.gov AI chatbot often links to a site launched under Clinton 26 years agoFOR SUBSCRIBERSAt MAHA summit, industry CEOs the movement once vilified take the stageFOR SUBSCRIBERSThis Paralympian has two goals: Win medals and give away $500,000 to her teammatesFOR SUBSCRIBERSCornell rape allegation spotlights stringent New York state laws that have long drawn criticismFOR SUBSCRIBERSThe debate over AI’s future rages on both coastsFOR SUBSCRIBERSDecades-old march dispute reignites in Northern Ireland, threatening political crisisFOR SUBSCRIBERSMore oil is getting out of the Middle East. Why is it still so expensive?FOR SUBSCRIBERSKey DOJ lawyers departed Trump ‘grand conspiracy’ probe amid pressure to produce, source saysFOR SUBSCRIBERSThe complicated bargain between ‘looksmaxxing’ influencer Clavicular and the women in his orbitFOR SUBSCRIBERSSenators unveil bipartisan bill to deliver essential newborn supply kits to new momsFOR SUBSCRIBERSAI agents promise to run your errands. Websites are fighting back.FOR SUBSCRIBERSDemocrats face a staggering spending disadvantage in Georgia’s tight race for governorFOR SUBSCRIBERSObama boosts Senate Democrats with October fundraiserFOR SUBSCRIBERSTheir owner is suspended, their draft picks taken. The Clippers still believe they can win.FOR SUBSCRIBERSMLB wants a salary cap for competitive balance. Does the playoff field already have it?After months of more muted complaints about the project, in January a new revelation about it rocked Washington.

In an extraordinary video statement posted to the Fed’s social media pages on a Sunday night in January, Powell announced that “the Department of Justice served the Federal Reserve with grand jury subpoenas.”

He said a criminal probe had been launched against him and the central bank over his earlier Senate testimony.

“No one — certainly not the chair of the Federal Reserve — is above the law,” Powell said. “But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.” He added: “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation.”

Those subpoenas were later blocked by a judge, who said that Trump’s handpicked U.S. attorney in D.C. had “produced essentially zero evidence to suspect Chair Powell of a crime.”

But the damage had already been done. Trump’s U.S. attorney for D.C., Jeanine Pirro — whose aides tried to tour the Fed amid the investigation — said her office closed its probe and referred the matter to the inspector general. The watchdog already had an open inquiry at Powell’s request.

Pirro, a longtime Trump friend, kept her threat to investigate Powell on the table, however. As a result, Powell decided to stay on the Fed board when his term as chair ended on May 22, denying the Trump administration an opportunity to fill an open spot.

Under Warsh, meanwhile, the Fed has raised rates once and is expected to do so again this year.

Ryan J. Reilly reported from Washington; Steve Kopack from New York.

Ryan J. ReillyRyan J. Reilly is a justice reporter for NBC News.

Steve KopackSteve Kopack is a senior reporter at NBC News covering business and the economy.