The Federal Reserve’s independent watchdog has found no evidence of misconduct in the renovation of the central bank’s headquarters, which has seen its costs balloon to nearly $2.5 billion. The Office of Inspector General (OIG) released its report on the project, stating that it did not identify any administrative misconduct or violations of federal law.
The report noted that the project’s approved budget climbed from $1.32 billion in early 2020 to $2.38 billion by the end of 2024, with the construction segment alone more than doubling in that time. The OIG found that numerous factors contributed to the significant construction cost increases, including inflation, limited subcontractor bidding, substantial design changes, and site conditions.
Watchdog Findings
The OIG’s report was released on September 29, after former Fed Chair Jerome Powell requested the probe in July 2025. The report stated that while the project has not been handled perfectly, there is no evidence to suggest that a violation of federal criminal law occurred. The OIG also found that the effect of some factors could have been mitigated by more effective project management and contract execution decisions.
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President Donald Trump had previously stated that the rising costs of the project made it possible that fraud was involved and that Powell may have to be fired if that was the case. However, the OIG’s report found no evidence to support these claims.
Federal Reserve Response
The Fed’s new chair, Kevin Warsh, has concurred with the findings and recommendations of the OIG’s report. Warsh stated that he and his fellow board members strongly agree on the necessity of completing the work in the most efficient and transparent way possible. The report included a copy of the letter that Warsh sent to the watchdog in response to its findings.
The OIG has recommended that the Fed audit the project’s construction costs and create an oversight group to monitor its progress. They will follow up with the Fed quarterly to ensure that their recommendations are fully addressed.
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Background
The renovation project was first approved in 2017, and the OIG has previously conducted audits of the project. However, the project began making headlines last summer after Trump and the director of the Federal Housing Finance Agency raised the possibility that fraud was involved. The allegations heightened a public feud between Trump and the Fed, which further intensified in January when Powell announced that the DOJ was investigating the renovation.
The DOJ ultimately dropped its investigation in April, though the U.S. Attorney for the District of Columbia stated that she will not hesitate to restart a criminal investigation should the facts warrant doing so. Powell’s term as Fed chair has since ended, but he has said that he intends to remain on the Board of Governors until he is certain that the DOJ’s probe is over for good.
Kevin Warsh and his fellow board members will now work to implement the OIG’s recommendations and ensure that the project is completed efficiently and transparently.
