Inspector General Clears Powell, Fed Board in Probe of HQ Renovations
The Federal Reserve’s inspector general found no basis for the Justice Department to reopen its criminal probe into the central bank’s handling of its headquarters renovation, Politico reported.
The decision removed a potential avenue for President Donald Trump to oust former Chair Jerome Powell from the Fed board, Politico said.
The long-awaited watchdog report concluded that the Fed should have done more to rein in the project’s cost, which has ballooned to an estimated $2.38 billion — more than $1 billion over a 2020 projection, Politico noted. But the agency said there were no “reasonable grounds to believe that a violation of criminal law had occurred,” nor was there misconduct by the Fed board.
Fed Chair Kevin Warsh said in response that the General Services Administration will take over management of the project.
Politico noted that the IG’s findings are critical to the future of the Fed, which has faced an onslaught of criticism from the president not only for what he called the “very luxurious” renovation project but also for not moving quickly enough to lower interest rates.
Constitutional Issues
The finding called into further question the merits of the administration’s criminal probe.
Politico reported that the president’s repeated musings about whether to fire Powell also raised constitutional issues about the extent of the president’s authority to remove Fed board members. Under law, members can be let go only “for cause.”
In January, then-Chair Powell disclosed that the DOJ had sent subpoenas to the central bank regarding the renovations and said that move “should be seen in the broader context of the administration’s threats and ongoing pressure” over borrowing costs.
A federal judge later quashed the subpoenas as a “mere pretext to pressure the Fed,” and U.S. Attorney for the District of Columbia Jeanine Pirro dropped the investigation in April, saying she would defer to the Federal Reserve inspector general’s inquiries.
The report shows that the IG met with Pirro’s office eight days before she announced the suspension of her probe.
Powell stepped down as Fed chair in May when his four-year term officially expired, but he has remained on the board in what he said was a bid to help defend the central bank’s independence.
Trump’s pressure campaign on Powell was underscored by a highly unusual visit he made to the central bank in July 2025. Both Trump and Powell donned hardhats for television cameras to inspect the work.
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