Fed watchdog finds no criminal wrongdoing in $2.5 billion renovation project

The Federal Reserve's internal watchdog found no criminal wrongdoing or violations of federal law in connection with a renovation of the central bank's Washington, D.C. headquarters, according to numerous outlets including the Associated Press, CNN, NBC News, Bloomberg, Politico, Reuters and the Financial Times. The Office of Inspector General said in its report that it did not 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 Axios, which also quoted the watchdog saying it "did not identify administrative misconduct during our evaluation."

The renovation project's cost more than doubled to roughly $2.4 billion to $2.5 billion, according to The Guardian, Axios and the New York Post, among others. The Guardian reported the inspector general's 120-page report found the Fed's board of governors did not secure a comprehensive cost estimate at the outset of the project and never set a maximum overall cost, a step that could have forced the building contractor to absorb the impact of inflation. The Guardian added that prices spiked after construction began in 2022. CBS News similarly reported that poor project management dramatically increased costs, while The New York Times reported the roughly $2.5 billion project was

poorly managed

but that the watchdog made no referrals to the U.S. attorney general.

The renovations became a flashpoint in President Donald Trump's pressure campaign against then-Fed Chair Jerome Powell, according to Axios, The Guardian and The Washington Post, among others. The Washington Post reported that the Fed's watchdog found cost overruns but no evidence of criminal violations after the Justice Department dropped an investigation into the renovations earlier this year. Axios reported that the Justice Department had opened an unprecedented criminal investigation into Powell that became public in January, and that the inspector general's findings effectively clear him. The Straits Times reported that Trump blamed Powell for the mismanagement and pushed for legal action, and separately reported that Trump called for Powell's resignation following the watchdog's findings.

Coverage on the right detailed steps taken in response to the findings. Breitbart reported that Fed Chairman Kevin Warsh appointed the General Services Administration to oversee completion of the renovation and ordered an independent cost audit following the inspector general's investigation. The New York Post, citing the Inspector General review, described the headquarters work as a "Palace of Versailles" project and reported it detailed massive cost overruns, mismanagement and contracting failures. The Washington Examiner reported the watchdog found the Fed "has not effectively managed and executed its CMAR contract" but found no grounds for a criminal probe into Powell.

How the coverage differed

Outlets across the spectrum converged on the two central findings — no criminal wrongdoing and mismanagement — but emphasis varied. Left-leaning outlets such as The Guardian and The New York Times devoted substantial detail to the mechanics of the mismanagement, including the missing cost estimate and ceiling, and tied the episode explicitly to Trump's pressure campaign against Powell over interest rates. The Washington Post and Al Jazeera English likewise framed the report primarily around Trump's attempt to oust Powell, with the Department of Justice's dropped investigation noted by The Washington Post as context.

Center outlets, including Axios, Reuters and CNBC, led more squarely with the clearing of Powell personally, with Axios providing the most extensive direct quotations from the inspector general's report. The Straits Times was alone in reporting that Trump called for Powell's resignation even after the watchdog's findings, a single-source claim.

Right-leaning outlets gave more attention to consequences and oversight changes than other sides. Breitbart's report on Warsh's appointment of the General Services Administration and an independent cost audit was not reported elsewhere among the supplied material, a single-source claim. The New York Post's "Palace of Versailles" characterization of the renovation was also unique to that outlet. The Washington Examiner and The Epoch Times, along with Newsmax and the Washington Times, emphasized the no-misconduct finding with less focus on Trump's role in pressuring Powell than left-leaning coverage.

What is still unclear

The supplied material does not specify what corrective actions, if any, were recommended or required of the Fed's board of governors beyond the audit and GSA oversight step reported by Breitbart alone. It also remains unclear from the sources what specific role, if any, the dropped Justice Department investigation played in the inspector general's decision not to make a referral, beyond The Washington Post's brief mention of its timing.