Fed Review Finds No Criminal Referral Grounds. Trump Still Wants Powell Out

The Federal Reserve’s watchdog found serious failures in its headquarters renovation—but no grounds for a criminal referral against Jerome Powell or anyone else. Donald Trump responded by demanding Powell’s resignation anyway. A report documenting how costs escaped control became another occasion to seek the removal of an official whose criminal wrongdoing it did not substantiate. ^{5 6}

That distinction is the central finding of Inspector General Michael Horowitz’s evaluation: expensive mismanagement is established; criminal wrongdoing and administrative misconduct were not found. The institution responsible for monetary policy failed to secure the cost certainty its own construction contract was supposed to deliver. Neither that failure nor the size of the bill is, by itself, evidence of a crime. ⁵

“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 in accordance with the Inspector General Act,” the evaluation states. It adds: “We did not identify administrative misconduct during our evaluation.” Those conclusions are not a court verdict, an endorsement of every project decision or a resolution of every conceivable legal issue. ⁵

The review followed Powell’s July 2025 request and lasted more than a year. Its September 29, 2026 printed date and September 30 public release refer to one evaluation, not two. The official document has 120 numbered pages, despite some public descriptions of 121. ^{5 14}

The project covers the Eccles and 1951 headquarters buildings in Washington. Construction began in July 2022; the original plan anticipated ending the construction phase in the second quarter of 2024. The revised projection is December 2027. Meanwhile, the approved renovation budget rose from $1.317 billion to $2.381 billion, with the latter still approved as of August 2026. Within those totals, construction increased from $921 million to $2.018 billion. These are budgets, not amounts already paid. ⁵

Public price tags need care. Bloomberg reported $2.4 billion, CBS used $2.5 billion and PBS described nearly $2.5 billion. A separate, broader multicycle capital budget reached $2.455 billion in 2024; the Fed’s public explanation later cited approximately $2.46 billion. Different scopes and rounding help explain the range, but do not definitively reconcile the basis and date of every published figure. The exact renovation line is the more useful measure here. ^{119 8 120 5 137}

The Board chose a construction-manager-at-risk contract, an arrangement intended to transfer meaningful cost risk to the manager and establish a guaranteed maximum price. Instead, the watchdog found that the Board “repeatedly deviated from its cost-management provisions.” By July 2026, four years after construction began, it still had not transferred material risk, obtained cost certainty or established an overall ceiling. ⁵

An early constraint was effectively discarded. The project team gave the architecture and engineering firm an $857 million design cost limitation in April 2020, distinct from the approved construction budget. It was neither updated nor enforced, and neither the construction manager nor the owner’s representative was told of it. The representative also lacked budget and detailed bidding information needed for independent cost validation. ⁵

Between July 2022 and December 2025, the Board awarded 69 subcontractor work packages totaling $1.978 billion before formally requesting a guaranteed maximum price on December 30, 2025. Those were construction awards—not manager fees or cash disbursements. The manager submitted a $2.135 billion construction-cost proposal in January 2026. That was a late contractor estimate and price-ceiling proposal, not the Board’s first total budget: an approved budget had existed since February 2020. ⁵

The manager’s fee remained 2.95 percent of work rather than a fixed, capped fee. Responsibility for cost and schedule was unclear, and package increases exceeding $100 million were not adequately escalated. In practical terms, the Board kept committing work without establishing the project-wide protection it had contracted to obtain. ⁵

Mechanical, electrical and plumbing work shows the scale. Two core-and-shell packages estimated at $178 million in March 2022 were awarded for $539 million in July and October 2023; each received two bids. Two interior systems packages rose from a $28 million estimate to $155 million in June 2025 awards. Together, the four totaled approximately $694 million, about $488 million above the earlier estimate. ⁵

Inflation was a factor, but not a sufficient explanation. The watchdog compared those periods with producer-price increases of approximately 16 percent and 19 percent—far below the package increases. Those indexes are not a precise calculation of this project’s inflation exposure, and the Board supplied no project-specific analysis. A January 2023 shift from predominantly open workspaces to predominantly closed offices also delayed interior design completion by 21 months. ⁵

The evaluation rejected another prominent explanation: marble, water features, the garden terrace, a private elevator for the chair and skylights “did not materially contribute” to construction-cost increases. That does not mean every feature was absent or free. It means the main accountability questions concern contract controls, bidding, design decisions and governance—not simply conspicuous finishes. ^{5 8}

The inspector general’s evaluation was separate from the Justice Department inquiry into the renovation and Powell’s June 2025 Senate Banking Committee testimony. At a March 3, 2026 hearing, prosecutor George A. Massucco-LaTaif was asked what evidence existed of renovation fraud or criminal misconduct. “We do not know at this time,” he answered, according to reporting on the unsealed transcript. ¹²⁶

Chief U.S. District Judge James E. Boasberg quashed the subpoenas in an opinion dated March 11 and unsealed March 13. “The Government has offered no evidence whatsoever that Powell committed any crime other than displeasing the President,” he wrote. He also found extensive evidence that the subpoenas were intended to pressure Powell into supporting lower interest rates or resigning. ^{118 52}

On April 24, U.S. Attorney Jeanine Pirro said she had directed her office to close the investigation while the inspector general conducted the review, reserving a restart if facts warranted it. The June 11 court opinion recorded: “Instead of appealing, the Government closed its investigation.” It denied the government’s attempt to vacate the subpoena opinion. Blocking subpoenas and closing the inquiry were successive events, not conflicting outcomes; no indictment had issued. ^{122 112}

Powell’s chair term ended in May, when Kevin M. Warsh became chair, but Powell remained a governor. On September 30, Trump said Powell “should be forced to resign” or face a government lawsuit for “either corruption or incompetence.” He asked Attorney General Todd Blanche to study the evaluation and determine a response. Trump’s description of a project with “no end in sight” omitted the report’s December 2027 projection, though that date is not guaranteed. ^{14 156 5}

Pirro’s office said it was reviewing the newly received report. Review is not an announced reopening. Through October 1, no public filing established a formal restart, and no new charges were established. That is the limit of the public record, not a guarantee about prosecutors’ next decision. ^{14 6 112}

The Board accepted seven recommendations: obtain a guaranteed maximum price or another best-value completion approach; set cost and schedule metrics; establish the manager’s fee under the contract; clarify oversight and reporting; audit awarded costs; reconcile contracted services with those received and assess reimbursement; and standardize oversight of future major initiatives. ⁵

In his September 29 response, Warsh retained the General Services Administration as project executive, effective immediately, reporting to him and the Board. That is oversight of remaining work, not a transfer of Fed ownership. He committed to promptly completing price-ceiling negotiations, establishing fixed budget and schedule measures, and hiring an independent auditor to “verify the accuracy and compliance of all awarded costs to date.” No fixed completion deadline for that audit or the price negotiations was established. ^{16 14}

With GSA, the Board also intends to value services not received and pursue remedies, potentially reimbursement or credits. No recovery has been established. The inspector general plans quarterly follow-up until the recommendations are addressed. The useful test now is whether the Board obtains a real ceiling, validates costs, recovers anything owed and delivers against defined measures. A resignation demand answers none of those questions. ^{16 44}

Broadcast accounts and initial reporting: ^{1 2 3 4}

Evaluation, contemporary reporting and related coverage: ^{5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29}

Inquiry coverage and background references: ^{30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69}

Additional reference material, not all relied upon for article claims: ^{70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109}

Court records, inquiry reporting and release-day coverage: ^{110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126}

Further supporting and background references, not all relied upon for article claims: ^{127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162}