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WASHINGTON — <\/span>The Federal Reserve\u2019s internal watchdog said Wednesday that the central bank has broadly mismanaged an expansive building renovation project<\/a> but did not find any criminal violations, as alleged by Trump administration prosecutors.<\/p>\n A variety of missteps by the Fed’s Board of Governors and staff inflated the cost of the $2.4 billion renovation, the Fed\u2019s inspector general said. The board did not secure a comprehensive cost estimate at the beginning of the project, nor did it nail down a maximum overall cost, a step that could have forced the building contractor to absorb the impact of inflation, the IG said in a 120-page report. Prices spiked after construction began in 2022. <\/p>\n \u201cOur review found that the Board has not effectively managed and executed its … contract and repeatedly deviated from its cost-management provisions,\u201d the report said. <\/p>\n The building project became a high-profile flashpoint<\/a> in the Trump administration\u2019s efforts to pressure the Fed into cutting its key interest rate. President Donald Trump even visited the construction site last July, when then-Chairman Jerome Powell corrected<\/a> Trump\u2019s estimate of the project\u2019s expected costs as the two stood in hard hats before TV cameras. <\/p>\n Criticism of the project also mounted in Congress, leading Powell to request in July 2025 that the inspector general, Michael Horowitz, investigate the renovation. <\/p>\n The building project then became the focus of a criminal investigation by Trump\u2019s Justice Department, specifically into whether Powell had committed perjury during brief testimony about the renovation before a Senate committee. That investigation was dropped in April<\/a> after a judge quashed subpoenas<\/a> issued by Jeanine Pirro, the U.S. attorney for the District of Columbia. Pirro said then she would await the outcome of the inspector general\u2019s investigation before deciding whether to take any further action. <\/p>\n \u201cAt 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,\u201d the IG\u2019s report said. <\/p>\n Tim Lauer, a spokesperson for Pirro’s office, said the report is under review. <\/p>\n Powell’s term as chair ended in May, but he took the highly unusual step of remaining on the board as one of seven governors. His term as a governor lasts until January 2028. Powell said earlier this year he would remain on the board at least until he is convinced that Pirro’s investigation is done. By keeping his seat, Powell has also prevented the Trump administration from filling another spot on the board. <\/p>\n Trump on Wednesday afternoon seized on the report to renew his call for Powell to resign from the Fed. <\/p>\n \u201cHe can\u2019t manage a Building, and he certainly shouldn\u2019t be allowed to manage his High Interest Rate Policy,\u201d Trump wrote on his social media site, Truth Social. \u201cAnd no, I do not want this Building named after President Donald J. Trump, ME!\u201d <\/p>\n Massachusetts Sen. Elizabeth Warren, the top Democrat on the Senate Banking Committee and a frequent critic of Powell’s, said the report \u201cconfirmed that Trump lapdogs U.S. Attorney Jeanine Pirro and Attorney General Todd Blanche have no basis to restart the President\u2019s witch hunt against former Fed Chair Jerome Powell.\u201d <\/p>\n Current Fed Chairman Kevin Warsh, who took office last May, welcomed the IG\u2019s findings in a letter and said the General Services Administration, a federal agency that oversees most government buildings, would take on a consulting role with the Fed to help oversee the project.<\/p>\n He also said the Fed would engage an independent auditor to evaluate the building project and all its costs. The Fed, with the GSA, will review all the project’s contracts and \u201cpursue appropriate remedies,\u201d including seeking reimbursement for any work paid for but not performed, the letter said.<\/p>\n The report said that the construction costs to renovate two Fed buildings more than doubled from an original estimate of $921 million in February 2020 to $2.018 billion by December 2024. Construction is expected to last until December 2027, long past its originally slated completion date of mid-2024.<\/p>\n Some aspects of the project that were criticized by the Trump administration and Republican members of Congress for being luxurious \u2014 water fountains, private elevators and marble facades<\/a> \u2014 were not significant drivers of the excessive costs of the project, the report said. <\/p>\n Instead, the IG said that a design change by the Fed in 2023 from a mostly open workspace to one with mostly closed office space caused a significant delay in the project’s design. It also delayed the Fed from seeking a maximum cost ceiling for the project at that time. <\/p>\n The Fed has long blamed a range of factors for the cost overruns, including a spike in inflation that occurred as the economy emerged from the COVID-19 pandemic, unexpected expenses such as asbestos remediation, and additional demands from review agencies. For example, Trump appointees to a planning commission from his first term pushed the Fed<\/a> to add more marble to the exterior of the renovated buildings, in keeping with Trump’s preference for classical architecture. <\/p>\n The report said those factors all played a role, but added that they \u201cdo not account for the effect of key project management and contract execution decisions\u201d that effectively transformed the contract to “a cost-plus reimbursement contract with a pay-as-you-go approach.\u201d<\/p>\n \u201cInflation does not change the Fed\u2019s responsibility to manage its resources prudently and be accountable to Congress,\u201d Sen. Tim Scott, chairman of the Senate Banking Committee and a South Carolina Republican, said.<\/p>\n<\/div>\n