The Federal Reserve’s inspector general determined management and oversight failures contributed to major cost overruns in the central bank’s headquarters renovation but found no grounds for a criminal referral, according to a report released Wednesday.
“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,” the report states.
Despite that finding, President Donald Trump seized on the report to argue that former Fed Chair Jerome Powell should be “forced to resign” from the central bank’s Board of Governors “at a minimum.”
The Cost Overruns
The report details a renovation project of the Washington facility that ballooned in cost by roughly a billion dollars from initial estimates. The Fed estimated in 2020 that the project would cost $1.3 billion. As of August 2026, the board-approved budget has soared to $2.4 billion. Construction costs alone have risen by $960 million.
The Fed’s board has attributed some of those costs to inflation. That was part of the problem, the IG found, but while overall producer price inflation rose 16% during the renovation, some costs rose by far more. Plumbing and heating, ventilation and air conditioning costs rose by 223%, for instance.
The IG found that the Fed failed to enforce a guaranteed maximum price for the project and designed a process that did not escalate rising costs to senior leadership.
Trump’s Response
“This is Jerome Powell’s fault, and he should be forced to resign, IMMEDIATELY!” Trump wrote on Truth Social. He added that if Powell refuses to step down, he should be sued by the federal government “for either corruption or incompetence, both of which are completely unacceptable.”
Trump said he has asked Attorney General Todd Blanche to “study” the IG report “and make a determination” of what to do about the project. Powell said in April he would stay on as a governor “until this investigation is well and truly over, with transparency and finality.” He can remain on the board through January 2028.
The Political Context
The investigation was led by Fed Inspector General Michael Horowitz, appointed by Powell in June 2025. Powell requested the investigation a month later. Congress designed the Fed to be independent from the executive branch. The agency is self-funded and manages its own budget.
Trump has long argued the Fed ought to lower interest rates and said he would apply that litmus test to anyone he chose for chair. Powell said in January that a criminal investigation related to the renovation was a pretext to force him to lower interest rates.
Sen. Elizabeth Warren, the ranking Democrat on the Senate Banking Committee, said that after the IG’s report, the Justice Department “has no basis to restart the President’s witch hunt against former Fed Chair Jerome Powell.”
The Bottom Line
The Federal Reserve’s inspector general found management and oversight failures contributed to $1.1 billion in cost overruns on the Fed’s headquarters renovation but found no grounds for a criminal referral. President Trump is demanding Jerome Powell resign anyway and has asked the attorney general to study the report. Powell has said he will stay on the board until the investigation is over. The report cedes little to Powell’s critics beyond his responsibility for the project.
My Opinion
The inspector general looked at the evidence and found mismanagement. Not corruption. Not criminality. Mismanagement. That is a distinction that matters, because it is the difference between a construction project that spiraled out of control and a crime scene.
Trump does not care about the distinction. He does not want an investigation. He wants a resignation. He has wanted Powell gone for years — not because of the renovation, but because Powell would not cut interest rates on command. The renovation is a pretext. The criminal referral was a pretext. The demand for resignation is the latest version of the same pressure campaign, dressed up in a new report that does not say what Trump wanted it to say.
Senator Tim Scott, a Republican who questioned Powell during his testimony, said he found Powell inept but did not believe he committed a crime. That is the honest position. You can think Powell mismanaged the project without thinking he belongs in prison. Trump refuses to make that distinction because the point was never accountability, just leverage
