An internal watchdog report released this Wednesday concluded that while the Federal Reserve mismanaged the $2.4 billion renovation of its Washington, D.C. headquarters, there was no evidence of criminal activity. The investigation determined that the Fed’s board of governors had not effectively managed the complex construction project and frequently ignored its own cost-management provisions. However, the oversight body clarified that these failures did not constitute administrative misconduct or illegal behavior.
“At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred,” the report explicitly stated. The renovation project has faced significant financial strain and delays; original budget estimates set in February 2020 were approximately $921 million, but costs ballooned to $2.018 billion by December 2024. Furthermore, the completion date has been pushed back significantly, with the project now slated to conclude in December 2027 rather than mid-2024. Construction costs have gone from an initially budgeted $921m in February 2020 to $2.018bn by December 2024, over the course of renovations.
These renovation costs served as a central focal point for Donald Trump’s public campaign to pressure then-Chair Jerome Powell into lowering interest rates. In June 2025, Trump characterized the construction expenses as an act of corruption, suggesting the total reached $3.1 billion and alleging the inclusion of lavish features like a garden terrace and VIP dining rooms. During a July visit to the site, Trump and Powell engaged in a tense public spat regarding these budget figures. According to “It looks like it’s about $3.1bn,” Trump, At the time. “It went up a little bit or a lot.”.
In response to the mounting public criticism, the Fed released a video tour of the construction, highlighting that the historic buildings had not undergone major renovations since the 1930s. Powell, typically composed, became visibly frustrated during the disputes, notably telling the former president he was unaware of the specific figures Trump cited.
The tension escalated in January when Powell announced that the Department of Justice had launched a criminal investigation into the construction project. Powell described the probe as a “pretext” aimed at intimidating the central bank. “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions – or whether instead monetary policy will be directed by political pressure or intimidation,” he stated at the time.
This investigation eventually stalled the confirmation process for current Fed Chair Kevin Warsh, as a prominent Republican senator withheld support until the inquiry concluded. The Department of Justice ultimately closed the investigation in April. Tensions between the White House and the Fed, an institution designed to remain non-partisan and independent, were further strained when Trump attempted to fire Fed governor Lisa Cook over unrelated mortgage fraud allegations. The Supreme Court later ruled the dismissal process unconstitutional due to a failure to follow proper legal procedures.
Despite the closure of the criminal investigation and the watchdog’s findings, Trump and his economic team have maintained persistent calls for lower interest rates. The Federal Reserve, conversely, has continued to hike rates, pointing to high inflation as the primary economic concern.
