Fed Watchdog Clears Powell of Criminal Wrongdoing in $1 Billion Renovation Overrun, But Trump Still Wants Him Out

The Federal Reserve's internal watchdog has concluded that a sprawling renovation project at the central bank's Washington headquarters, which ran roughly $1 billion over budget, does not warrant a criminal referral or a finding of administrative misconduct. The report, released Wednesday by the Fed's Office of Inspector General, nonetheless delivered a sharp critique of how the project was managed, faulting oversight failures that allowed costs to balloon.

The findings immediately reignited a long-running political battle between President Donald Trump and former Fed Chair Jerome Powell, who led the institution for most of the renovation effort. Within hours of the report's publication, Trump took to his Truth Social platform to demand that Powell step down from the Fed's Board of Governors, threatening legal action if he refuses.

The inspector general's report stated plainly that investigators "did not find reasonable grounds to believe that a violation of federal criminal law had occurred requiring a referral to the US attorney general." It further noted that while deficiencies in the management of the renovation project were identified, along with recommendations for corrective actions under the Inspector General Act, no administrative misconduct was uncovered during the evaluation.

The renovation involved two historic Fed buildings situated along the National Mall in Washington. What began as a major infrastructure modernization effort ultimately produced a price tag of approximately $2.4 billion, representing an overrun of about $1 billion against original projections. Cost overruns on large government construction projects are hardly unusual, but this particular project became a political flashpoint because of Trump's sustained campaign against Powell.

Powell declined to comment on the report. His feud with Trump dates back to 2018, when the president, having nominated Powell for the top Fed job in late 2017, began publicly criticizing him for declining to cut interest rates. That conflict has persisted through Powell's tenure, with Trump repeatedly arguing that the Fed's monetary policy has been too restrictive and has hampered economic growth.

In his social media post, Trump wrote that "at a minimum, 'Too Late' Powell should be forced to resign from the Board," adding that Powell "can't manage a Building, and he certainly shouldn't be allowed to manage his High Interest Rate Policy." The president went further, suggesting that if Powell does not resign voluntarily, the US government should sue him "at the highest level" for either corruption or incompetence. Trump also said he had instructed Attorney General Todd Blanche to review the inspector general's report and determine what action, if any, to take.

The report also draws attention to other Fed officials involved in overseeing the project. Fed Vice Chair Philip Jefferson chairs the central bank's Committee on Board Affairs and serves as the "administrative governor" with the most direct responsibility for project oversight. Jefferson did not immediately respond to requests for comment on the report's findings.

Current Fed Chair Kevin Warsh, who succeeded Powell in May, responded to the report by committing to implement its recommendations on project management. Warsh said he would bring in an independent auditor to verify the accuracy and compliance of all costs awarded to date on the renovation. His measured response stands in contrast to the more combative posture taken by the White House.

The broader political context is significant. Trump has sought to expand his influence over the Federal Reserve's direction on monetary policy, and the renovation overrun became a useful tool in that effort. Separately, Trump has also attempted to remove Fed Governor Lisa Cook over allegations of wrongdoing in an unrelated matter, a move that has raised questions about the independence of the central bank.

The report's release prompted reactions from lawmakers that largely followed party lines. Republican Senator Tim Scott, who chairs the Senate Banking Committee, described the cost overruns as "egregious" and said that inflation does not diminish the Fed's obligation to manage its resources prudently and remain accountable to Congress. He promised rigorous oversight of the central bank going forward.

Senator Elizabeth Warren, the ranking Democrat on the Banking Committee, offered a sharply different interpretation. She said the inspector general's findings provided "no basis to restart the president's witch hunt" against Powell, framing the report as a vindication of the former Fed chair rather than a justification for further attacks.

The White House's push against Powell comes amid a broader pattern of scrutiny over government spending on high-profile construction. Trump's own budget for renovations to the White House ballroom, a project currently underway, doubled from initial estimates to at least $400 million, a detail that critics have pointed to as evidence of inconsistent standards.

For the Fed, the episode raises uncomfortable questions about internal governance and the management of major capital projects. While the inspector general found no criminal conduct, the report's identification of oversight deficiencies could fuel congressional demands for tighter controls and more transparent accounting at the central bank. Warsh's decision to commission an independent audit appears designed to address those concerns before they gain further traction.

Whether the report will quiet the political pressure on Powell remains doubtful. Trump's statement made clear he intends to continue pressing for Powell's departure from the Board of Governors, and the referral of the matter to the attorney general suggests the administration is exploring additional avenues. For Powell, who has already weathered years of presidential criticism, the latest chapter adds another layer of uncertainty to a tenure defined by friction with the White House.

The standoff also carries implications for the Fed's independence, a principle long upheld by economists and policymakers who argue that monetary decisions should be insulated from short-term political considerations. Every escalation in the Trump-Powell conflict invites fresh debate over whether that independence can hold under sustained pressure from the executive branch.

For now, the inspector general's report stands as the most detailed public accounting of what went wrong with the renovation project. It absolves Powell and other officials of criminal liability, faults the management process, and leaves the ultimate political judgment to a president who has already made his position unmistakably clear.