Fed watchdog finds no grounds for criminal referral over renovation

The Federal Reserve’s inspector general has found no reasonable grounds for a criminal referral over the renovation of two of the central bank’s buildings, but has identified serious weaknesses in its control of construction costs. The approved project budget rose from $1.317bn in February 2020 to $2.381bn in December 2024. [1]

The watchdog said the Fed had failed to make effective use of safeguards in its construction contract. By July 2026, around $2bn of construction work had been awarded without a guaranteed maximum price for the project. Four mechanical, electrical and plumbing packages cost about $694m, against a March 2022 estimate of $206m; the Fed did not request an independent estimate to assess the higher prices. [1]

Inflation, limited bidding, changes to interior plans and difficult site conditions contributed to the increases, the inspector general found. Marble, water features and a garden terrace did not materially contribute to subsequent construction-cost rises. The watchdog also found no breach of Fed policy warranting an administrative misconduct finding. [1]

A federal judge ruled in March that two grand jury subpoenas concerning the renovation and former Fed chair Jerome Powell’s testimony had been issued for an improper purpose. Prosecutors closed their criminal investigation in April. [3] [1]