The Federal Reserve building renovation was broadly mismanaged but did not involve criminal violations, according to the central bank’s inspector general in a report released Wednesday.
The watchdog found that the Fed’s Board of Governors made a series of errors that pushed the renovation’s price tag to $2.4 billion. The report said the board did not secure a comprehensive cost estimate at the outset and failed to establish a maximum overall cost, which could have shifted inflation risk to the contractor. Construction began in 2022, and prices rose soon after.
“Our review found that the Board has not effectively managed and executed its … contract and repeatedly deviated from its cost-management provisions,” the report said. Former Chair Jerome Powell requested the inspector general’s review last year.
The project became a political flashpoint as the Trump administration ramped up pressure on the Fed to cut interest rates. Former President Donald Trump visited the site in July, where Powell corrected Trump’s cost estimate before television cameras.
The Justice Department later opened a probe into whether Powell committed perjury during brief Senate testimony about the renovation. That investigation was dropped in April after a judge quashed subpoenas issued by U.S. Attorney Jeanine Pirro for the District of Columbia. Pirro said she would await the inspector general’s findings before considering any further action.
“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 said.
The inspector general detailed how construction costs for two Federal Reserve buildings more than doubled, from an initial estimate of $921 million in February 2020 to $2.018 billion by December 2024. Work is now expected to continue until December 2027, well beyond the original mid-2024 completion target.
Features criticized by the Trump administration and some congressional Republicans as lavish, including water fountains, private elevators, and marble facades, were not significant drivers of the overruns, the report found.
Instead, a 2023 redesign that shifted the plan from mostly open work areas to mostly enclosed offices substantially delayed design work and kept the Fed from pursuing a maximum cost ceiling at that time, according to the inspector general.
Federal Reserve building renovation timeline and costs
The report underscores persistent cost growth and delays since the project’s early estimates, citing inflation pressures, inadequate early budgeting, and later design changes as key factors. Construction is now slated to finish in December 2027.
