An internal watchdog said the Federal Reserve mismanaged costs associated with a $2.4bn renovation of its Washington DC headquarters, but noted that no criminal violations occurred, according to a report released on Wednesday.
For over a year, Donald Trump has centered his attacks against the Fed and former chair Jerome Powell around the renovations, including a months-long Department of Justice criminal investigation that was dropped in April.
The report said that the Fed's board of governors “has not effectively managed†the construction project and “repeatedly deviated from its cost-management provisionsâ€, but noted that the mismanagement was not criminal and that it did not find any administrative misconduct in its evaluation.
“At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred,†the report said.
Over the course of renovations, construction costs have gone from an initially budgeted $921m in February 2020 to $2.018bn by December 2024. Construction was supposed to be completed in mid-2024 but is not slated to go until December 2027.
The renovations have been a key part of the tension between the White House and the Fed, which by law is supposed to be non-partisan and independent. Trump has long been trying to pressure the Fed into lowering interest rates, to no avail.
Trump latched on to the Fed's ongoing renovations as an attack point against Powell in June 2025, suggesting that it amounted to corruption. He suggested that renovations included elaborate features including a VIP dining room and a garden terrace.
In response, the Fed posted a video tour of the ongoing construction, noting that two buildings have not undergone renovations since the 1930s.
Trump visited the Fed's headquarters to highlight the expenses that July. Donning hardhats in the bowels of the construction site, Trump and Powell had a spat over budget figures.
“It looks like it's about $3.1bn,†Trump said at the time. “It went up a little bit or a lot.â€
The typically reserved Powell became visibly annoyed. “I am not aware of that,†he said.
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Soon after, Trump turned his Fed fight toward Fed governor Lisa Cook, whom he tried to fire over mortgage fraud. The supreme court ruled earlier this summer that the firing was unconstitutional because the White House did not follow proper procedure.
In January, Powell released a stunning video statement announcing that the Department of Justice was investigating the renovations as part of a criminal investigation, noting that the investigation was “pretext†for the Fed not lowering interest rates.
“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,†Powell said at the time.
The justice department investigation would end up stalling the confirmation of current Fed chair Kevin Warsh, after a key Republican senator said he would be a holdout until the department ended its investigation. In April, the justice department closed the investigation.
Trump and his economic advisers have continued to call for the Fed to lower interest rates, though the Fed most recently hiked rates, citing high inflation.
