The Federal Reserve's inspector general said managerial and oversight failings played a role in the cost blowout for renovating the historic Eccles Building, but concluded there was no basis to refer the matter for criminal prosecution. As the report put it, "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 in accordance with the Inspector General Act."
Inspector General Michael Horowitz led the review. He was appointed by Jerome Powell in June 2025, and one month afterward Powell asked that the inquiry be launched. The Washington headquarters overhaul ultimately swelled by roughly a billion dollars from early expectations as design changes and other issues piled up.
The 2025 budget for the Fed set aside $2.5 billion for the project, roughly $700 million more than prior estimates. The Fed attributed the jump to design updates shaped with other federal agencies, differences between expected and actual materials and labor costs, and environmental conditions at the site that turned out to be unexpectedly poor.
The report also said the Fed's Board of Governors was not making day-to-day project calls, stating, "Indeed, we would expect the [board] to delegate the day-to-day management of a large construction project."
The findings undercut a key line of attack against former Chair Jerome Powell by acknowledging his role as head of the institution without assigning additional blame. President Donald Trump and other critics had accused Powell of mishandling the renovation and misleading Congress, with some alleging perjury tied to his June 2025 Senate appearance. The inspector general did not specifically aim to judge those claims, but said it reviewed materials related to that testimony and made no claims about any misconduct tied to it.
Trump has repeatedly said the Fed should reduce interest rates and has stated he would apply that standard to any chair he chose. In January, Powell, in an unusual video message, said a criminal probe tied to the renovation was being wielded as leverage to pressure him to reduce interest rates.
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In March, Chief Judge James E. Boasberg of the D.C. Circuit quashed subpoenas she issued to the Fed, finding there was evidence they were intended to "harass and pressure Powell" over interest rates and no evidence of wrongdoing by Powell. In April, Pirro agreed to shut down the investigation in order to pave the way for Warsh's confirmation; however, she noted she was waiting for the inspector general's report and might revisit the case. "I will not hesitate to restart a criminal investigation should the facts warrant doing so," Pirro said. Neither Pirro nor the White House immediately responded when asked for comment regarding the IG's report.
Depending on the new findings, the Department of Justice could revive that investigation into Powell, or Warsh could seek his resignation. Republican senators who attended Powell's testimony have said they do not believe he committed a crime. Sen. Tim Scott, R-S.C., said in a February appearance on Fox Business, "I was the one asking the questions." Scott described Powell as inept, but added, "I do not believe that he committed a crime during the hearing." The president has nonetheless asserted that the renovation problem involved criminal conduct.
The Board of Governors of the Federal Reserve offered no comment. The report includes a letter from Kevin Warsh welcoming the findings and stating that the central bank will move to implement the recommendations. Warsh called the overruns "outrageous" in a Fox interview conducted before he was selected for the role. In his letter, he said he intends to conduct a comprehensive audit of the renovation, and he has requested that the General Services Administration act as the project executive from here on.
Powell remains on the board as a governor, with his term ending in January 2028. Congress designed the Fed to operate independently of the rest of the executive branch, and the agency funds itself and manages its own budget.
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