No criminal wrongdoing in Federal Reserve building renovation, watchdog says, but it was mismanaged

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WASHINGTON (AP) — The Federal Reserve's internal watchdog said Wednesday that the agency has broadly mismanaged an expansive building renovation project but did not find any criminal violations, as alleged by Trump administration prosecutors.

The Fed's inspector general said that a variety of missteps by its Board of Governors inflated the cost of the $2.4 billion renovation. The board did not secure a comprehensive cost estimate at the beginning of the project, nor did it nail down a maximum overall cost, a step that could have forced the building contractor to absorb the impact of inflation, the IG said in a 120-page report. Prices spiked after construction began in 2022.

"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 that the IG review the renovation project last year.

The building renovation project became a high-profile flashpoint in the Trump administration's attempts to pressure the Fed into cutting its key interest rate. President Donald Trump even visited the construction site last July, when Powell corrected Trump's estimate of the project's expected costs as the two stood before TV cameras in hard hats.

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